
Ask HN: Can a contractor earn as much or more than a full-time employee? - ratsimihah
My understanding is that the main drawbacks of contracting is not to have any of the benefits of  full-time employment, although from personal experience a few years ago, I struggled to consistently find clients and had periods without contracts, hence not making it worthwhile in the longer term.<p>As a FT employee now, I keep getting thousands of contract work offers, but these don&#x27;t seem attractive from my previous experience.<p>Is there any of you out here able to consistently get contract work, which in the long term earn you as much or more than as a FT employee?<p>(in the context of software development, mobile&#x2F;front-end&#x2F;back-end)
======
swatcoder
Contracting can be very lucrative. It is also extremely flexible. It also
involves a lot of tasks that you don't need to think about as an FTE.

Importantly, it also usually grows through a daunting non-linear curve where:

1\. [Scary Phase] you don't have enough work in the beginning and don't know
how to find it and freak out and look at FTE job listings and think about
giving up.

2\. [Frustrating Phase] you start accumulating good clients and bad clients
and have to learn to avoid new bad ones and shake existing bad ones; you feel
like you're always working with the bad ones and are neglecting the good ones.

3\. [Lucrative Phase] you're good clients keep coming back with fresh work and
you've really gotten the hang of getting new leads without even trying and you
have more work than you can handle on your own. And if you have good business
instincts, you're earning quite a lot.

Often (but not always), it can take quite a while to get to (3).

~~~
j88439h84
How do you identify a bad client?

~~~
CodeWriter23
They either:

\- don’t pay

\- don’t pay on time

\- want to low ball you on bids

\- don’t follow your advice

\- get upset when the pain you told them would happen if they ignore your
advice, happens

\- are verbally abusive or manipulative

\- anything else that makes you unhappy working for them

Bottom line my mentor taught me to take work from the troublesome clients but
to make sure their rate was sufficiently high so that I was always happy to
work for them. They can be jerks but I would smile because I knew I was
getting a fat check from them. Experience has shown me however crap loads of
cash aren’t always enough.

------
undreren
The amount of money you can earn as a contractor depends heavily on your
brand. From what I've heard from contractors, their playbook seems to be the
following:

1\. Work to increase strength of brand to get more leads.

2\. When number of leads exceeds capacity, increase prices until number of
leads are manageable.

3\. Go to step 1.

The hard thing here is of course to increase the strength of your brand. The
easiest way to do that is to pidgeonhole yourself into a very narrow area of
specialization (SEO, effectively), attend / speak at relevant conferences,
write books / articles about it.

~~~
ratsimihah
This makes sense. #1 feels like building a product/business, which I've tried
many times and the marketing part is ALWAYS hard!

I guess iOS, front, and back-end aren't exactly niche, though.

~~~
twunde
Many times consultants specialize in certain industries. I know one consultant
that charges $200+/hour + expenses for basically energy industry data
processing and custom reporting. I imagine that there are a ton of people in
banking/finance systems that charge that much or more for their knowledge
about the regulations and how some of that data should be processed.

~~~
undreren
There’s horizontal and vertical specialization. Your “vertical” is your “ideal
clients”, and your “horizontal” is your product.

Solve an expensive problem for a niche industry and roll in gold.

------
dyeje
The upside of being a freelancer / contractor is that you make 100% of the
rate you charge. The downside is that you have to take care of all the
overheard as well (lead generation, benefits, tools, accounting, etc).

If you're able to charge a high enough rate, then yes you will make more money
than you could in most full time positions. But this depends alot on your
ability to market yourself and handle the overhead I mentioned.

~~~
ratsimihah
This makes sense, this correlates with what undreren said.

[https://news.ycombinator.com/item?id=17868192](https://news.ycombinator.com/item?id=17868192)

------
ilaksh
In my experience, the majority of contracts are offered 100% as a way to avoid
having to pay benefits or make any sort of real commitment. The so-called
lucrative contracts are the exception.

It's also going to depend on if you find a certain type of repetitive niche
where you are just reusing the same speeches or libraries over and over again
or where you really are engaged with unique problems.

------
matt_the_bass
Clients want contractors so that they don’t need the commitment of an
employee. This is a benefit to the Client that the contractor can charge a
premium for. Therefore, if the contractor can find enough clients and is able
to handle their overhead efficiently, they can make a lot more money than an
employee. The downside is that the contractor needs to be
willing/interested/effective at marketing and managing overhead.

