Re: hello and rates question

["Eric J. Ray" <ejray -at- RAYCOMM -dot- COM>]

At 11:49 AM 11/14/98 -0500, Sue Landsman wrote:
  <snip>
>I'm intending to go back to the same company as a 1099 contractor. I'm
>wondering what I should charge as a rate. (I've checked the archive and
>other information, but I've seen conflicting figures and am also looking
>for regional rates). Do rates depend on "years of experience" or proven
>ability? If I can do the work as well as or better than someone with
>"ten years" of experience, and the client knows that, can I charge as
>much, or am I out of luck?

At the risk of being unhelpful and trite, I'd say that 1) it depends
and 2) know your audience.

In an attempt to salvage that answer, let me explain...

Rates depend on your value to the people signing the checks.
The better they know what you do, how well you do it, and
how you compare to others in the field, the better they'll
be able to assess your value (which could be a good thing
or not, depending). If, as in the case of one of our contract
gigs, your employer knows and really likes your work, has
unsuccessfully tried other alternatives and not liked those
results as well as having you do it, and comes to you to
pick up the project, you're in a really strong negotiating
position. On the other hand, if your employer doesn't
know anything about the alternatives, doesn't particularly
value the particular contribution, or cares more about
the bottom line (short term) than the bottom line
long term (=quality), you're probably stuck.

IMHO, it's only when your work is an unproven quantity or the
company is pretty rigidly structured that
issues like years of experience come into play for
setting rates.

>I'm also wondering how strongly I should insist on a high rate to my current
>employer. Should I be more willing to negotiate on the assumption that they're
>doing me a favor by accommodating me as a contractor, or should I just treat
>them like any new client?

From your employer's perspective, would they see it as doing you
a favor, or as you doing them a favor? If your skills relative to
your market are weak enough that clients take you on as
a favor to you, you're probably in trouble already. On the other
hand, if you have the control (=power, not =self-control)
to be able to walk away and pick up something equally as
good a mile down the road, you can get whatever you want.

A participant on the StudioB list (unfortunately, I can't locate
the name right now) refers to this as the BATNA--Best Alternative
To Negotiated Agreement. In brief, the better your other choices
are, the more power you have in the negotiations. This applies
to the other party as well, of course. Throw in the intangibles
of unknowns and "what does she know that I know that she
knows..." and you have the makings for a full course in negotiations.

If your employer/client knows that the current going rate
in your market for a competent tech writer is $40/hour,
and all they need is competent, you'll be pegged at about
that level. However, if, say, they've already tried to hire
other tech writers and found problems with getting the
quality and capability levels they need, and have to have
known and good quality for this particular project, you're
in at nearly any reasonable rate.

Another example--we were approached last year for a short
term contract gig that we didn't particularly want, didn't
really have time for, and could easily have gotten along
without. So, we bid the project at about 160% of our top
normal rate, which is pretty high to start with. We got the
project anyway, but at that rate, were happy to make time
for it. Our best alternative was really good, so we were in
a good position.

Right now, we're busy but not swamped, so would probably
quote pretty high for a short term project, but reasonable
for a long term gig (which is what we really want). Our BATNA
to a stable, long-term, contract gig isn't exceptional right
now, so we'll be more flexible than we otherwise would.

Other issues to consider--as a W2 (full-time) employee,
you cost your employer about 2x your salary. If you work
as a contractor for the nominal equivalent of your
salary, they're getting a real deal. Similarly, if their alternative
to contracting directly with you is to go to an agency for
a tech writer, you'll cost them roughly 30-50% less direct
than your neighbor would through an agency. Thus,
their BATNA isn't great--haggling with you over the
difference between $40 and $50 and losing you could
cost them $70/hour in the end, after they find
a (n unknown and untried) contractor through an agency.

On a final pragmatic note, check the archives carefully
for some formulas for setting rates based on W2 salary.
That is, if you're working for $60K on W2, you'll nominally
make the same rate at $30/hour, but you'll really need to
be making closer to $50/hour as a 1099 contractor to cover
all expenses, etc.

Hope this helps,
Eric

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Eric J. Ray    RayComm, Inc.
http://www.raycomm.com/      ejray -at- raycomm -dot- com

*Award-winning author of several popular computer books
*Syndicated columnist: Rays on Computing
*Technology Department Editor, _Technical Communication_

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