

Ask HN: How much should I ask for? - throwaway23

I'm posting this under a throwaway account in order to give details.  From this thread - http://news.ycombinator.com/item?id=1591225 - it seems people like discussing money here so I wanted to ask for input.<p>I've been contacted by a place I've worked for before about hiring me on a contract.  This would be the fourth time I have done work for them.  The first two times I was working as an employee - I quit to go do something not software related, came back and then got laid off.  The third time I was hired on contract.<p>As an employee, the first two times, I earned $23/hr (there would have been benefits on top of that but I never made it past the probation period).<p>For the contract, I asked for $36/hr and it was accepted.<p>Since then, I have been working on a contract at another place and earning $45/hr.  This contract will end soon (or be reduced to just a few hours per week).<p>This company does client work which they bill at approximately $100/hr  so I know there is a limit to what financially makes sense to them no matter how good my work is.<p>I was thinking of asking for $55/hr this time around but that seems like a huge jump from their point of view when I was earning $36/hr at my last contract with them - just six months ago.<p>I should note that not getting the contract wouldn't be a bad thing.  I would be interested in having the free time for a while to work on my own projects.<p>I would be interested in hearing other people's viewpoints.
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petercooper
If they really bill at ~$100/hr, they should certainly be comfortable with
paying $50/hr to subcontractors, maybe more. (It's common to double a
subcontractor's rate and bill that to the client.) So definitely don't take
anything under $50.

Asking for $55 and being ready to take $50 doesn't seem crazy at all to me,
but since you don't care too much whether you get it but _also_ don't want to
burn a bridge, ask for a daring "wow, it makes it worth it!" but inoffensive
figure. Given their margins, I'd say that's $65-75/hr.

~~~
jasonkester
A standard multiple for consulting shops is 3.15. As in, bill your contractors
out at 3.15X what you pay them. Anything lower and you won't be able to keep
up with overhead.

It sounds like they're doing that with this guy, so he probably won't be able
to get much more out of them.

~~~
exline
I haven't seen 3.15 before. That seems pretty high to me. 2x is closer to what
I have experienced before, some times less if the overhead is low. If a
company needs 3.15x, then they have some pretty serious overhead issues.
Perhaps this is true for large consulting shops, I've only dealt with smaller
ones.

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brk
What region/location are you in?

All those rates sound very low, especially when you look at what you actually
net after taxes and all that.

$75/hr would seem the be the floor, IMO, unless you're in a very low-tech area
like the middle of Utah or something.

~~~
webwright
$75/hr rebilled at $100/hr doesn't really make sense for the prime contractor.
That's valuing the sales effort, client relationship, billing risk, etc.,
etc., at $25.

Having been a prime contractor who hired subs for overflow work, we'd
generally never go above 2/3 of the prime rate.

If you want to make $100/hr, you generally have to go sell yourself to a
customer, not act as a subcontractor.

~~~
sandal
I would say that depends entirely on the subcontractor and your relationship
with him/her. Someone you're bringing on just to meet availability demands,
maybe.

Someone who is already well known and respected for what they do, you should
be prepared to offer a better deal for. In fact, you may end up being able to
raise your own outgoing rate if you find folks willing to work for you who are
really great.

But of course, the risk does end up in the hands of who owns the contract. And
if there isn't sufficient trust with between you and your subs, a premium
helps protect you from that.

But this practice may be keeping you locked into a cycle of only getting help
from low to mid skill level developers, who end up going elsewhere once
they've grown a bit more.

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tptacek
Purely based on your own cost structure, in an apples-apples comparison to the
FT job you had before, anything less than $50/hr is a giveaway.

As a subcontractor for a $100/hr project, you have wiggle room between
$50-$75/hr. It's probably not a huge amount of wiggle room, because as someone
making $46,000/yr FT, you're not doing anything super hard to replace.

You are a maze of twisty little passages, all alike.

(a) You need more contracts, because your current BATNA ($45/hr via contract
quite possibly being worth less than $23/hr FT) sucks.