To me the question is a lot like “what type of company should I work for”. It
depends on your skills, interests and values.

~~~
ratsimihah
This makes sense, yet it contradicts with
[https://news.ycombinator.com/item?id=17869727](https://news.ycombinator.com/item?id=17869727),
which argues that there's a trade-off between income and freedom.

But maybe they all fit into some sort of balance between income, self-
marketing, and freedom? Oh man, that really makes me want to get into
contracting again!

~~~
matt_the_bass
I don’t think our two comments are mutually exclusive. One could be a
contractor only working a few small jobs or off and on. In that case you’d
have more freedom but not make as much.

------
apohn
This doesn't directly answer your question, but there is some silliness in the
way some large companies hire contractors that typically prevents an
individual contractor from making more (including benefits) than an employee.
I know somebody who was able to work around this that I'll describe at the end
of the post.

Many companies prefer to hire contractors through agencies they trust or
professional services companies. Sometimes this is just baked into HR policy
so you can't hire an individual contractor even if you want to. I used to work
for a services company that charged customers ~$225/hr for US based people
with specialized expertise in a certain area. The employees would get less
than 50% of that in salary, but it probably came to 50-60% of that if you
added in benefits.

Note that "specialized expertise" is really broad and many customers were
paying premium rates for very average consultants. The customers that really
needed experts cycled through a few average consultants before getting a great
one.

I've also been at the other end of this, being the person who was hiring
through an agency who charged ~$150/hr and paid their actual contractors much
less. Again, the quality of the "experts" on their end varied widely.

At those rates, if you paid an individual directly you could get somebody
amazing. But none of these companies were willing to do that and directly hire
a great person for 75% of what they were paying a firm to do the same (or
worse) work.

I knew one person who found a way around this. He was part of a professional
services group and was contracted to a large company for 2+ years (multiple
short term contracts) and built a bunch of custom stuff for them. He was
literally the only person on earth who understood what he had built. He was
also really good, so you couldn't replace him easily. He had some family
issues and had to quit from the services company to take care of family.

The large company had no choice but to hire him directly as a contractor and
give him a lot of leeway in his work schedule so he could take care of his
family. He got a great rate and made that work for multiple years. I think the
large company wanted to hire him as an employee, but he had no interest in
getting pulled into their day-to-day politics.

~~~
ratsimihah
> He was literally the only person on earth who understood what he had built.

This is often not a good sign, i.e. if the code is so messy no one can
understand it. But if it's so technically challenging only him can understand,
then that's a great position to be in!

I guess the tldr of your story is to stay away from these big companies and to
work directly for your clients?

~~~
apohn
>This is often not a good sign, i.e. if the code is so messy no one can
understand it. But if it's so technically challenging only him can understand,
then that's a great position to be in!

What he built required specialized knowledge of a GUI driven product that had
a very convoluted C# SDK for developing custom add-ons. So it was less about
messy code and more about there being very few people who could understand all
4 aspects (The product, C#, the SDK, and how the SDK related to the GUI).

>I guess the tldr of your story is to stay away from these big companies and
to work directly for your clients?

Yes and No. Sometimes to get paid well as a contractor you need to find other
ways to get gigs than finding standard contract recruitment that comes through
LinkedIn. In the case of the person I knew, he had basically created an add-on
product and was charging hourly for services to maintain and add features.

------
jiveturkey
You are looking at it the wrong way. What you lose in income, you gain in
flexibility and self-reliance. If you get very good at it (deep specialization
or a knack for finding contracts) it may equalize in income but that should
not be the point.

Just as working for a startup shouldn't be driven by dreams of riches.

~~~
ratsimihah
Right, trade-offs! Thanks for the mindset shift!

------
slipwalker
you might consider keeping your FT job, and as a side-hustle, subcontracting
those "thousands of contract work offers" with third-world professionals
acting as an agency.

~~~
Rjevski
> subcontracting those "thousands of contract work offers" with third-world
> professionals acting as an agency

Aka the easiest way to ruin your brand and deliver shit work. If the clients
wanted work done by "third-world professionals" they would hire them directly;
the reason they're contacting _you_ instead is because you have some
credentials, references, etc that the third-world guys don't have; now do you
wanna bet all of that on unvetted third-world freelancers?

~~~
ratsimihah
Oh thanks for adding that, totally agreed.

I initially misunderstood the suggestion as taking those contract as side
gigs.

