What is your rate? Software QA/Test Engineer, Resume.

   ROB DAVIS, P.E.

Q21: What is your rate?

The short answer is, my rate is public information. View the below table, do the math, and offer me a rate.

The long answer is, I prefer not to low ball myself. I'm aware of what the current rates are nationwide, and expect your offer within those market rates for the area. The rate you offer should be competitive. Don't let the current economy fool you into thinking that high-tech skills are now a dime a dozen. Talent is talent, and in today's business climate I know your clients need talent more than ever. There are many employment options available to me.

I do not have a one-size-fits-all hourly rate for all markets, all employers, all states, all positions, and all job descriptions. My rate depends on the type of work, the location, and the client. My rate also depends on the duration, number of billable hours per week, pay rate for overtime, and whether there are any paid holidays. On contracts, I work on site at a rate that is negotiable depending on current market rates, expenses, location, and job assignment. I'm aware of what the current rates are nationwide, and expect offers within those market rates for the area. I will negotiate with you on most items. But, "negotiate" does not mean, "give away".

LENGTH OF CONTRACT MY RATE ON A W-2
At least 12 months... My base rate *
At least 11 months... My base rate *
At least 10 months... My base rate *
At least 9 months... My base rate *
At least 8 months... My base rate *
At least 7 months... My base rate *
At least 6 months... My base rate *
At least 5 months, add...   2.50/hr
At least 4 months, add...   5.00/hr
At least 3 months, add...   7.50/hr
At least 2 months, add... 10.00/hr
BIG CITY    --
FYI, small cities (Springfield IL, Cedar Rapids IA, etc) have low population densities, homogenous populations, but neither traffic jams, nor major airports, or Extended Stay America hotels.

FYI, in contrast, big cities (Boston area, Chicago area, Los Angeles area, Milwaukee area, Seattle area, Tucson area, etc.), are urban versions of jungles. Population density is high, and the population is diverse and multi-cultural. There are traffic jams, nearby major airports, and Extended Stay America hotels that charge more than $55/night.

If the job site is in a BIG city, or any of their suburbs, then everything will costs more, therefore the rate will have to make up for it. Add...
10.00/hr
CALIFORNIA    --
In addition to any big city expenses, if the state is California, there will be additional expenses, therefore the rate will have to make up for them. Add...   5.00/hr
HOLIDAYS    --
If you don't pay for a minimum of six holidays per year, then the rate will have to make up for them. Add...

OR...

If you don't pay my holidays in the first 90 days, then the rate will have to make up for them. Add...
  4.00/hr
NEW YORK CITY    --
NYC is not only a big city, but a very expensive big city. If the contract site is NYC, then the rate will have to make up for it. Add... 15.00/hr
OVERTIME    --
FYI, overtime is where the money is.

FYI, you CAN pay me overtime, because I'm neither salaried/exempt, nor a programmer, or developer.

FYI, overtime commands a higher rate because it's associated with back injuries, higher blood pressure, a greater rate of industrial accidents, and many other health problems.

However, if, in spite of all these reasons, you still want to pay straight time for overtime, then the rate will have to make up for it. Add...

OR...

If overtime is less than 10 hours per week, then the rate will have to make up for it. Add...

OR...

If the overtime rate is based on the rate minus the PD, then it'll be straight time for overtime, or even less, therefore the rate will have to make up for it. Add...
  5.00/hr
PER DIEM    --
FYI, my home base is not WA, therefore I'm ELIGIBLE for PD.

FYI, the PD split is in our mutual interest. It is a very NECESSARY part of this business. It saves you money, allows you to make more money, and costs you nothing. However, if, against your best interest, you still don't want to do a PD split, then the rate will have to make up for it. Add...

OR...

FYI, the rule book -- page 7 of IRS Publication 463 -- says the PD should be paid for SEVEN DAYS per week, not 5 days per week. What's more, this 7-day PD split is in our mutual interest. Do you want to break the rules? Or, against your best interest, do you want to do this PD split for less than 7 days per week? If you do, then the rate will have to make up for it. Add...

OR...

FYI, paying the legal MAXIMUM PD is in our mutual interest. It saves you money, allows you to make more money, and costs you nothing. However, if, against your best interest, you want to do less than legal maximum PD splits, then the rate will have to make up for it. Add...
12.00/hr
ROLE    --
FYI, if it's a lead role, then the level of responsibility is far greater, therefore the rate will have to make up for it. Add...   8.00/hr
STATE    --
If the contract site is in a state with state income tax, then the rate will have to make up for it. Add...   4.00/hr
1099 RATE    --
I prefer "W-2" relationships. If you still want me to work "on a 1099", then I'll have many additional expenses (of both time and money), therefore the rate will have to make up for it. Add... 12.00/hr
TRAVEL    --
FYI, travel to and from the contract site is a NECESSITY. If you don't pay the cost of my travel, then the rate will have to make up for it. Add...   2.00/hr
VACATION    --
FYI, a very minimum of five days for an annual vacation is a NECESSITY. If you don't pay vacation time, then the rate will have to make up for it. Add...   1.00/hr
MY BASE RATE *    --
My base rate is... 43.00/hr


The myth of high rates: Myth: We, contractors, get "high rates". Reality: No, we don't. Mentally deduct 33% for our agency, and another 33% for our hotel, motel, travel, rental car, vacation, sickness, retirement and other very necessary business expenses, and what you get is our "real rate". For example, if the bill rate is $100/hr, then our real rate is approx. ($100 - 33 - 33 =) $33/hr.

