RE: Asking The Billing Rate?

Subject: RE: Asking The Billing Rate?
From: Sharon Burton <sharon -at- anthrobytes -dot- com>
To: "TECHWR-L" <techwr-l -at- lists -dot- techwr-l -dot- com>
Date: Wed, 5 Oct 2005 12:14:25 -0700

Tony, I know you love books but I've been a contractor for the last 10 years,
although I took a salaried job last March. Here's some info for you on what
it's really like to contract.

Many people use agents to find work simply because there are a lot of
that won't hire you as a contractor without an agency involved. It
protects the
company from contractor-as-employee lawsuits, such as the one that hit
about 10 years ago. It also protects the company from other things,
such as odd
workman's comp claims.

Agencies bill you out at about 40% more than they pay you, on average.
They pay
your SSI (otherwise you pay the full 15% of your gross) and taxes,
leaving them
about 15% of that hourly bill rate. That 15% pays the agents salaries, lights,
phones, etc.

Some people choose to be independant (1099). That limits and expands the
companies they can deal with. Some companies are not able to deal with
unincorporated entities at all - I lost projects because I never incorporated.
And there are many good reasons not to incorporate. Other small companies may
be fine with your 1099 status. It varies from company to company.

All that said, in early 2002, rates fell apart. In So Cal, most contract jobs
were advertised at ~$25 an hour or less (we are usually the high end of the
scale and had previously been at about $50 an hour). You can make more waiting
tables. And there was almost nothing available and many of us were
overqualified and unemployable for most of these gigs. The market is back but
it's not that strong on pay yet in the contract work range.

What you choose to go with has a lot to do with your ability to manage your
books and pay your quarterlies in time and in full. Your ability to manage and
cope with risk. How well you network and stay plugged into your network.

After you pay the taxes out of your pocket, $45 an hour is no better
than $30 an
hour, really. Remember, you only pay 7.5% of your SSI as a W-2. You pay
15% as a
1099. Plus all the other taxes and, no, you don't get to write off that much.
The government says it loves small businesses but it really doesn't.

The trick is to always be working and then being scared when you are between
gigs because you don't know where the next is coming from. It's not a
its a scramble for the next contract. You don't get to enjoy the time off.


Sharon Burton
CEO, Anthrobytes Consulting

Quoting Tony Markos <ajmarkos -at- yahoo -dot- com>:

Can a TW contractor win? $30 per hour on a W2
contract equals $30 K per yer as a permanent employee
with benefits. Many untrained customer service reps
make more than that here in Cleveland - and you are
saying (I don't doubt you) that they want experienced

And subtract for any downtime between assignments and
that 30 K per year rapidly drops.

To quote the on-line Contractor's Handbook: "...if [a]
contractor employee were to use an agency to locate
their next assignment, they would most assuredly earn
significantly less... in some cases less than half as
much as a permanent employee doing the same job!"

AJ Markos


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RE: Asking The Billing Rate?: From: Tony Markos

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