John Soer

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

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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