One problem is, all the above travel expenses are very necessary business expenses, but they DON'T get reimbursed! Another problem is, the cost of travel is going up a lot faster than our rates! For example, in 1998, I could rent a car for $120 per week, but today the same car rents for $240 per week. In 1998 I could rent a hotel room for $40 per night, but today the same room rents for $80 per night. Both of these are increases of 100%. During the same 10-year time period the length of our job descriptions has increased 100%, corporate earnings have increased 100%, but our rates have increased only 10%.

Recruiters, how do you expect to recruit me, if you quote me low rates that would have been good 10 or 20 years ago? Do you think my rate is "high"? Take the bill rate, mentally deduct 33% for your company's fee, and another 33% for my hotel, motel, travel, rental car, etc. business expenses, and the amount you get is my real rate. Mentally deduct an additional 30% for my income taxes! Realize that I can make more money at a roadside fruit stand!

Recruiters, how do you expect to recruit me, if the rate you have in mind is not high? Realize that most out of town locations are simply not economically feasible! How would you like to do the work, travel all over, leave your friends and family behind, MAKE A LOW RATE, and, at the same time, more than double your living expenses while on the road? Without the higher pay, no one in their right mind will do it twice!

Recruiters, as our cost of travel increases without similar increases in our rates, we, contractors, will soon have to borrow money every day, just to be able to afford the travel expenses of being and working out of town, out of state, in a location where no one in their right mind would willingly move to permanently! What counts is NOT what we 'get', but what we're able to 'keep'!

Your benefits: What are the benefits to you and your company? The first benefit is, these hourly rates are not straight hourly wages, but so called "all inclusive" rates for "out of town" locations, where, by definition, most of the monies I collect go to third parties, i.e. airline companies, hotel operators, landlords, car rental agencies, gas stations, federal, state, county and city tax collectors.

The second benefit to you is that I'm the one who assumes all risks, because every new, out-of-town location represents new risks and new surprises that usually increase my expenses for the duration of the whole project.

The third benefit to you is that my rates are pretty low and reasonable, if you consider the high hotel and motel rates, especially in big cities and their suburbs; and if you consider the fact that most of the money I collect goes to the pockets of third parties!

On a W-2: As to my STATUS with your firm, I see many possibilities. A) I am incorporated, so I could work as a "consultant" through my own company, on a 1099, on a "corp-to-corp" basis. Or, B) I could be an "employee" on a W-2. At this time of my life I prefer W-2 relationships.

No profits: Are my rates too high? No, they're not! In the last 10 years, my rates have gone up 10%, while my expenses increased 120%, i.e 12 times faster! Let's remember, as of 2008 (vs. 1998), gas prices are 300% higher, rental car rates are 100% higher, hotel/motel rates that are 100% higher! Where are the well-deserved profits? In this business there are no profits, just low hourly wages! Additionally, there is increasing pressure from end clients and screeners to...

  • Take jobs without any benefits;
  • Take jobs that pay low-low wages;
  • Take jobs that do not pay for overtime work;
  • Take jobs that pay only straight time for overtime work;
  • Take risks far greater than the local "directs" are taking;
  • Take jobs that pay less than what the local "directs" are making;
  • Use my time (i.e. whatever little time I've got after working 80-hour weeks) to develop additional technical expertise in my own time, and at my own expense;
  • Avoid jobs that would expose me to any new experience, new industry, or new technology;
  • Say "yes" to an unlimited number of telephone interviews, without receiving any compensation for my time;
  • Say "yes" to an unlimited number of all-day face-to-face meetings in out of town client sites, without receiving any compensation for my time;
  • Absorb the cost of out-of-town business travel, if hired;
  • Absorb the cost of unemployment, if laid off;
  • Absorb the cost of unemployment, whenever the software sector is showing any weakness;
  • Absorb the cost of unemployment, whenever the economy is in recession;
  • Absorb the cost of health/dental care;
  • Absorb the cost of retirement;
  • Absorb the cost of holidays;
  • Absorb the cost of vacations;
  • Absorb the cost of 25 unpaid hours per week to help recruiters for free, without receiving any compensation for my time; and
  • Say 'yes' to low rate contracts that don't even pay my expenses!
The high cost of travel: The high cost of client turnover, advertising, marketing, hundreds of long distance calls, constant moving, hotels, motels, car rentals, taxes, training, all my vacations, holidays, insurance, and retirement benefits come out of my own pocket. It's TOUGH to live in hotels and motels. It's also very EXPENSIVE. One's cost of living doubles, and triples when one has to live in hotels, and move often.

