Tuesday, October 15, 2013

The content below is a thread from Fatwallet forums. Print document.Thread Title: $110,000 W2 salary is equivalent to ?/hr if changing to 1099?

Date Posted: Mar/30/2010 11:29 PM
Posted By: dealdistributor
Rank: Senior Member
Hello,

If one is currently making say: $110,000 on W2 (full-time). How much they should ask the consulting company to pay them per hour if converting to 1099 without any benefits? Traveling (3 hrs drive from home) every weekend will be involved with staying at hotels during the week.

Thanks for all your advice in advance.

DD  Message edited by: dealdistributor on 2010-03-31 22:11:43 CDT


Date Posted: Mar/30/2010 11:30 PM
Posted By: WikiPost
Rank: New Member
Quick Summary is created and edited by users like you... Add FAQ's, Links and other Relevant Information by clicking the edit button in the lower right hand corner of this message.


Date Posted: Mar/30/2010 11:37 PM
Posted By: singhonfire
Rank: Cranky Member
Thats a lot of money


Date Posted: Mar/30/2010 11:38 PM
Posted By: dawhim
Rank: Broke Member
Link

2nd link

this topic has been well covered in the past.


Date Posted: Mar/30/2010 11:39 PM
Posted By: tripleB
Rank: Banneddealdistributor said:

Hello,

Can anyone help me in coming up with a $ figure if I want to make a switch to 1099 from my current W2 pay with benefits like 401K, 2 weeks vacation, insurance etc?

Current salary say: $110,000K W2. How much should this translate to $s/hour if changing to 1099. I will be travelling (3 hrs drive from home) every weekend back home from work and will stay at hotels during the week.




What job pays $110k per year to an employee who can't do basic math or spell "traveling"?


Date Posted: Mar/30/2010 11:46 PM
Posted By: hejustlaughs
Rank: Senior Member
2KtripleB said:

dealdistributor said:

Hello,

Can anyone help me in coming up with a $ figure if I want to make a switch to 1099 from my current W2 pay with benefits like 401K, 2 weeks vacation, insurance etc?

Current salary say: $110,000K W2. How much should this translate to $s/hour if changing to 1099. I will be travelling (3 hrs drive from home) every weekend back home from work and will stay at hotels during the week.




What job pays $110k per year to an employee who can't do basic math or spell "traveling"?



Teacher?


Date Posted: Mar/30/2010 11:49 PM
Posted By: BlueSeaLake
Rank: Senior Member
1K
I always guestimated needing about 14% more at that level, as a quick figuring.
However you don't need to guess.
Look up sites to see what it costs to hire an employee.
You will pay Employer and Employee share of things like SS, medicare, (2 weeks vacation is 3.85%), UI (which stops about the 7K level, or roughly $500/yr depending upon the state).
Are you going to cover disability insurance cost, equipment cost?


Date Posted: Mar/30/2010 11:53 PM
Posted By: dealdistributor
Rank: Senior Member
Thanks dawhim !!

Link

2nd link

this topic has been well covered in the past.  Message edited by: dealdistributor on 2010-03-30 23:53:48 CDT


Date Posted: Mar/30/2010 11:55 PM
Posted By: dealdistributor
Rank: Senior MemberBlueSeaLake said:

I always guestimated needing about 14% more at that level, as a quick figuring.
However you don't need to guess.
Look up sites to see what it costs to hire an employee.
You will pay Employer and Employee share of things like SS, medicare, (2 weeks vacation is 3.85%), UI (which stops about the 7K level, or roughly $500/yr depending upon the state).
Are you going to cover disability insurance cost, equipment cost?



Thanks.

Not planning to cover disability insurance cost, equipment cost etc.


Date Posted: Mar/30/2010 11:56 PM
Posted By: dealdistributor
Rank: Senior MembertripleB said:

dealdistributor said:

Hello,

Can anyone help me in coming up with a $ figure if I want to make a switch to 1099 from my current W2 pay with benefits like 401K, 2 weeks vacation, insurance etc?

