## Re: Contract salary calculation question

Subject: Re: Contract salary calculation question
From: "L. H. Garlinghouse" <garlinghou -at- WATERLOOINDUSTRIES -dot- COM>
Date: Thu, 30 Apr 1998 13:23:33 -0600

This certainly is not the first word on this thread nor the last.
I do offer some basics based on some limited experience.

In a past life I played the free-lance consultant game. I did some
research and one of the rules of thumb is charge double what the
hourly rate would be for an equivalent full-time employee.

So, if there are 2,000 billable hours/year (50 weeks times
40h=2,000h - remember the 2 weeks for holidays, etc need to be
absorbed) and the equivalent person is worth \$20,000/year, that works
out to \$10/h which means as a contractor you need to bill at least
\$20/h.

But the situation is actually worse. The \$20k/year wage slave also
has, lets say, \$600/mo bennies such as vacation and med. insurance.
So now the comaprison figure is now an additional \$7,200/year higher,
which now makes the billing rate around [\$27,200/2000]*2=
\$13.60*2 or \$27.20/h.

But this applies to BILLABLE hours. If you have to spend one hour of
promotion time to get one hour of billing time, you are either going
to have to work 80h weeks, or settle for equivalent annual income of
\$13,600.

Soooo, you have to arrive at some burden to add on to the base hourly
rate you use to figure what you bill at. Where the rub is, if you
rather than a lark, you are probably going to be overpriced as far as
the market is concerned. Not fair, not just, just real. Recall
the good story from last week or so about (not) competing with \$10/h
interns for a winery writing position.

You should bill for windshield time to places other than the base of
operations. You do not get to bill for down time not under the

The plus side to all of this, if you can get the thing going, is
that Uncle Sammy will subsidize lots of education and neat toys if
your idea of neat toys are the tools of trade you are freelancing
with e.g. computers, software, et cetera. Freelancing is also a good
way to fill in embarrassing voids in one's resume.

As a freelancer you can do anything you want, except work a 40h/week,
take a vacation and get sick. You also will be working for the
biggest "jerk" imaginable - yourself.

<< All opinions, statements, &c are my own>>
L.H. Garlinghouse, C.Q.E.
Pocahontas AR U.S.A.
(870) 892-4586 ext 7659
garlinghou -at- waterlooindustries -dot- com