RE: Asking The Billing Rate?

Subject: RE: Asking The Billing Rate?
From: "Nuckols, Kenneth M" <Kenneth -dot- Nuckols -at- mybrighthouse -dot- com>
To: "TECHWR-L" <techwr-l -at- lists -dot- techwr-l -dot- com>
Date: Thu, 6 Oct 2005 08:13:11 -0400

Maggie Secara said...

> I can only speak for myself, but says the median in my area
> is about $68K. But I don't think I know anyone who's making $68 an
> hour. The 25th percentile marker is at about
> $60K... and I'm not making $60 an hour, I can tell you. Nor is anyone
> offering a rate like that, as far as I can tell. However, the agency I
> work through at present is probably charging something like that (or
> more) for me. Maybe that's relevant, I don't know.
> Maggie
> > -----Original Message-----
> > From: Edwin Skau
> >
> > How close does come to the real McCoy?

What's important to remember is that is looking at FTE rates,
thus contractor rates are not going to skew appropriately. As has been
exhaustively discussed here recently, contract rates are "generally"
figured on a different algorithm than FTE rates.

Conventional wisdom:
Contract annual salary = h*1000

FTE annual salary ~ h*2000

(where h = hourly rate)

Thus, with an hourly rate of $30 / hr, the Contractor algorithm returns
$30,000 per annum, while the FTE algorithm returns $60,000 per annum.

So when responding to Edwin's question, be aware that contract positions
aren't what is tracking. They are tracking FTE salaries in a
given region, not contract rates.

What would be interesting and instructive to learn is if there is a
"companion" site similar to that tracks specifically contract
rates for a given metro, zip code, or region. Does anyone know of such
a tool?

As an aside, contract rates that are set up with contracting companies
would probably skew the results too high. Maggie mentioned
that the hourly rate charged by contracting companies for the services
of contract workers in her area is probably between $60 and $68 / hr.
Now, consider that the client company (ABC MegaSoftware, for example)
wants to have a year-long contract with the contract company (Dewey,
Cheetham & Howe Management, Ltd). If DCH is charging ABC a rate of $64 /
hr, that means ABC is _actually_ paying $128,000 per annum for the
services of that contractor. Of course the contractor is not making
nearly that amount, and it may not be the same individual contractor
doing that job the entire year, but if all the ABCs in a given area
report those contracts to as part of their survey, it would
artificially inflate the rate for that job title in that market.

In other words, to Edwin: responses from contractors are not relevant to
the question you asked--and I'm not sure if that's because you're asking to figure contract rates or some other reason; and to Maggie:
the data reported on is both apocryphal and irrelevant for
those of us working as contractors. The figures you see on
are based on what companies are paying FTEs. Take the figure
gives and divide by ~ 2000 instead of 1000 to see what the true FTE
hourly rate is. Based on the information in your post, FTEs in your area
with your job title should be making between $30 and $34 / hour.

Hope that helps and clarifies any confusion. I know the last few days of
this discussion have really helped me in understanding some of the
differences between calculating annual salaries for contracts and FTEs,
and I very much appreciate it.

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