
Ask HN: If my company bills me out at $165/hr what should my salary be? - isthispermanent
I work as a client-facing software consultant for a medium-sized firm. They bill me out at $165&#x2F;hr. What would a fair salary given that number be or how should I think about my salary relative to that number?<p>SKILLSET UPDATE: 
- I work across both mobile and front-end projects writing major features on multi-month projects in iOS&#x2F;Java&#x2F;Typescript&#x2F;React&#x2F;Angular. 
- I am the only mobile person in the entire company and am one of two that has a Mac (the only real way to dev iOS). 
- I&#x27;ve also contributed to mid-tier areas in C#.
- I&#x27;ve always delivered.
======
patio11
A fair salary is the one you shake hands on. It will largely be set by your
value on the market and what you can successfully negotiate, not by your
employer's unit economics.

But let's talk unit economics of consultancies, since they're useful to know.
Your employer will model you as being approximately 70% utilized for the year.
Your gross revenue contribution is approximately $231,000. Your employer has
approximately 20% overheads; that knocks it down to $185k. They'll want to
keep somewhere in the 15~20% of gross range as their profit; that leaves about
$140k. This makes the math convenient, since the TCO of a technical employee
is about 140% of base pay, which is going to come in right about $100k. [0]

"$100k is a very different number than $231k."

Yep, it is. If you want to capture a substantial portion of the difference,
put out your shingle and start getting gigs.

[0] This isn't a guarantee, and if the company thinks that $80k gets you over
the line, then they will probably offer $80k. If your other offers and
irreplaceability to their ability to deliver gigs counsels $120k, they might
accept being bid that high. But there are HNers who will suggest that you get
e.g. $160k and that seems _highly unlikely_ if the consultancy wants to stay
in business long-term.

~~~
harryh
How do you define the difference between the 40% premium on base pay to get to
TCO and the "20% of overhead" for the business as a whole?

What sorts of things fall into each of these two buckets?

I feel like I know some of the answers but not all of them.

~~~
patio11
Depends on the business, but most of the 40% is employer contributions to
payroll tax, health insurance, and other per-employee costs, and the 20%
overhead is "general and administrative" (office manager, professional
services, coffee, etc), coverage for non-billable employees like sales folks
(including otherwise billable employees who are below 70% due to winning you
the gigs keeping you at ~70%), and what have you.

If it isn't obvious, this is a bit handwavy; particular jurisdictions will
have rates/requirements which materially influence the 140% figure, etc.

~~~
tptacek
140% fully loaded also sounds a bit low.

------
tptacek
As a W2 employee, your bill rate is not really your problem and only a
secondary factor in how much your total comp will be. Given the same set of
delivery staff, a strong consultancy might generate high bill rates, and a
weaker one lower rates. The work is the same; as a full-time employee, your
point of reference for your own comp isn't what the company earns, but rather
what full-time people like you earn elsewhere. If people with your skillset
and experience and capability generally earn $170/hr, it doesn't matter that
the consultancy only makes $165/hr. Similarly, if they tend to make $90/hr, it
doesn't matter that their firm makes almost 2x that in bill rate.

I'd also caution that people have weird ideas of how bill rates correlate to
salaries. If you strike out on your own to do a solo consultancy (strongly
consider doing that sometime!), you should know that whatever your FT salary
was in your previous job, your bill rate should be _drastically_ higher. It
should account for:

* Your increased cost basis w/r/t taxes, facilities, vacation and "PTO", expenses, and benefits, which you'll now be on the hook for

* Your ample downtime --- a well-managed consultancy running in steady state at reasonable scale might expect 70% utilization across its staff, and a fledgling consultancy might struggle to break 50%

* The work you'll be putting in to source and close consulting engagements

* The substantial extra risk you're taking on by being a technical delivery person that can be "fired" (you're never really fired, just released) on a whim with little notice, which risk is something you as a consultant _are selling_.

People sometimes use a rule of thumb of 2x your full-time salary as a target
consulting rate. I think that's lowballing it.

Always, these specific questions are best answered by consulting the market
directly, not by asking for an axiomatic derivation of what a skillset is
currently worth.

------
seem_2211
I run a small business, and the one thing I was not prepared for, vs being an
individual contributor - there is SO much random stuff that pops up.
Paperwork, compliance stuff, HR stuff, planning stuff, finance stuff, making
sure that you've been doing enough sales. Oh and it's all urgent. And almost
all of it is menial. But needs to be done in the next few days.

There's a world of difference in being an IC and running a shop. Reminds me a
comment I saw on HN a while ago - "Oh you like writing software and want to
start a SaaS business? Great, now writing software is 10% of what you do"

~~~
tixocloud
Very much agreed ever since I decided to build a startup.

