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Comment by ww520 | Hacker News Reader

Yeah, most people don't bill enough to cover the cost. Remember you are paying your own medical, social security (both employee and employer portions), insurances (professional, worker comp, life), retirement, office, utility, etc.

A rough rule of thumb is to charge 2X of what you would be paid as an employee.

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A rough rule of thumb is to charge 2X of what you would be paid as an employee.

That's a common rule of thumb, but I suggest that it's not a good mindset if you're interested in making what you're really worth as a freelancer.

One of the most fundamental differences when you're negotiating with a client as another business rather than as a prospective employee is that your arrangement will be a business to business one. Like any other such arrangement, it pays to price based on what your contribution is worth to the client, which will ideally be much more than what it costs you to provide it.

It shouldn't be your target price, but it's useful to keep in mind as your "cost" level. Below this, you're actively loosing money (over a regular job) and at that price point, there's no financial upside to compensate you for the downsides (risk, uncertainly, stress) of consulting.

As someone who has run a consultancy and employed consulting staff my rough rule of thumb is 3x total employment cost: one third for the employee, one third for the company, and one third for profits.

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