More on the high cost: I'd love to, but in most cases it's not practical to move next to the client's site, if it's only a contract, and if the contract is only for 3-6 months. Because of this, on contracts - unless I rent a room in a nearby, usually expensive, hotel or motel I cannot afford - the time I spend commuting tends to double, triple, and quadruple. Time is money! Who is going to compensate me for the time I lose when I'll have to fight traffic 2-3 hours per day, every day?

Unpaid overtime work: In addition to my paid 40 hours per week, and 15 hours per week of unpaid commute, in this business I have to work an additional 25 hours per week, so that I can market myself, update my web sites and resumes, as well as catch up with technology. All of this is overtime work that is (and remains) unpaid to me. I've never received any compensation for any of this overtime work.

Minimum 3 months: On contracts, I usually need two to three complete months just to break even, just to recover my initial cost of client turnover, advertising, marketing, moving, and transportation.

Helping recruiters: In addition to my paid 40 hours per week, and up to 15 unpaid hours per week of commute, I find myself working 25 additional hours per week because of a steady stream of telephone calls and e-mails from hundreds of screeners all over the country who just possibly perhaps someday might have a suitable position for me, and because a great many of them do NOT...
  • Recruit;
  • Click on my resume.
  • Read my resume;
  • Click on my recruiters' FAQs;
  • Read my recruiters' FAQs;
  • Answer their own telephones;
  • Answer their own e-mail;
  • Answer my paging, if I'm able to page them;
  • Answer their cell phone, if they have a cell phone.
Instead, they do...
  • Screen and only screen;
  • Play phone tag;
  • Waste my time;
  • Play head games with me;
  • E-mail me long lists of canned questions;
  • Ask me canned questions;
  • Make me rehash for them, individually, and one by one, my FAQs, without any compensation for my time;
  • Make me rehash for them, individually, and one by one, my resume, without any compensation for my time;
  • Make me give an unlimited number of telephone interviews, without any compensation for my time;
  • Want to spend time with me;
  • Make me e-mail them, one by one, manually and individually, my standard answers to their canned questions;
  • Make me e-mail them, one by one, manually and individually, my usual resume, even when I e-mailed to them the very same resume two to five days earlier;
  • Make me spend additional time on my resume, before I send it to them;
  • Want me to drop everything I'm doing, answer their telephone calls 7 days a week, and view their web sites, job descriptions and e-mails as soon as they e-mail or call me.
Their excuses are...
  • "I can't find your resume (in my own desk)."
  • "I can't find the requirement (I called you about)."
  • "I do not understand your resume."
  • "I need a "first edition" resume from you."
  • "I'm not allowed to use the Internet."
  • "I've got a requirement that is 'hot'... 'urgent'... and 'very urgent'!!!"
  • "My computer is 'slow' today."
  • "You will save ME time..." (and he's not concerned about my time!)
  • "We've never talked before..." (so let's talk and talk and talk!)
  • "The resume I've got is an 'older' one..." (i.e. older than 2 days)
  • "Your resume came from a 3rd third party whose file type is not Word."
  • "If I print a resume off your web site, your resume won't look good."
  • "If I download your resume, all formatting will be lost."
Great! Here I'm again, chained to a desk, and, in addition to my regular 55-hour work week, I'm working an additional 25 unpaid hours per week, without any compensation for my time. Please notice that I keep helping screeners and recruiters, day after day, every day, and I receive ZERO compensation for my time. -- I am working for FREE!

Unskilled laborers make more money: Where are the high rates? Where are the benefits? This contract work -- coupled with the need to commute, and constantly market ourselves -- is an (40 + 15 + 25=) 80 hour per week job for a low rate of ($55/hr * 40hrs / 80 hrs =) $27.50/hr.

In contrast, unskilled, uneducated, ordinary computer data entry operators working 40 hours per week with west coast longshoremen make $136,000 per year, i.e. 2-3 times more than yours truly. Add to their benefits the fact that their jobs are permanent, not temporary, jobs, and then you might find they make FOUR times more than yours truly!

In contrast to their jobs, in this business there are no profits, only low hourly wages that do not even pay for much needed hotels, motels, rental cars, airline tickets, and travel expenses!

$60/hr in 2000: Do you want to know what computer professionals charge? According to a January 2000 contract rate survey of "realrates.com", the median rate for contractors working directly for clients was $75 per hour. The median rate for contractors working through middlemen was $60 per hour. According to their April 2003 survey (for the 12 month period ending in 4/03), the median rates for software QA engineers/testers were $82.50 per hour (when working directly for clients), and $62.50 per hour (when working through
middlemen).

Fairness: If the contract is in the United States, then the above-mentioned dollar amounts are in American money. If the contract is in Canada, then the above-mentioned dollar amounts are in Canadian money.

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