Quote: Original post by fastlane69
...If I have to pay a freelancer almost the same as an employee, then hell, I might as well just hire someone!!! It's only when a freelancer is distinct and offer financial advantages from an employee that they are viable options IMO. Under your viewpoint, that advantage is lost.

This is only true if your only basis for deciding is financial. As has been pointed out there are many other reasons to hire a contractor.

Quote: ...But this is different than holding on to the belief that I as a Outsourcer am somehow indirectly responsable for what a Freelancer doesn't get by not being an Employee.

Of course you aren't "responsible" but you are paying. Companies aren't responsible for providing college education to their employees kids... but they do. The salary they pay goes to pay for it.

You aren't "responsible" for a contractors health insurance but you pay for it - that is why they are charging you money, to be able to pay for whatever they need to do their job and feed their family. It is the cost of doing business.

You might expect a plumber to have all the tools they need when they show up for a job but you are still paying for those tools (or their future replacements). The money from some client somewhere paid for what they have now and your money will pay for something they use on their next job.

Quote: This is only true if your only basis for deciding is financial

Which unless I'm mistaken is the scope of this discussion. :)

We aren't discussing which is better, but rather the finances behind an employee vs. freelancer...at least that is all I was addressing.

Quote: Of course you aren't "responsible" but you are paying. Companies aren't responsible for providing college education to their employees kids... but they do. The salary they pay goes to pay for it.

Right. Their salary. The company NEVER puts an extra percentage to account for children or their college needs (no company I've heard of anyways)...this has to come out of the salary.
But you (you in the general, not specific) suggest that this is exactly what I do for my freelancers, that I include an extra percentage to what a company would pay it's employees so that their kids dental work is taken care of. To me, this should come from the freelancers salary and not my pocket

Quote: You aren't "responsible" for a contractors health insurance but you pay for it - that is why they are charging you money, to be able to pay for whatever they need to do their job and feed their family. It is the cost of doing business.

Exactly. It's the cost of doing business. Just like my position that a freelancer not receive "salary equivalent + 20%" is the cost of doing freelance business. If you can't pull enough jobs to support yourself as a freelancer without depending on each job to carry your medical, equipment etc, then you have no business being one.

After all, as an employee, most companies mandate that you can only work 40 hours...no more and no overtime. A freelancer is under no such restrictions. If they want health care, take another job. If they want pension fund, take another job. If they want a to take a vacation next month and not work, take another job. A freelancer can take 160 hours worth of jobs a week and get paid for it with no problem...an employee can't.

Hence, the freelancer makes his money by, well, Freelancing...by taking as MANY jobs as he needs...

...while the employee will take the SINGLE job that has the best pay and benefits.

I can't shake the feeling that you are treating freelancers like "remote employees" with each paycheck being the equivalent of what they would receive if they were employees (salary +20% for benefits).


Ultimately, the truth is what we have both said and that is that as a Freelancer, you either accept or deny the price and that is the beauty and curse of freelancing. I'm on the Indy Outsourcing side and I pay salary + 0% and it always works, so something must be right with this approach. You are on the Industry Employee side, get paid salary+benefits, and feel that if you were to freelance, you should make an equivalent amount. Is that an accurate summary?

It would be nice for some REAL freelancers to pop in and give us their perspective.

[Edited by - fastlane69 on June 15, 2005 9:31:25 PM]

I agree, contractors get more up front cash than an in house developer. I work for a company that has both. I work in house and get about 60k. I know the contractors make a significant amount more up front. The company also publishes a benefits information and breaks it down to actual cost of PTO, medical, bonuses, options, stock plan, etc etc they say I make/cost 90k in a year. In the end, the contractor is actually cheaper.

IMHO I think there is a fine balance for a large company. You need a certain number of in house employees that are loyal to the company and continue on into management positions. Contractors are a great resource and in the end can wind up being a cost savings. Though it's possible to suffer from a lack of quality work. When you are loyal to a company and you plan on supporting software development for the long haul, you the tendancy to do the right thing as apposed to the fastest/easiest. There is also an incentive to work harder so that you will continue to be promoted. For a contractor, you pretty much are going to get paid what you are getting paid until your time is up. Then you move onto a new job and hope that with your added experience you will command a higher rate.

Bob, how does your company calculate what to pay contractors?

Quote: Original post by BobV
I agree, contractors get more up front cash than an in house developer. I work for a company that has both.

Do you happen to know how your company determines what to pay it's contractors? ..how they calculate what they consider a fair price?

I have the sneaking suspicion that contractors get paid more in your companies because the contractor smells money and knows they can get more out of you than from a small house...nothing to do with covering expenses normally covered by employee benefits, just savvy freelancing business sense. :)

Quote:
IMHO I think there is a fine balance for a large company.

But for a small company, it makes more sense to use contractors as much as possible since it won't have the money nor people-power to manage employees and contractors the way a big company could.

Just so everyone can understand where I'm coming from, I own my small company, am it's only "employee", and outsource absolutely everything else. I just want to state this clearly so that future readers can see that my perspective is a small house outsourcing perspective while the others are a big house employee perspective.

Quote: Original post by fastlane69
It would be nice for some REAL freelancers to pop in and give us their perspective.

I am a real freelancer and have been for 8 years. I know many other real freelancers too. One of them charged £15,000 per month ($25k) to code games and got it (until he decided to set up his own company).

On the flip side I know of one guy who wrote a top arcade conversion for £12,000 all in and lived on cup-a-soup for four months. Likewise I know employees who got £70,000 a year while other at the same company got £30,000.

The only difference between contractors and employees is that employees have no limit on the term of their contract and they get certain legal required benefits. Contractors have a fixed term (be it time or just completion of a job) and don't get the same benefits (but they do have other benefits that may offset this.

Everything else is negotiable. You can get employees who will work cheaper just as you can get contractors who will. Employees will negotiate better benefits if they are smart and contractors will negotiate a bigger fee (some of which may or may not be used to buy those same benefits) because they know that they are worth the same money as an employee.

You get contractors to work for salary+0 because
a) They aren't as good at negotiating as you are,
b) They aren't good enough to work in the commercial sector and as such aren't worth more,
c) They are trying to break into the industry and as such are willing to give up some money to get something that is of greater benefit to them (experience on a published project),
d) They don't know the value of their work,
e) Due to location or circumstances they have a lower cost of living than others.

There isn't a right or wrong, a better or worse. It is all down to negotiation.

Quote:
It is all down to negotiation.

I like that; very concise summary for what it REALLY comes down to

As a real freelancer then, how you do calculate your rates? Do you base it on industry salaries or some other method?

Quote:
You get contractors to work for salary+0 because

a) Unlikely. Everytime I do negotiate prices, it's up, not down. I think that makes me the poorer negotiator. What I do pride myself in is quoting a fair price from the get-go, which is why I took such interest in this thread.

b), c)& d) To me c) and d) are kinda related and exposes what i feel is the diff between industry and indy: I can take the risk as an Indy of trying out new talent in a way a bigger company simply can't. As such, I work exclusively with what I consider untapped talent. They need to get their name out or pad their resume, I get some quality work. And after working with me, they are usually very aware of their value. I had two artists who had never done game dev do some work for me...now I can't afford the prices they are charging cause they have contracts for 2 or 3 times what I offer...Good for them!!! :)

Perhaps I was too critical of the 20% markup as I can see now that my people DO have value added to the contract, it just isn't monetary nor quantifiable. Be it resume or notarity (the majority of my people insist on being mentioned in the Credits, which I am all to happy to oblige), my freelancers ARE getting some benefits above and beyond the salary. :)