Re: Asking The Billing Rate?

[Jefro <jefro -at- jefro -dot- net>]

There is a difference between effective hourly rate for salaried 
employees vs. contractors.

In a salary situation, there are many expenses covered or handled by the 
company invisibly.  Just to name a few:

   - state disability insurance
   - 1/2 of social security
   - health insurance, dental, vision

These all must be handled by the contractor in a contract situation.  
Additionally, the tax situation is a bit different for contractors 
(1099) vs. employees (W2).  Also, contractors do not get paid time off 
(sick time, vacations, "administrative leave", sabbaticals).

In other words, $x/hr for a salaried employee is not the same as $x/hr 
for a contractor.  The conversion factor is neither constant nor simple, 
and any attempt at conversion is fraught with assumptions.  For this 
reason, most conversations of this nature end up in confusion over what 
seems like it should be a simple question:  How much should I be paid 
for my work?  Add to the mix contract agencies and corp-to-corp 
arrangements that require the contractor to incorporate or outsource 
"back-office" stuff, and it's no wonder we are confused.

Off the cuff, as I posted earlier, I have found I can estimate 
conversion very roughly at about 1.4x.  In other words, a $45/hr 
contract billing 35 hrs/week for 50 weeks per year is similar to a 
$65000 ($31.25/hr) salary, with both yielding around $39000 after taxes, 
based on a set of wild assumptions.  Make of that what you will.  :)