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Market Price

By dreelings ·
The question I have is, if I wanted to become an independant consultant where can I find the market price for a job? How can I find out what to set my prices. Is there any websites that can help out someone wanting to become independant? Also looking to see if there is anyone that has some type of checklist the uses to bid out a job?

Thanks ahead.

Gregory Dreelin

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Market Price

by Clint Hartner In reply to Market Price

There are a couple places to look. First, go to the library and ask for the Department of Labor's studies - these are the most comprehensive I've seen. (I believe the Gartner Group also has the same type of studies available on the web) This will give you an idea of employee's salaries.

Now to get what you need to charge as an independent, start by figuring additional costs you'll need to absorb. This includes: the company's share of income tax (companies pay a share of the income tax that many people don't know about unless they've run a company), Life Ins, Health Ins, Disability Ins, retirement (401K)contributions, company car, computers, health club memberships, professional certifications, training, travel expenses (if not reimbursed), accounting costs (even if you run your own books and billing, an accountant is a good asset), marketing costs (pays to have someone else looking for work for you), etc. Add all these on top of the annual salary to get the "fully burdened salary"

Next figure out how many hours you'll be working per year. At 40 hours/week there is a possibility of 2080 hours. Then you have to subtract holidays, vacation days, and sick days - the nunmber you allow for each of these is up to you, but don't go overboard.

One of the things folks don't think about is how much time they'll actually be on the job. Figure out IF you'll be able to work on long term contracts. If not, better figure in some bench time - how much depends on how much risk you like to swallow. I generally figure at least 4 months idle time/year (some argue for 6 months)

Subtract all the lost hours from the possible hours, and you have "target hours/year"

Finally, do the math:
Hourly Rate = Fully Burdened Salary/Target Hours/Year

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Market Price

by Clint Hartner In reply to Market Price

YEOWCH!! Amazing what you have to charge to accept the risks of working for yourself, isn't it?

Sorry for the multiple responses, the browser kept dying in the middle of submission, and I wasn't sure it was getting anywhere.

Clint

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Market Price

by dreelings In reply to Market Price

The question was auto-closed by TechRepublic

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Market Price

by Clint Hartner In reply to Market Price

There are a couple places to look. First, go to the library and ask for the Department of Labor's studies - these are the most comprehensive I've seen. (I believe the Gartner Group also has the same type of studies available on the web) This will give you an idea of employee's salaries.

Now to get what you need to charge as an independent, start by figuring additional costs you'll need to absorb. This includes: the company's share of income tax (companies pay a share of the income tax that many people don't know about unless they've run a company), Life Ins, Health Ins, Disability Ins, retirement (401K)contributions, company car, computers, health club memberships, professional certifications, training, travel expenses (if not reimbursed), accounting costs (even if you run your own books and billing, an accountant is a good asset), marketing costs (pays to have someone else looking for work for you), etc. Add all these on top of the annual salary to get the "fully burdened salary"

Next figure out how many hours you'll be working per year. At 40 hours/week there is a possibility of 2080 hours. Then you have to subtract holidays, vacation days, and sick days - the nunmber you allow for each of these is up to you, but don't go overboard.

One of the things folks don't think about is how much time they'll actually be on the job. Figure out IF you'll be able to work on long term contracts. If not, better figure in some bench time - how much depends on how much risk you like to swallow. I generally figure at least 4 months idle time/year (some argue for 6 months)

Subtract all the lost hours from the possible hours, and you have "target hours/year"

Finally, do the math:
Hourly Rate = Fully Burdened Salary/Target Hours/Year

Collapse -

Market Price

by dreelings In reply to Market Price

The question was auto-closed by TechRepublic

Collapse -

Market Price

by Clint Hartner In reply to Market Price

There are a couple places to look. First, go to the library and ask for the Department of Labor's studies - these are the most comprehensive I've seen. (I believe the Gartner Group also has the same type of studies available on the web) This will give you an idea of employee's salaries.

Now to get what you need to charge as an independent, start by figuring additional costs you'll need to absorb. This includes: the company's share of income tax (companies pay a share of the income tax that many people don't know about unless they've run a company), Life Ins, Health Ins, Disability Ins, retirement (401K)contributions, company car, computers, health club memberships, professional certifications, training, travel expenses (if not reimbursed), accounting costs (even if you run your own books and billing, an accountant is a good asset), marketing costs (pays to have someone else looking for work for you), etc. Add all these on top of the annual salary to get the "fully burdened salary"

Next figure out how many hours you'll be working per year. At 40 hours/week there is a possibility of 2080 hours. Then you have to subtract holidays, vacation days, and sick days - the nunmber you allow for each of these is up to you, but don't go overboard.

One of the things folks don't think about is how much time they'll actually be on the job. Figure out IF you'll be able to work on long term contracts. If not, better figure in some bench time - how much depends on how much risk you like to swallow. I generally figure at least 4 months idle time/year (some argue for 6 months)

Subtract all the lost hours from the possible hours, and you have "target hours/year"

Finally, do the math:
Hourly Rate = Fully Burdened Salary/Target Hours/Year

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Market Price

by dreelings In reply to Market Price

The question was auto-closed by TechRepublic

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Market Price

by PENGUINSRULE In reply to Market Price

I disagree with the above answers - market price is what you personally are able to negotiate. Even if the going price for the skill you have is $X, the final amount is based on your ability to negotiate. Other factors also come into play - like location, etc.

Pick up some good negotiating books first.
Janet Ruhl has some excellent books for contractors, check them out as well.

Rick

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Market Price

by dreelings In reply to Market Price

The question was auto-closed by TechRepublic

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Market Price

by PENGUINSRULE In reply to Market Price

Market price also has to do with whatever your prior rate was too. Let's say that the "going rate" (if there is such a thing) is $35/hr and you are making $10-15/hr. It's fairly unlikely that even if your skills match that you'll get that kind of a jump in rate. On the other hand if you are already making $45/hr then they'll need to offer at least $47-48/hr to get you if not a lot more.

Basically you start fairly low - do a great job get a good reference - do another job for 3 months/6 months/1 year, etc and then do a great job get a great referral and then you negotiate for an increase over what you were making for your next assignment. In a 5-10 year period you can increase your rate quite a lot gradually like this. You'll never get this kind of a rate increase on a permanent job. But then, you do have a stability factor here, and mobility. Most people don't like living out of a suitcase and living on the road. They want roots..

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