From Internal Employee to Consultant

Have a rate schedule that encourages them to contract long term.

As a contractor, you are much easier to get rid of them an employee. You need to protect yourself.

With a long term contract and rates based on the length of contract, you caneither charge a termination fee, the higher rate based on the shorter term, not allow it to be dissolved in the contract, and there are other options as well.

There are no standards, its what the market will bear. Why not start by adding your current pay, cost of fringe benefits and divide by hours. Then adjust for additional expenses incurred and insecurity of being a subcontractor. The last two are nebulous factors but have a real value.

Or do you have them? At my place the ratio is an additional 14% on Part Time, or 34% full time, so I can take my salary and add 34% to know what they pay now. Consulting around this area goes from free to 8-9 bucks an hour to over 125 an hour, so it's based on skill, experience and how high you have to raise your fees to keep your workload down (or up...)

If I was in your situation, I would negotiate a retainer too. I would also suggest that most companies don't think paying you more when you move to their consultant is within reason, so backing it up with your true cost with benefits is helpful. If you know someone in hiring they probably know the % in your company off the top of their head.

Hope that helps :)

Over and above benefits (medical/dental insurance, disability insurance, 401k matching, holidays/leave, etc.) that go into a total compensation package (that you probably won't be eligible for as a concultant), don't forget that you will also be liable for all taxes (state and federal income tax, Social Security, unemployment, etc.). All of these things will need to go into an hourly rate that you quote your client / previous employer.

Talk with your HR and/or payroll departments. They should be able to give you a standard figure for benefits as a percentage of total compensation (for your current position), and then a fairly accurate idea of what your current total compensation is. They should also be able to give you an idea what types of taxes you will be liable for as well as what types of compensation are taxed or not taxed.

Hope this helps.