Current salary say: $110,000K W2. How much should this translate to $s/hour if changing to 1099. I will be travelling (3 hrs drive from home) every weekend back home from work and will stay at hotels during the week.




What job pays $110k per year to an employee who can't do basic math or spell "traveling"?



Never misspelled a word before? Why act like a moron when a straight forward Q is asked.


Date Posted: Mar/30/2010 11:57 PM
Posted By: dealdistributor
Rank: Senior Membersinghonfire said:

Thats a lot of money



Go tell all those wall street executives that make bonuses in millions.


Date Posted: Mar/31/2010 12:08 AM
Posted By: dealdistributor
Rank: Senior Member
Let me rephrase the Q again. Sorry if it caused any confusion before:

Hello,

If one is currently making say: $110,000 on W2 (full-time). How much they should ask the consulting company to pay them per hour if converting to 1099 without any benefits? Traveling (3 hrs drive from home) every weekend will be involved with staying at hotels during the week.

Thanks for all your advice in advance.

DD  Message edited by: dealdistributor on 2010-03-31 22:12:49 CDT


Date Posted: Mar/31/2010 12:12 AM
Posted By: qcumber98
Rank: Pickled
Thanks for setting off my topic alert twice in the last 15 mins.


Date Posted: Mar/31/2010 12:12 AM
Posted By: tripleB
Rank: Banned
Full time is 40 hours a week times 50 weeks a year is 2000 hours.

$110,000 on a W2 is worth $120,000 on a 1099 because now you have to pay Self Employment Tax. Health Insurance might be $10k per year bringing this up to $130k. Assuming that the person is still working 40 hours a week including this travel time, then $65 per hour.

There's also the factor that on a 1099 allows slightly greater deductions of expenses that would theoretically reduce the amount the person should need to be paid per hour.


Date Posted: Mar/31/2010 12:17 AM
Posted By: dealdistributor
Rank: Senior MembertripleB said:

Full time is 40 hours a week times 50 weeks a year is 2000 hours.

$110,000 on a W2 is worth $120,000 on a 1099 because now you have to pay Self Employment Tax. Health Insurance might be $10k per year bringing this up to $130k. Assuming that the person is still working 40 hours a week including this travel time, then $65 per hour.

There's also the factor that on a 1099 allows slightly greater deductions of expenses that would theoretically reduce the amount the person should need to be paid per hour.



Perfect answer. Thanks tripleB


Date Posted: Mar/31/2010 1:09 AM
Posted By: Horseymen
Rank: Senior Member
When you're a 1099 - the section 179 depreciation on that car in which you travel 3 hours on weekends with could have an effective 40% off value to it if you don't mind driving an SUV for at least one year. 


Date Posted: Mar/31/2010 2:01 AM
Posted By: okwiater
Rank: Senior Member
I prefer to be paid on 1099 because I always came out ahead with the extra deductions allowed. Sadly, I'm mostly W2 now.


Date Posted: Mar/31/2010 2:14 AM
Posted By: AbbaZabba
Rank: Addicted MembertripleB said:

dealdistributor said:

Hello,

Can anyone help me in coming up with a $ figure if I want to make a switch to 1099 from my current W2 pay with benefits like 401K, 2 weeks vacation, insurance etc?

Current salary say: $110,000K W2. How much should this translate to $s/hour if changing to 1099. I will be travelling (3 hrs drive from home) every weekend back home from work and will stay at hotels during the week.




What job pays $110k per year to an employee who can't do basic math or spell "traveling"?



H?


Date Posted: Mar/31/2010 3:51 AM
Posted By: riznick
Rank: Acrobaticdealdistributor said:

Let me rephrase the Q again. Sorry if it caused any confusion before:

Hello,

If one is currently making say: $110,000K on W2 (full-time). How much they should ask the consulting company to pay them per hour if converting to 1099 without any benefits? Traveling (3 hrs drive from home) every weekend will be involved with staying at hotels during the week.

