Hacker News Reader

Comment by 0110011 | Hacker News Reader

2-3x?

I've been having this conversation with coworkers a lot lately. In San Diego, a senior sw guy can expect to pull $120-160k(there are outliers... I have a friend making $240k, but it's unsustainable) as an employee with benefits. As an independent contractor, you can make around $75-120 / hour. As a SW consulting company you can get $120-180 / hour. These are all rough numbers based on talking with people.

I don't know why there is a disparity between what ICs and consulting companies make but it seems to exist.

The amount you charge also depends on many factors (difficulty, on-site vs remote, total hours per week, ability of company to pay, etc).

View on HN

The disparity exists because each scenario has different risk profiles. It's much lower risk to be an employee (you dont' have to look for work, worry about payroll, benefits), so you're salary reflects that. Similary, the employer sees a long term benefit for your skill so it's cheaper for them to have an employee in that scneario than a contractor.

For a independent consultant, you carry the risk of contract termination, added headache of invoicing and looking for work, so to make it worth it, you charge more hourly then you would if you're an employee. You don't have to work 40hrs a week, but it makes your time worth it to you. For the employer, they need your skills on a temporary or project basis, or they have issues filling a permanent role (non sexy industry or company, bad location, etc).

Consulting firms have overhead and margins to hit so they charge more. The benefit to the client is they get a whole team (usually), which can include UX, UI, and Engineering, and sometimes product management. For companies who can't build teams and need to execute on fixing, saving, or establishing a new product, Consulting firms can be attractive - eg, $500K for year 1 at $150/hr is cheaper than hiring 3 engineers and product manager with fully burdened and competitive salaries. Especially if you have trouble hiring good people.

> In San Diego, a senior sw guy can expect to pull $120-160k(there are outliers... I have a friend making $240k, but it's unsustainable) as an employee with benefits.

The benefits, if they are competitive, will cost the company ~20-25k. The employer's portion of social security taxes and medicare is another 10k. Add vacation and holidays (~25 days a year, out of 260 work days), so you have to multiply everything by 1.106. That employee sick for a few days? Had a kid? Grandpa died, and they are taking unpaid time off for bereavement?

After all that math, the 120k/year employee will end up costing the company ~$80/hour to employ... But only $60 of that goes to their salary.

And, of course, he needs a manager. And a desk. And bathroom facilities. And HR. All of these costs keep running up, both for the employee, and the contractor. At the end of the day, if overhead is another $20/hour, said employee will cost you $100/hour.

Or you can pay a contractor $120/hour in cash, $20 in your own overhead, and the end cost is $140/hour. You're paying 40% more for someone who is probably an expert in whatever you want them to do, that you can fire anytime there's a lack of work. (Yes, you can fire FTEs at any time, but that scares the rest of the company - not extending a contract doesn't.)

Just when things start to look up, you're reminded what a colossal pile of shit you live in...

Where I'm from, a senior sw person is lucky to crack six figures in Canadian dollars. The thought of getting paid $160k a year is akin to dreaming I'll get signed to a major league contract. Typically, developers either become something else where code is their secret weapon, or they top out at below six figures.

There are benefits, working conditions are amazing and so I'm confident that for these people, the total package is worth into the six figure range.

However, the same people who will top out at around $95k a year here (that's roughly $45 an hour) can bill (as you said) in the $75 - $120 an hour. Add in a favourable US - Canadian exchange rate and yeah, you're looking at 2-3 times...

That's not profit and particularly if you have a family, it's expensive to get the same kinds of benefits. But the raw figures speak for themselves.

I hate reminding myself what a stark difference a border makes. And, don't even tell me the average daytime temperature in San Diego in January...

I hear this a lot, and it makes one wonder why people aren't running to start companies in Canada (or europe) with all this cheap talent?

Though fwiw I left the US. Terrible work culture and san diego, or my apt in south park at least, was boiling hot 8 months of the year.

Why are you surprised by 2-3x? 120/hour is 2x 120k/year, which you charge for things like time off, extra taxes, and benefits.

I've been a contractor on and off for years (and I still do it on the side...$100/hr for Linux kernel/driver and systems programming with emphasis on digital video ). I know why you charge more as an IC.

$120/hr is on the high side of what I've seen fellow ICs make in this town. $120k/yr is on the low side of what I've seen senior devs make in this town. 2x is suprising.

Reply on news.ycombinator.com