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Finding rates for contracting work

By onbliss ·
I have been an employee in a consulting firm for some years now. I would like to explore corp-corp kind of contracting work. As an employee I was not privy to what my consulting firm was charging its client, and I did not care either.

With a change in my plans, now I would like to find out the current contractor rates in my city for my skill sets (.Net). can not walk to a co-worker or a person who I know does contracting work to ask "Hey how much do you charge?".

Are there any websites that track the ongoing rates for a .net developer? Googling led me to a UK website. And Salary.com did not seem to give me what I wanted.

Any ideas how to glean this info.? And since our interaction at TR is anonymous, probably I can ask you "Hey how much do you charge for C# programming (or .net work)?" :-)

Thanks a bunch.

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my rates

by john.a.wills In reply to Finding rates for contrac ...

When I was getting paid $40/hr plus my expenses my consulting firm was charging the client $150/hr plus my expenses.

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Around those numbers

by onbliss In reply to my rates

Looks like independent contractors have the potential to earn $80-$100/hr.

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Wow

by Meesha In reply to Finding rates for contrac ...

Having been on both sides of the fence, I feel qualified to say that the response you received from john.a.wills whose agency is charging $150 but only paying him $40 is gouging for sure - almost 400%? Incredible. How is it that his value is so low but the agency can justify to anyone that the agency is worth an additional $110.00? Again, incredible. Why haven't they shared the wealth with John? If I knew this about the agency I worked with or hired, I would be making demands or quitting.

As an employer, I rarely pay over $70 for a developer. The costs escalate with the type of services required, i.e. architect approx. $125, DB or DBA approx.$60 to $100, Network Analyst depending on level $40 to $80. Often the requirements are mixed which depends on the consultant/contractor's value added abilities and this would be in the realm of $100. What I've outlined is given either directly to the consultant/contractor or to the agency.

If you plan to work contract/consulting in a virtual manner, the prices again may make a difference. If your plans are to stick to your local area, then your best bet is to research what the market will bear. An agency, if it's a good one will consider the value of your services and the value of the objective and only tack on the cost of doing business; for example, 10% for the overheads such as office space, phone, and depending on your jurisdiction - vacation pay, etc. and approx. an additional 10% to 20% for their own margin. So if you're the consultant and your services to the agency is valued at $50.00 then the total to a client would be around $60 to $70 and don't forget to tack any incidental expenses if they are incurred such as travel. Sometimes the agency may even go as high as 50% total markup. Being greedy can only work against your best interests - continuous work hence good compensation.

I recently had one consultant (database developer) acquired directly from a very large database vendor organization; they charged me $135.00 per hour plus travel. Although I had to use this consultant for 2 weeks, I quickly replaced him with another at $60 per hour no expenses and who hand a better hand on understanding the development environment.

I guess at the end of the day, if you're good at what you do, you can ask whatever you want - but will the market go for it? Sometimes flexibility in costing will keep you working far longer and with better results than asking for the whole nut. Price yourself according to the requirement. For example, if it's a short term contract (< 3 months) you may want to charge more than say a long term contract (> 6 months). If it's a simple coding project - less or if it's developing an enterprise architecture framework - lot's more. This is business, your business. And if you want to stay in it and earn a good living then pay attention to all the variables mentioned here. Good Luck!

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Informative.

by onbliss In reply to Wow

I liked this comment of yours particularly:

Being greedy can only work against your best interests - continuous work hence good compensation.

As I had implied in my original post, how does one determine what the market bears for one particular kind of development? Do .net, java, abap, etl, BI reporting... programmers all draw the same rate? I don't think so.

Your percentages on overheads and their margins fits in perfectly with what I have been hearing about the 80-20 or 70-30 rule. The latter number being the percentage the agency takes for providing the job and overheads.

On a whole a great post that was informative and wise. Thanks

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Try government websites

by Poodoo999 In reply to Informative.

You might want to try the Dept. of Labor's Bureau of Labor Statistics website. They publish an occupational outlook handbook at http://www.bls.gov/oco/home.htm that might give you an idea of what the national market pays on average, and then you would have to adjust for your area (higher in big cities, lower elsewhere). I'm not sure if it will give you what you're looking for, but it might be a place to start. Maybe your local chamber of commerce, economic development office or employment security commission has access to some info that would help. Government agencies like to track that kind of thing, partly because businesses that are looking at relocating want to know what they would have to pay their employees.

