As "just a smart developer" how I read this line:
"I don't need a Ferrari, a Porsche would do, and I'm willing to pay Honda Accord prices for one"
for the right person, I had the budget to give them a top of the market rate.
We aren't building self driving cars. At the end of the day we are doing basic CRUD.
By "smart developers", I mean can pick up things fast, they don't have to know everything.
I am a big proponent of the Joel "Smart and Get Things Done" filter when it comes to hiring (https://www.joelonsoftware.com/2006/10/25/the-guerrilla-guid...). My interviews are far more behavioral than "Describe all of the design patterns in the GoF book and write examples on the whiteboard"
Now, if your post said for the right person, I had a budget to give them $150k in Austin, TX then we'd be getting somewhere. "top of the market rate" is just too ambiguous in most experiences.
Yes "top of the market" is $85 an hour as a W2 contractor. Using my rule of thumb - 1800 hour work year when contracting taking into account unpaid holidays, unpaid vacation and sick time, and gap between employment - that's a base pay rate of $153,000. More often than not, there will be more than 40 hours worth of billable work.
I am fairly aggressive about my contract rate when I am contracting, and I would take that in a heartbeat.
So yeah, all of the contractors that report to me make more than I do. For some strange reason, I'm okay with that.
Of course if you need to pay for family benefits, that's an extra cost, a lot of the contractors I know are either married and get benefits under their spouse or are single and have a relatively cheap high deductible plan. When you work for an agency, you can buy insurance as their employee.
Apparently with a W2 this number is net whatever the agency skims while covering some things; not sure how that stacks up.
40 hours x 50 weeks = 2000 hours
So just 2x and thousands.
https://news.ycombinator.com/item?id=2185782 (Feb 2011)
> zipdog: $40/hr contract is about $40k/yr permanent
https://news.ycombinator.com/item?id=2438980 (Apr 2011)
> techiferous: But remember that there is non-billable work (accounting, etc.) and a 15.3% self-employment tax. [...] Working as a consultant for $175/hour is similar to being employed at $175K/year.
> danssig: Calling that pay rate $175K/yr is beyond conservative.
NOTE: two users here also recommended your equation
> slashcom: $x/hour * 40 hr/wk * 50 wk/yr = 2n1000 The general rule is always "times 2, add 3 zeros"
> jurjenh: yes, this is generally the rule I use as well, take the hourly rate and double it and add a K (eg $30/hr = $60K) [...] Personally I use an estimate of about 75% efficiency
> rapind: For 75% efficiency I assume you mean 3/4 * 2 * $175 * 1000 = $262,500 / year.
https://news.ycombinator.com/item?id=5299009 (May 2013)
> artumi-richard: The rule of thumb I was told is 1000 billed hours per year.
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To try to be genuinely helpful: a discussion documenting that hourly rates are a bad idea vs. charging per day:
https://news.ycombinator.com/item?id=5714930 (May 2013)
> gknoy: If you're doing freelance, you also have to cover downtime, business development, benefits
Here's the article since the discussion's link 404's:
https://web.archive.org/web/20161210162901/https://alanholli...
> Charge More:
> · Take the salary you’d want to earn as a full time employee.
> · Double it.
> · Divide your doubled salary by the amount of days you’d work as a regular employee.
> · This is the minimum rate you should charge per day.
And this seemed helpful too (mostly connecting for my own future reference at this point):
Poll: long-term contractors, what is your hourly rate? | https://news.ycombinator.com/item?id=5769348 (May 2013)
If the idea is that independent small job (less than a year) contracting results in a 50% loss to overhead, then yes, just take hourly rate in thousands. This helps convince people to stop messing about with self-employment and just work for the man.
If you mean how much money is in your bank account after a year of work for one company, contrasting a 1099 to FTE for a regular company, it’s the 2x + 000s formula. Unlike comments above, if you have your own LLC consulting business and run the 1099 payments through that, you can pay less tax as self-employed taking care of your own insurance and benefits.
[EDIT] Nevermind, saw your post clarifying/emphasizing the W2 angle down below. That's probably about right, then.