Thanks for all your advice in advance.

DD


This is reasonable to ask:
$65-$100/hour (depending on how much work you get or lose)
+ weekend expenses paid
+ travel expenses  Message edited by: riznick on 2010-03-31 03:53:29 CDT


Date Posted: Mar/31/2010 8:40 AM
Posted By: jetsfan92588
Rank: Senior Member
2Kdealdistributor said:

singhonfire said:

Thats a lot of money



Go tell all those wall street executives that make bonuses in millions.



I think it was a joke. You wrote 110,000K which is actually 110,000,000 which is more than most CEOs make 


Date Posted: Mar/31/2010 8:45 AM
Posted By: hkgfnt
Rank: Senior Member
3KtripleB said:



What job pays $110k per year to an employee who can't do basic math or spell "traveling"?



There are several high-profile arrests and charges against many former and current city officials and friends in Detroit recently on farming out consulting or being paid for it. Most of the consulting were for "voter education or registration", "at-risk youth", "self esteem", and all those coded words. One fellow was paid 150K for performing such difficult task of "enhancing communication among city departments". I am compiling a book with all these phrases and words when I am ready to start a consulting business trying to grab federal dollars. 


Date Posted: Mar/31/2010 8:49 AM
Posted By: Yoksel
Rank: Senior Member
1K
It totally depends on your circumstances - how much current benefits are really worth to you, how long is the contract, how much will be your downtime once the contract expires, how expensive it is to open and maintain a business in your state, how you structure your business, what write-offs you can make. Since you'll be driving 3 hours, it's possible that your place of work is located in another state which may have higher or lower taxes. There's just too many parameters that only you personally know.

I did my due diligence on this topic not so long ago and just put your number (110K) in my calculations. As a rule of thumb, talking just about pure money, 110K comes down to the same after-tax hourly rate as $65/hr. Factoring in other expenses, I'd probably only exchange a full-time 110K-position to $80+/hr. But again, maybe you're just tired of what you're doing now.


Date Posted: Mar/31/2010 9:05 AM
Posted By: BlueSeaLake
Rank: Senior Member
1K
So looks like I was low with my quick 14% , it should be more like 20%.
It still does not account for time off between contracts, take a long range view, say 4 years and when contracting you will find a lot of places let you go after 1.5 years due to an IRS ruling. You can come back after 6 months if they love you, but often its hard to find a 6 month filler.
So in a 4 year stretch you end up not working at least 6 months. Something I never figured into calculations but now that its harder to get a gig, its a real factor.


Date Posted: Mar/31/2010 9:40 AM
Posted By: Yoksel
Rank: Senior Member
1KBlueSeaLake said:

a lot of places let you go after 1.5 years due to an IRS ruling.


what ruling is it? in the company I'm working for now there's a bunch of contractors who have been here a few years


Date Posted: Mar/31/2010 9:56 AM
Posted By: MaxRC
Rank: Senior Member
3K
Generally, we expect to pay 30% more for 1099 vs W2. This is NoVA/DC/MD area. For low level positions, the spread is not that wide. But someone making $100K+ is used to the good life (insurance, 401k, paid vacation, holidays, FICA, etc). I can't believe someone would be willing to take only a 14-20% premium. What a bargain. Our entry level position gets 27 days out of a year off (10 holidays plus 17 personal days). That alone is a 10.4% premium. Add in 7.65% FICA contribution, 3% 401k matching, insurance benefits, etc...


Date Posted: Mar/31/2010 11:21 AM
Posted By: forbin4040
Rank: Senior Member
6KtripleB said:

What job pays $110k per year to an employee who can't do basic math or spell "traveling"?

Corporate Downsizer?


Date Posted: Mar/31/2010 11:27 AM
Posted By: dmlavigne1
Rank: Senior Member
1Kdealdistributor said:

tripleB said:

Full time is 40 hours a week times 50 weeks a year is 2000 hours.

