Re: Contract salary calculation question

Subject: Re: Contract salary calculation question
From: Elna Tymes <etymes -at- LTS -dot- COM>
Date: Thu, 30 Apr 1998 12:32:13 -0700

L. H. Garlinghouse wrote some very true comments about the economics of
being a freelancer. I have some minor quibbles with his math -
medical/dental/vision insurance for me runs my company about $250/mo.,
and my premium is double what someone in his/her 20's would pay because
of my age. And at $20,000/year, the person is earning $384.62/week, so
taking off 10 workdays of holidays and another 10 working days for
vacation, and even allowing another 10 working days for sick days, you
have an annual cost to the company of $1153.85, which divided into
monthly allotments is only $96.15. So adding that figure to the medical
premium ($250), the monthly 'burden' is only $346.15, not the $600
figure used in his example. There are other things the company pays -
employer FICA, workmen's comp. insurance, etc. - but they don't add up
to another $250/month.
He then talked about factoring in promotional time. Granted, you can
either market or do what you're marketing, but not both at the same
time. But if someone is spending an hour promoting his/her services for
every billable hour, something is grievously wrong with the pitch, the
target audience, or the economy. Given the right mix of services, a
reasonably healthy economy, and the right territory, a truly competent
salesperson can handle the services of 50-100 technical communications
pros. When you're a smaller shop, you need to spend a larger ratio of
time marketing as opposed to doing, but still it shouldn't anywhere
*near* approach 1:1.
> Where the rub is, if you
> are really going to run your freelancing operation as a business
> rather than a lark, you are probably going to be overpriced as far as
> the market is concerned. Not fair, not just, just real.

Au contraire. One of the things a good contractor brings to the table is
the discipline of being cost-effective. When a project manager is
dealing with a roomful of employees discussing how to handle some
project, there is the luxury of taking some time to thoroughly analyze
the options. In fact, many times this analysis period fills the gaps
between rush projects. If, however, the room has contractors, the
project manager is more keenly aware of the clock ticking - the
contractors are being paid by the hour, regardless of decisions being
made or delayed. If you want to increase cost-effectiveness, you need
to make decisions AND STICK WITH THEM. And even if you do have to
change plans, as frequently happens, you as project leader are still
motivated to make the most cost-effective use of these people.

Further, knowing that they're being paid by the hour, contractors are
less likely to take time off for marginal illnesses like a cold or upset
stomach, and more likely to schedule things like doctor visits when they
won't interfere with the schedule.

And because contractors live by the resume, successful ones tend to be
the ones who have been senior writers, learned a lot, and are more
familiar with what to do when problems occur. And those people ARE
worth more in the marketplace than junior-to-intermediate writers who
need a lot of guidance.

> 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.

You can work a 40 hour week as a contractor, if that's what you want.
You can *certainly* take a vacation - several, in fact, if that's what
you want. You may have to trade off several 60+ hour weeks for your
vacation, but how you arrange that is up to how you negotiate things
with your current contracts.

And as for working for the biggest jerk around, no. I have met dozens
of bosses who were far bigger jerks than me. (Granted, I've met far
more who were nice, too.) I really *like* working for a company I run -
its style is comfortable, casual, supportive, intellectally stimulating,
and full of possibilities. I'm not limited by someone else's perception
of my job description, I'm usually accorded more respect than the
in-house writers, and I can decide what I'm going to do and not going to
do. Unlike cubicle-land, I rarely have to deal with the consequences of
a boss blaming me for something that he/she did wrong.

I'm not going to change Mr. Garlinghouse's mind - contractor vs. captive
is what amounts to a religious debate. However, I felt it important
that the newbies on this list get some perspective from the other side.

Elna Tymes
Los Trancos Systems

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