PostHeaderIcon Contractors Hourly Rate

As a contractor how much should you charge?

 

As a company how much should you pay a contractor?

 

The biggest challenge a contractor will have is to convince a company that you are worth your rate. A company’s perception is that they can hire a full time senior developer for $80,000 per year (London, Canada) which comes down to $80,000 / 52 weeks / 40 hours = $38.46 dollars per hour. Any rate above $38 an hour and you have to start justifying your rate. Companies do not realize that a contractor has to make at least 2.5 to 3 times the hourly wage of a full time person for the simple reason that a contract does not get paid for holidays and sick days plus contractors can only bill their productive hours and must provide their own hardware and software.

 

The following table below gives a breakdown as to what the true cost of an employee is compared to that of a contractor

Salary
Days worked
Number of vacation days
Number of sick days
Number of statutory holidays
Hours worked
Lunch Duration
Breaks
Lost time
  This could be anything from reading email, browsing the web, time sheet entry, talking with a co-worker, etc
Investment
Hardware
  Total hardware invested

  • Main computer ($800)
  • Secondary computer ($700)
  • Main laptop ($750)
  • Secondary laptop ($650)
  • MacBook laptop ($1200)
  • External Hardrives (4) ($700)
  • UPS (3) ($540)
  • Handheld devices (2) ($900)
  • Software
      Total software invested – yearly cost

  • MSDN ($2500.00)
  • dot Net libraries (2) ($2750)
  • Taxes
    Taxes (CPP)
    Taxes (EI)
    Hourly Rate
     

    In my situation I should be charging at least $67 dollars an hour. For a company it is equivalent to pay an employee $80, 000 a year ($38.46 per hour) or a contractor $67.88 per hour.

     

    This does not take into account the following costs

    • Preparing invoices
    • Filing taxes
    • No Unemployment insurance when I run out of work
    • Time spend networking and finding new jobs
    • Office space.

     

    The two advantages that contract does give are

    • Every hour I work I get paid for
    • I set my own hours.

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