$110,000 on a W2 is worth $120,000 on a 1099 because now you have to pay Self Employment Tax. Health Insurance might be $10k per year bringing this up to $130k. Assuming that the person is still working 40 hours a week including this travel time, then $65 per hour.

There's also the factor that on a 1099 allows slightly greater deductions of expenses that would theoretically reduce the amount the person should need to be paid per hour.



Perfect answer. Thanks tripleB



FWF first, someone actually accepted a TripleB answer!

Nice going Triple B it only took you 3K posts.


Date Posted: Mar/31/2010 11:37 AM
Posted By: tripleB
Rank: Banneddmlavigne1 said:

dealdistributor said:


Perfect answer. Thanks tripleB



FWF first, someone actually accepted a TripleB answer!

Nice going Triple B it only took you 3K posts.



3,534 posts.


Date Posted: Mar/31/2010 12:50 PM
Posted By: btuttle
Rank: Senior MemberBlueSeaLake said:

So looks like I was low with my quick 14% , it should be more like 20%.
It still does not account for time off between contracts, take a long range view, say 4 years and when contracting you will find a lot of places let you go after 1.5 years due to an IRS ruling. You can come back after 6 months if they love you, but often its hard to find a 6 month filler.
So in a 4 year stretch you end up not working at least 6 months. Something I never figured into calculations but now that its harder to get a gig, its a real factor.

20% is still too low. Do some simple math, paid time off assumes 15 days vacation, 10 holidays, 5 days sick/personal = 6 weeks.

1.0000 / 0.9235 = 1.0828, additional 7.65% in SE tax
1.0828 * 1.1304 = 1.2240, paid time off 6 weeks 52/46 - 1.1304
1.2240 + 0.0300 = 1.2540, add retirement, 3% could be more or less
1.2540 + 0.0500 = 1.3040, add downtime risk premium (I use 5% > 1yr, 10% 6-12 months, and 20% < 6 months

I generally use 30% + benefits (health, dental, disability, life insurance). Benefits are calculated by dividing monthly benefits by 175. It usually works out to about $5/hr single, $10/hr married, and $15/hr family. NOTE: Even though your costs are higher it is very often difficult to get a rate to cover married/family medical costs. This is why most of the married contractors I know are covered on their spouse's medical plan.

In this job market it might be a little constrained. I have had to give up downside risk premium (one of those things that go away when you need them the most). So I am currently getting 25% + $5/hr. Many first time contractors underestimate their contract rates. They often are unable to pay their tax/SE tax quarterly estimated payments. If you are not getting at least 25%-30% above your W2 hourly rate, you are taking a pay cut.

P.S. You should definately be getting paid for travel time and any out of pocket expenses.


Date Posted: Mar/31/2010 12:54 PM
Posted By: jkimcpa
Rank: Senior Member
5K
The "correct" answer is charge the company as much as they are willing to pay.


Date Posted: Mar/31/2010 1:01 PM
Posted By: geo123
Rank: Happy MemberMaxRC said:

Generally, we expect to pay 30% more for 1099 vs W2. This is NoVA/DC/MD area. For low level positions, the spread is not that wide. But someone making $100K+ is used to the good life (insurance, 401k, paid vacation, holidays, FICA, etc). I can't believe someone would be willing to take only a 14-20% premium. What a bargain. Our entry level position gets 27 days out of a year off (10 holidays plus 17 personal days). That alone is a 10.4% premium. Add in 7.65% FICA contribution, 3% 401k matching, insurance benefits, etc...

This is all correct but I just wanted to point out that the social security wage cap in 2010 is $106,800, at which point the social security tax is no longer charged (this is because social security benefits are capped and you qualify for the maximum benefits at that income level). Medicare tax has no wage cap. Hence, to the extent that a contractor/employee is receiving income above $106,800, since such excess is not subject to the SS tax, the contractor should not be requiring a compensation bump to account for that portion of the social security tax.

In other words, a contractor can accept 6.2% less for the portion of the compensation that exceeds $106,800 without taking a paycut compared to what he/she would have received as a W2'd employee.


