When determining your rate, you need to get a feel for your competition. For example, my rate is on the high end but not the absolute highest. The software vendor that created the language I use charges about $100/hour more than I do. Their service is also inferior to mine so I have the luck of knowing that eventually, everyone using the vendor for their custom programming is going to get burned by the vendor.

My job is to then convince the client that I'm a better choice than the guy charging $85/hour. Those guys are usual the bottom of the barrel feeders and really don't do the industry any good with the crap they produce.

I typically charge myself out at a similar rate to the bigger consulting companies. I may be higher than some and lower than others. My selling point is that I know my qualifications and the qualifications of my sub-contractors. Larger companies will place people who may not be as qualified as they should be just to fill a spot. I won't do that so my reputation keeps me as busy as I want to be.

You are in the Toronto area so rates should be much higher than a small town. I'm not sure exactly what you do (web development?), but I would say you could likely get a rate between $80-$110/hour depending on how good you are.

Don't forget sub-contracting as an option as well. Contact all of your competition and go work for them as a sub-contractor. You get all the same tax benefits since you are still self employed but someone else does the job of finding you work. You will likely lose 30%+ of the contract value (so if they charge $100/hour you get $70). Some people feel more comfortable working as sub-contractors as the sales part of the job is no longer an issue.

John

Hi borngamer,

thanks for all the insights, I've found it very interesting and I'm sure others have as well. I apologize for bugging you with a question that has already been assked but how do you handle the creation of your legal documents. Hire a lawyer? Buy a template (where?). Happy to get a PM on this as well.

Thanks again for all the insights.

-CProgrammer

Quote: Original post by CProgrammer
Hi borngamer,

thanks for all the insights, I've found it very interesting and I'm sure others have as well. I apologize for bugging you with a question that has already been assked but how do you handle the creation of your legal documents. Hire a lawyer? Buy a template (where?). Happy to get a PM on this as well.

Thanks again for all the insights.

-CProgrammer

Hey, no PMs! Unless you PM me too :)

Yes its something I'm interested in myself. There aren't a lot of programming jobs where I live and have been kind of thinking about the freelancing from home thing.

I had no idea the rates are so high. I'm working as a self-employed programming consultant and charge $55/hour (see my other thread). I'm fresh out of college and mainly do Java, but I've been working on and off for the same firm for 2.5 years. Should I be asking for a higher price? To be fair, they have a pile of projects for me to go through, so I'm never without work.

You rate is pretty good for a new graduate. There is a MASSIVE difference between someone just out of college (no matter how good) and someone who's got several years' real-world experience. $100-200/hr is what you might aim at once you have proven yourself, paid your dues, etc. Resist the urge to get greedy :)

When youre talking about 100-200$ per hour, are you talking about all for the one developer? Or does the company take some of that? Because wow.

Suppose I estimate 2 months for my project, and quote that to them. How do I quote the price? Do I just multiply my hourly wage by 8 hours by 5 days by 8 weeks? And what happens if I take longer than I estimated? Do I keep charging for the extra hours, or do I work overtime for free since it was my fault the estimate was bad ?

Quote: Original post by AndreTheGiant
When youre talking about 100-200$ per hour, are you talking about all for the one developer? Or does the company take some of that? Because wow.

When I was charging $100 per hour, it was just me receiving the money. It sounds like a lot, but if I was doing contract work full time, I might have gone a month or more without any work coming in. I didn't have an extensive network setup at the time and really wasn't selling myself. I was just working on projects as they came to me in my spare time. Full time with that setup would have been challenging.

Quote: Suppose I estimate 2 months for my project, and quote that to them. How do I quote the price? Do I just multiply my hourly wage by 8 hours by 5 days by 8 weeks?

That's a starting point. A good rule of thumb is to double (or more, if you're a particularly bad estimator) the amount of time you think it'll take you to complete the project and you should come out somewhere around where you should be. This isn't just development time, you'll also have to interface with the client and potentially have meetings about this or that and all of that should be accounted for.

Quote: And what happens if I take longer than I estimated? Do I keep charging for the extra hours, or do I work overtime for free since it was my fault the estimate was bad ?

It really depends on how you have your agreement setup with the company. When I did contract work it was straight hourly. If I ran over my original estimate, I charged them for every single hour I worked.

I've worked on projects in the past where I bid on the entire project, before hand. One instance was a website modification where they wanted me to go through page by page and fix a certain error they had. There were a few hundred pages and the way they described it, it sounded like I would have to manually edit each one so I based my price on that. It ended up being a very easy script and I made around $2,000 for about 30 minutes of work. I've been on the other side of the coin as well, where I drastically underbid a project and ended up making very little as far as an hourly wage goes.

Quote: Original post by Straudos
I had no idea the rates are so high. I'm working as a self-employed programming consultant and charge $55/hour (see my other thread). I'm fresh out of college and mainly do Java, but I've been working on and off for the same firm for 2.5 years. Should I be asking for a higher price? To be fair, they have a pile of projects for me to go through, so I'm never without work.

Generally a high rate helps to cover potential down time. If, for whatever reason, a contract developer hits a bad dry spell, they will have to fall back on their previous earnings. Throw on the self-employment tax of around 9%, insurance which can easily run $12,000 per year (here in the states at least). Equipment, material and training costs that are often covered by the employer. Time put into networking or trying to bring in new work. The expenses add up very quickly.

Can it be a very lucrative career? Absolutely. I'd probably be doing strictly contract work myself if my wife had a job so we would have a steady reliable income to make sure that all the bills were payed on time. As it stands, it isn't worth the risk for me at this time.

Right now, in the UK anyway, the contracting market is very tough. People are having contracts cut or being forced to take rate cuts, and those gaps ('bench time') between contracts are growing. Experienced guys are having to wait up to 3 months between gigs...