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The short answer is,
offer me a rate, will you? I prefer not to low
ball myself. FYI, 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.
Please 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.
The long answer is,
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".
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LENGTH OF CONTRACT
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MY RATE ON A W-2 |
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At least 12 months...
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My base rate * |
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At least 11 months...
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My base rate * |
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At least 10 months...
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My base rate * |
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At least 9 months...
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My base rate * |
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At least 8 months...
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My base rate * |
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At least 7 months...
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My base rate * |
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At least 6 months...
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My base rate * |
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At least 5 months, add...
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2.50/hr |
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At least 4 months, add...
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5.00/hr |
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At least 3 months, add...
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7.50/hr |
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At least 2 months, add...
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10.00/hr |
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AMOUNT OF OVERTIME
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-- |
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FYI, overtime is where the money is. Therefore, if overtime is less than 10 hours per week,
then the rate has to make up for it. Add...
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5.00/hr |
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HOLIDAYS
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-- |
FYI, holiday pay is a very necessary business expense. If you still don't want to pay for
a very minimum of six holidays per year, then the rate has to make up for it. Add...
OR...
If you don't want to pay for my holidays in the first 90 days of my contract,
then the rate has to make up for them. Add...
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4.00/hr |
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LOCATION
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-- |
FYI, housing/shelter near the contract site is a very necessary business expense.
If I need to stay at an overpriced hotel in a BIG city e.g. Boston, NYC, Seattle,
Tucson, or their suburbs, then the rate has to make up for it. Add...
OR...
If the contract is in California, the "home of the 25-dollar hamburger", then add...
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10.00/hr
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PER DIEM
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-- |
FYI, the PD split is our mutual interest.
It's 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 my rate has to make up for it. Add...
OR...
If you do the PD split for
less than
7-days per week, then my rate has to make up for it. Add...
OR...
If you do less than legal maximum PD
splits, then my rate has to make up for it. Add...
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12.00/hr |
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ROLE
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-- |
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FYI, if it's a lead role, then the level of responsibility is far greater,
therefore the rate has to make up for it. Add...
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8.00/hr |
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STATE
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-- |
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If the contract is in a state with income tax,
then the rate has to make up for it. Add...
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4.00/hr
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1099 RATE
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-- |
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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 has to make up for them. Add...
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12.00/hr
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OVERTIME PAY
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-- |
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You CAN pay me overtime because I'm neither salaried/exempt, nor a
programmer/developer. 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. Therefore, if, in spite of all this, you still want
to pay me straight time for my overtime, then the rate has to make up for it. Add...
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8.00/hr
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TRAVEL
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-- |
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FYI, travel to the contract site is a very necessary business expense.
If you still don't want to pay for my travel,
then my rate has to make up for it. Add...
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2.00/hr
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VACATION
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-- |
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FYI, time off for an annual vacation is a very necessary business expense.
If you still don't want to pay for vacation time, then the rate has
to make up for it. Add...
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1.00/hr |
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MY BASE RATE *
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-- |
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My base rate is...
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Confidential
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Negotiating leverage:
Sorry, I no longer disclose my base rate in advance.
When I did that, I gave up my negotiating leverage, and
made $5 to $10 less, per hour, every hour, for
the duration of the whole project.
No, it's not a good idea to give up negotiating
leverage. And no, it's not a good idea to earn less
than the guy working next to me, doing the same work
as I'm doing, working on the same project!
No, it's not a good idea, especially when I
"totally blew him out of the water!"
(And these were his words, not mine!)
The myth of high rates:
According to one myth, we contractors get "high rates". FYI, no, we don't.
Our so-called "high rate" is a myth, an illusion.
Mentally deduct 30% for our income taxes, then an additional 40% for our hotel,
motel, travel, rental car, vacation, sickness, retirement and other very necessary business expenses.
The amount you get is our real rate.
Problem #1 is, all the above expenses are very necessary business expenses!
Problem #2 is, way too many times our very necessary business expenses do NOT get reimbursed!
Problem #3 is, the cost of doing business is going up, but our rates are NOT!
For example, in 1998 I was able to rent a car for $120 per week, but today the same car
is renting for $240 per week, and the $40 per night hotel room I stayed at in 1998 is currently
renting for $80 per night. Both of these are increases of 100%. During the same 10-year time period, the length
of our job descriptions also increased 100%, demanding 100% more skills, corporate earnings increased 100%,
but our rates went up only 30%.
Keep in mind, what counts is NOT what we 'get', but what we're able to 'keep'.
If the cost of everything keeps increasing without similar increases in our rates, very soon we contractors
will have borrow money Friday and every Friday, just to be able to afford the high cost of living at out of
town contract sites!
Recruiters, how do you expect to recruit me, if you quote me rates that would have been good 10 or 20 years
ago? Do you think my rate is "high"? Mentally deduct 30% for income taxes, then an additional 40% for airline,
hotel, motel, rental car, vacation, sickness, retirement, and other very necessary business expenses. Do the math,
and you might find that sales people working at roadside fruit stands are making MORE money than that!
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, and 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.
As you can see, compared to the high-high hotel and motel rates in big cities and their
suburbs, my rates are pretty low and reasonable. Additionally, when you consider that
most of the money I collect goes to the pockets of third parties, my rates will begin to
look to you even lower and more reasonable.
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 30%, while
my expenses went UP 120%! Let us remember, as of 2008 (vs. 1998),
gas prices are 300% higher, rental car rates are 100% higher, hotel and motel
rates that are also 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 could expose me to new experiences,
new industries, or new technologies;
- 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
- "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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