Date Posted: Mar/31/2010 1:02 PM
Posted By: Yoksel
Rank: Senior Member
1Kjkimcpa said:

The "correct" answer is charge the company as much as they are willing to pay.


It's not nearly a correct answer because the question is more "is it worth it" versus "how much to ask".


Date Posted: Mar/31/2010 1:05 PM
Posted By: jkimcpa
Rank: Senior Member
5KYoksel said:

jkimcpa said:

The "correct" answer is charge the company as much as they are willing to pay.


It's not nearly a correct answer because the question is more "is it worth it" versus "how much to ask".



Well, he did say how much he should ask the consulting company...the consulting company can prob charge $200/hr and he can get 60-120


Date Posted: Mar/31/2010 1:20 PM
Posted By: Yoksel
Rank: Senior Member
1Kgeo123 said:

I just wanted to point out that the social security wage cap in 2010 is $106,800


Exactly! And a lot of people on both sides refuse to calculate it correctly into the calculation.
Also as far as 401K match, if you structure well and do solo 401, the match might be covered by higher tax-deferral you can make while self-employed.
Write-offs can be minimal or huge and often cover some things you'd buy anyway.


Date Posted: Mar/31/2010 1:29 PM
Posted By: Yoksel
Rank: Senior Member
1K
The sad reality is that nobody cares how you're going to cover your expenses as a contractor, whether they are justifiable or not. You start off your salary, factor in expenses and if that rate turns out to be higher than the market rate, you will not get hired.


Date Posted: Mar/31/2010 2:13 PM
Posted By: Crazytree
Rank: Senior Member
9K
biggest change for me from changing from a pure 1099 employee to a hybrid W2/1099 is that as a 1099 I could only contribute $5k to my IRA... now I can contribute more than that limit to my 401k along with matching and profit sharing.


Date Posted: Mar/31/2010 3:02 PM
Posted By: BlueSeaLake
Rank: Senior Member
1KYoksel said:

BlueSeaLake said:

a lot of places let you go after 1.5 years due to an IRS ruling.


what ruling is it? in the company I'm working for now there's a bunch of contractors who have been here a few years



It was because of Microsoft treating contractors like employees, without some of the benefits, and some contractors decided to ask for the benefit.
In 2000, Microsoft had to hand over nearly $100 million in taxes, missed payments, and penalties.

One answer to it now, is Microsoft would end your contract each year for 3 months. Lots of other big companies instituted an 18 month rule, and let you go.

Now the the IRS is going to audit 6,000 companies for contractor cheating, expect to see more arbitrary end of contracts popping up.
Hey, maybe the IRS will reward you for informing on the company?


Date Posted: Mar/31/2010 3:03 PM
Posted By: geo123
Rank: Happy MemberCrazytree said:

biggest change for me from changing from a pure 1099 employee to a hybrid W2/1099 is that as a 1099 I could only contribute $5k to my IRA... now I can contribute more than that limit to my 401k along with matching and profit sharing.

Depending on the employer size, employee 401(k) participation and employer's willingness to use safe harbor rules, your actual 401(k) contribution limit can easily end up being very low as well. Although the deductible 401(k) contribution limit is $16,500, if the plan fails discrimination tests at the end of the year (this doesn't happen at larger employers that watch this regularly but is a common occurrence with smaller employers who are not willing to make safe harbor matching contributions), you can end up with most if not all of your contributions returned back to you in the form of taxable compensation.

By the way, you did not have to settle for the $5K IRA contribution limit. If you wanted to contribute more, a solo 401(k) could always be set up.


Date Posted: Mar/31/2010 3:38 PM
Posted By: Yoksel
Rank: Senior Member
1KBlueSeaLake said:

It was because of Microsoft treating contractors like employees, without some of the benefits, and some contractors decided to ask for the benefit.
In 2000, Microsoft had to hand over nearly $100 million in taxes, missed payments, and penalties.