(b) You need to eat, and so you may need to take an unnecessarily low rate
from your original employer. If I was them, and I was all business, I'd refuse
anything more than $36/hr. In this economy, procurements not letting us raise
any rates, have to be equitable to other workers, yadda yadda.

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phillytom
After many years billing as a consultant I found that I was happiest when I
ignored bill-thru rates and just focused on getting a fair rate commensurate
with my market value.

Unless the gig you are ending is unusual, or short term, it would appear that
your market value is at least 45/hr. I would either offer that, or if you want
to test your value, increase it to 50. If the company does not value your time
at that rate, they won't pay it. As a consultant it's important to remember
when you're discussing rates with a client, it's not a reflection of your
personal worth, just your economic value.

You can test your market value by either offering them a lower rate, or trying
to find other work at 45-50 hr.

Over time I learned that when I felt I was getting too busy it was time to
rate limit the work I was getting by raising my rates. Or vice-versa.

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maukdaddy
Don't let your previous salaries anchor you. Think about what you are
currently worth and what you want to make now. Ask for more. Compromise with
other benefits or a lower salary as appropriate.

~~~
minus1
I think the problem will be that the previous salaries have anchored the
_company's_ idea of his/her worth. Regardless, I agree that it's best to ask
for what you feel you are worth.

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bottlerocket
Ask for $55, then agree to meet in the middle at your current $45 if they
balk.

Unless you're set on getting $55 out of them :)

~~~
dstein
I disagree. Contractors should never waiver on their prices. Whatever your
asking price is you should always be willing to walk if your price isn't met.

~~~
phillytom
I disagree strongly. Changing your price isn't wavering, it's negotiating.
Companies hiring consultants aren't that different than most parties you would
negotiate with.

For example they tend to respond to standard negotiating techniques, such as
quoting them a higher standard rate then offering a discount in negotiation.

Walking away is fine as long as your confident in your ability to immediately
get work at your rate but it doesn't prove your rate out - people paying it
does.

There is a slightly dated, but highly relevant book I'd recommend - Janet
Ruhl's Computer Consultant's Guide - [http://www.amazon.com/Computer-
Consultants-Guide-Strategies-...](http://www.amazon.com/Computer-Consultants-
Guide-Strategies-Successful/dp/0471176494)

~~~
tptacek
Slip scope, never rate. Rates can only rarely be raised.

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sen
Since they came after you, tell them to make you an offer and you'll consider
it.

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jsulak
I would suggest reading this: [http://stackoverflow.com/questions/197139/fair-
contract-sala...](http://stackoverflow.com/questions/197139/fair-contract-
salary-compared-to-permanent-salary)

Obviously, I can't speak for your situation, but there's a good chance you're
undercharging.

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petervandijck
Go for 65, then lower to 55. If they bill 100, they want some profit, but they
mostly don't want to loose their client if they can't handle the work
themselves. Really, ask 65 with a straight face.

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aggelosmp
I suppose you could draw your line at around 50, but check out what they have
to say at first from their point of view.

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jteo
Ask them to pay you what they think you are worth.

~~~
garrettgillas
This is the one thing that I WOULD NOT do. The must successful contractors
that I've worked with always take charge of the negotiation and try to say
things like "going rate" or "standard rate", essentially stating their prices
authoritatively. If they're paying you to be an expert, than you should
maintain that persona through to your billing and price negotiation as well.

~~~
davidw
I've always heard the adage "the first guy who mentions a number loses".

~~~
DavidPP
I'm not sure if I got the exact word for it (english isn't my first language)
so I'll call it the "anchor price" effect.

Basically, if you are the one who mention the first number, you can set the
"anchor" of the conversation. This mean that if you ask for 55$ first and they
try to offer you 40$ You can focus on the fact that it's around 30% lower than
your asking price.

On the other hand, if they mention 40$ first, you are the one who has to
convince them to give you 30% more.

PS : I'm not saying you are wrong, just bringing another point of view on
that.

