RE: W2 to 1099 Conversion Rule Of Thumb?

[eric -dot- dunn -at- ca -dot- transport -dot- bombardier -dot- com]

Lisa Wright wrote on 12/02/2004 01:09:43 PM:
> Also, most employers are interested in what you last made.
> The market is a factor but so is personal history, and 
> being able to present a fair rate with the 1099 impact 
> accounted for can only help matters.

The ONLY factor is the market. Will a service station sell you gasoline 
for 10 cents a gallon cheaper than market rate because that was what the 
price was yesterday? Will you pay 10 cents a gallon more than market rate 
today because that was what the station sold it for yesterday?

Do you get to ask the car salesman how much they sold their last car for 
so you can make the same offer or lower? Will you be able to get your car 
at a loss to the salesman because he sold the last car at a loss to a 
family friend or meet a quota?

Of course not.

Why let the employer (or in this case the company buying a service) walk 
all over you by giving them the power of choosing lowest price between 
perceived market value (if you were paid more last time) or your previous 
rate (if you were paid below market or were simply wiling to work cheap 
for other reasons)?

How much you made last time is as discriminatory, arbitrary, and as 
inapplicable to current salary negotiation as whether you are married, 
have dependants, a big mortgage, car payments, your colour, race, 
religion, or gender. The service being sold and the decision to buy it is 
based purely on price, speed of delivery, and quality.

Now, a current employer WILL use your current salary as their base of 
comparison if they're changing you to contractor status. After all, they 
know how much you've already settled for and are making the change to 
better THEIR bottom line and not yours. But for a new contract, the only 
comparison points that count are how much the competition will currently 
charge and/or how much it would cost the client to do the work inhouse (or 
if possible, the value for money comparison between those options).

If you new that the next lowest bidder was charging $250/hr would you 
settle for $75/hr because at the last gig you only made $50/hr? Or would 
you bid $200/hr knowing that you'd win the contract? IMO, anyone who 
doesn't say they'd go for more money is a liar or a fool. Unless the 
customer was some non-profit organisation that you would like to support, 
but even then wouldn't everyone be better off if you bid $200/hr, won the 
contract, and then donated the money that is surplus to your 
requirements/desires back?.

Eric L. Dunn
Senior Technical Writer

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