One answer to it now, is Microsoft would end your contract each year for 3 months. Lots of other big companies instituted an 18 month rule, and let you go.

Now the the IRS is going to audit 6,000 companies for contractor cheating, expect to see more arbitrary end of contracts popping up.
Hey, maybe the IRS will reward you for informing on the company?


It's as stupid as the McDonald's hot coffee case. You're getting hired as a consultant and your contract typically says you have no benefits, just hourly rate so I see no ground to ask for them. Luckily for everyone, it's quite easy to bypass - just hire consultants via a third-party company such as a recruiter. I see most companies in my field doing that, including the one I'm working for, so I don't think they're breaking any IRS guidelines.


Date Posted: Mar/31/2010 3:40 PM
Posted By: Yoksel
Rank: Senior Member
1Kgeo123 said:

If you wanted to contribute more, a solo 401(k) could always be set up.


Not only it can be set up but it also allows for considerably higher contribution then employer-based 401k.


Date Posted: Mar/31/2010 4:17 PM
Posted By: AnimEva
Rank: Senior Member
1KtripleB said:

dealdistributor said:

Hello,

Can anyone help me in coming up with a $ figure if I want to make a switch to 1099 from my current W2 pay with benefits like 401K, 2 weeks vacation, insurance etc?

Current salary say: $110,000K W2. How much should this translate to $s/hour if changing to 1099. I will be travelling (3 hrs drive from home) every weekend back home from work and will stay at hotels during the week.




What job pays $110k per year to an employee who can't do basic math or spell "traveling"?




The President of the United States?  Message edited by: AnimEva on 2010-03-31 16:18:31 CDT


Date Posted: Mar/31/2010 4:18 PM
Posted By: manuvns
Rank: Senior Member
2K
here is a simple blog post about how one can go on deciding the hourly consulting rates
Consulting fee rates

for a rough estimate i would just double it

110k/2000 hours / year = $55/hr

so you should ask 110$/hour  Message edited by: manuvns on 2010-03-31 16:22:18 CDT


Date Posted: Mar/31/2010 4:31 PM
Posted By: Yoksel
Rank: Senior Member
1Kmanuvns said:

for a rough estimate i would just double it

110k/2000 hours / year = $55/hr

so you should ask 110$/hour


good luck finding a gig!


Date Posted: Mar/31/2010 5:15 PM
Posted By: BayAreaGuy
Rank: Member
$110,000K = $110,000,000


Date Posted: Mar/31/2010 6:11 PM
Posted By: karanpp
Rank: Member
Wow!...?


Date Posted: Mar/31/2010 7:15 PM
Posted By: btuttle
Rank: Senior Membermanuvns said:

here is a simple blog post about how one can go on deciding the hourly consulting rates
Consulting fee rates

for a rough estimate i would just double it

110k/2000 hours / year = $55/hr

so you should ask 110$/hour

You are kidding right??? Never mind "good luck", try "not a snowballs chance in hell". That website is a joke. Yes, established companies, well known in their fields can (and do) bill out consultants at 250% of those consultants salarys. Just exactly how many contracts have you performed at 200%-300% of your W2 salary. Which right now is supressing rates.

Individual contractors generally get 125%-150% (usually twoward the lower end) of an equivelant W2 salary. Yes, I have seen individuals well known in their field (articles, books, lecturers at inductry conferences, etc...) get 150%-200%. However, that is an enormous exception, not the rule. I have been contracting on and off for over twenty years. What I have said above is what I have recevied, what friends and others have received, and what companie's I have worked for have paid. You also have to factor in what current market conditions are.

As others have said this is like any other value proposition. There is a value to you and a value to the employer. Like any other negotiation the trick is to ask more than the buyer is willing to pay to establish value, but not so much the buyer is offended. For example the employer is thinking $65/hr, which happens to be your W2/contractor break even point. You ask for $75/hr and both settle on $70/hr. Even if the employer is firm at $65/hr, you have tried but not offended him. However, if you ask for $85/hr, that could be considered unreaalistic and if you ask for $55/hr, maybe that is what you will get paid.