I don't see why you couldn't ask other consultants what they make, as long as it's done tactfully. I wouldn't just blurt out "How much do you make?" - I would lead off by saying that I'm thinking of going into business for myself (or go to work for a consulting firm), do you have any advice you can give me, etc., and lead up to the "If you don't mind me asking, what could I expect to charge per hour?" That way, you're not asking them directly what THEY make, but they might tell you anyway.

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I have lot to learn.... :-)

by onbliss In reply to Try government websites

Being tactful, would be on my list.

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You're Welcome

by Meesha In reply to Informative.

Glad I could shed some light on the subject. As for the market delineation for each discipline, there's no right or wrong as it's market forces at work. For example, as an employer, I know that a DOT Net developer with C# will demand a bit more than a VB programmer; something like $65 to $70 compared to $50 to $65. (this is total, agency notwithstanding). Only when there is scarcity can the prices really fluctuate.

However, in the Java framework world, the same level of developer would be in the $65 to $90. The level of expertise is often greater. That's not to say that DOT Net/C# aren't good tools just more prevalent and developers tend to work on shorter term contracts and the objectives are often not enterprise in nature.

In the Java world more projects are of enterprise nature and use JNDI, JCA, open source tools such as Eclipse, Hibernate, Spring, Struts, iBatis, Ant, etc. while defining and using design patterns, UML/RUP, etc. This all leads to a more learned level of developer who technically is a software engineer not to mention very good at security in development as well.

When agencies contact me, which they do all to often, with a list of available consultants, the trend has almost always been on the lower side of the dollar scale for DOT Net developers as opposed to Java developers, et al. If a developer's expertise is in the former than very likely will have more contracts of shorter duration for less cost. The later will tend to be projects of longer nature with higher costs but the availability may be less.

By the way, these statements are not meant to evoke debate on one architecture over another but to help show some clear differences in contractor/consultant expertise that's employed by perspective employers.

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No debate....

by onbliss In reply to You're Welcome

...your comments have been very helpful, and provides an insight on some aspects of hiring contractors. Thanks.

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Sorry but .....

by PMPsicle In reply to Wow

Sorry to disagree with you ... especially in your own market.... Now agreed I don't do programming but ...

Standard rates in T.O. for a headhunter/contracting company is $130-150/hr with the sub getting between $40 & $70 of that depending on how bad they want you. (More if they realize you know the calculations).

20 years ago I would have said the markups you suggest are about right but about 15 years ago the market changed here ... the big boys want more of the rate and are taking it.

The key bit in your discussion is that you need to know the market. And recognize that there may be multiple markets at work. There are "sweet spots" or markets where you can maximize your income (as an independent) as well as markets where the entrance cost is beyond your means.

The rates you are quoting are for direct to subs (meaning you are dealing with people who are used to working as subs) and with 2nd stringers (small shops who don't know their costs/market).

In short they represent your hiring practices rather than the market. (Gee -- a manager who does their job despite HR -- how refreshing).

Interesting that there are some standard calculations that every other service industry uses but IT seems blissfully unaware of.

Looking at it from a cost standpoint, you can calculate your billable cost easily. Take the yearly salary you feel is fair for the job and divide by 1000. So $40K/year gives $40/hr. To calculate what you would expect to be billing for that (if you were reselling) take the yearly salary ($40K) and divide by 2000 then multiply by 3
($60) and then add salesman's commission (10-20%). The result is $72/hr for a junior earning $40K/year. Below that it probably isn't worth your while to be a contractor.

Note that $40/hr represents the cost per billable hour including employment taxes and basic benefits (i.e. Corp-to-Corp sub-contract in US parlance). NOT what you are paying an employee per hour (equivalent is $20/hr wage).

However, in this market you're not going to get a fully qualified programmer for $40K.

There are several ways to check the market. www.realrates.com is a good way to start. But the best method is to check everyone you know in the industry. Be part of the local associations .... ask managers what they pay and what they are willing to pay. If worse comes to worse -- call around. Make up a (typical) project then call around. Say that you are just at the budgeting stage, you know that you are going to use contractors but aren't in a position of making it official. Ask them what they charge for that type of work -- just for budgeting purposes.

Best of luck.

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Fair?

by onbliss In reply to Sorry but .....

Thanks for your thoughts.

Take the yearly salary you feel is fair for the job
Given the fact that I would like to earn more, how do I decide what is fair? Fair = What market will bear, right?

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