Date Posted: Mar/31/2010 10:10 PM
Posted By: dealdistributor
Rank: Senior Member
Thank you all for valuable feedback. Appreciate it very much. DD


Date Posted: Mar/31/2010 11:05 PM
Posted By: tolamapS
Rank: Senior Member
3K
I would ask for $160K (roughly 50% premium).

You might come out ahead with a lower amount, but in general, 1099 income is risky, does not include employer contribution to social security, fica, and would exclude you from benefits given to statutory employees.

Plus there will be billing / admin overhead that might get pushed to you, delay in payment, etc.


Date Posted: Mar/31/2010 11:09 PM
Posted By: tolamapS
Rank: Senior Member
3K
For reference, the major consulting firms try to bill 6x the salary rate, or 4x the total per-employee compensation.

E.g., salary is $100K, then billable $$ should be $600K. E.g., at 40 hrs per week, 46 weeks per year (4 weeks of vacation, a couple of weeks of admin overhead), you get $325 / HR.

Only a large, established company can do this. E.g., the McKinseys and the Deloittes.

If you are going solo, you are far less valuable, because you might quit midway, they can't sue you for liabilities and non-performance, they cant get the brand name, etc.


Date Posted: Mar/31/2010 11:14 PM
Posted By: tolamapS
Rank: Senior Member
3K
There is also the issue of exclusive suppliers, vendors.

E.g., imagine the company is a large corporation, e.g., Fortune 100 or 500.

This company might have only 3 or 4 first-tier vendors for all contracting services.

This would mean that as a sole proprietor and contractor you might have to go through one of those.

This would cost at least $10-$20 / Hr. So while you might want to keep $75 / Hr, the corporation would have to pay $85-$100 / Hr so that middle-man's $10-$20 can be covered.

Now, imagine if the first tier supplier considers you too small, and does not want to work with you. So you have to go through a second tier supplier too. $10-$20 / Hr to each tier supplier, and your hourly cost to the company is close to $125 / Hr.

You only get to keep $75-80 / Hr.

But here is the good thing for the corporation. If your services are not needed, or they need to tighten the belt, you will be one of the first to go without much severance or other termination benefits.


Date Posted: Mar/31/2010 11:26 PM
Posted By: manuvns
Rank: Senior Member
2Kbtuttle said:

manuvns said:

here is a simple blog post about how one can go on deciding the hourly consulting rates
Consulting fee rates

for a rough estimate i would just double it

110k/2000 hours / year = $55/hr

so you should ask 110$/hour

You are kidding right??? Never mind "good luck", try "not a snowballs chance in hell". That website is a joke. Yes, established companies, well known in their fields can (and do) bill out consultants at 250% of those consultants salarys. Just exactly how many contracts have you performed at 200%-300% of your W2 salary. Which right now is supressing rates.

Individual contractors generally get 125%-150% (usually twoward the lower end) of an equivelant W2 salary. Yes, I have seen individuals well known in their field (articles, books, lecturers at inductry conferences, etc...) get 150%-200%. However, that is an enormous exception, not the rule. I have been contracting on and off for over twenty years. What I have said above is what I have recevied, what friends and others have received, and what companie's I have worked for have paid. You also have to factor in what current market conditions are.

As others have said this is like any other value proposition. There is a value to you and a value to the employer. Like any other negotiation the trick is to ask more than the buyer is willing to pay to establish value, but not so much the buyer is offended. For example the employer is thinking $65/hr, which happens to be your W2/contractor break even point. You ask for $75/hr and both settle on $70/hr. Even if the employer is firm at $65/hr, you have tried but not offended him. However, if you ask for $85/hr, that could be considered unreaalistic and if you ask for $55/hr, maybe that is what you will get paid.



$110 is the middle man/vendor rate . the consultant will only get $80-90 (or whatever he can negotiate ) .

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