------
chrisgoman
Normally, your salary is 1/3 your billable rate (for most industries). So
approx $55/hr

1/3 goes to salary, 1/3 goes to overhead and 1/3 goes to profit. Overhead
includes the hours you are not getting billed out (paperwork, internal work,
etc.) and also fixed costs for the company (office, vacation, sick, PTO).
Profit normally goes to the owner and retained earnings (savings for a rainy
day for the company)

------
tedsanders
As a management consultant, I was billed out at about $875/hr. My salary was
about $50/hr. That's a ratio of about 18:1. This felt fair to me. The billing
had to cover a lot more than my salary.

~~~
aantix
How is that remotely fair?

The company has the expectations for you to perform as an $800+/hr consultant,
and your return for that effort is $50/hr?

~~~
ghaff
It's sort of how management consultants and big firm law works. They bill out
associates for a lot of money--less than partners but not necessarily _that_
much less--but it's the partners that make the big money. Of course, the
partners have a lot of other responsibilities such as bringing in new clients
and, frankly, a lot of the newly minted associates aren't all that useful.
(Source: I've been on the client side of a McKinsey consulting job.)

I can't speak to the exact numbers but that's basically how the math works.
(And the reason you hopefully perform as an $800/hr consultant is that there
is theoretically methodology and experience being provided by the firm behind
you.)

~~~
logfromblammo
My personal rule of fairness is that 1/3 of the direct-value an employee
brings to the company is probably the most that can safely be paid directly to
that employee without hurting the health of the business and its indirect-
value employees.

But if the employee is getting less than 1/4, they have a good reason to look
for employment elsewhere. At least in software dev.

At 1/18th, the employee should probably be interviewing with competitors as
often as they are billing hours. If that does not work out, it should be
possible to go independent and undercut your former employer and their
colluding competitors by charging only 9 times your former salary, giving
yourself 1/3 of that, and investing the rest into growing the new business,
such as by poaching former colleagues and business development personnel, and
offering them 1/4 to 1/3 of what they bring in.

It seems very dishonest to me to bill at near-partner rate for junior
associate work. If the latter aren't that useful, making the client pay a rate
as though they were doing vastly more or better work than they really are
getting done is very unethical.

~~~
tedsanders
>My personal rule of fairness is that 1/3 of the direct-value an employee
brings to the company is probably the most that can safely be paid directly to
that employee without hurting the health of the business and its indirect-
value employees.

I personally don't think it would be fair if 1/3 of a supermarket's revenues
went to the cashiers. Just because you're bringing the revenue in for a
business doesn't mean your labor is irreplaceable.

~~~
logfromblammo
I cannot comprehend the confusion of ideas that led you to believe that retail
cashiers are direct-value employees.

In a grocery store, the direct-value employees are the procurement employees--
the people who purchase the goods that go on the shelves. If they can
negotiate a good wholesale buying price, the store can make a profit on
reselling individual units. If they buy at a bad price, the store takes a loss
when reselling.

You can measure the direct value that employee provided by adding up the final
sale prices from the items in their buy, and subtracting the initial purchase,
optionally adjusting one or the other with a TVM calculation. If you bought a
ton of pineapples for $X, and they were all sold or discarded by the next
month, bringing in a total of $Y, that's $(Y-X) in direct value. It is very
reasonable for 1/3 of that number to go to the individual employee
responsible.

The cashier might be able to boost $Y by ensuring that no one who would have
bought pineapple walks out without one, because the check-out lines are too
long, but that effect is not _measurable_. The produce manager and stockers
might boost $Y by arranging the pineapples in an attractive way, and by
pricing them to encourage them to sell before they rot, but that effect is not
(easily) _measurable_ (without testing and statistical analysis).

The procurers are responsible for $X. Many other employees are responsible for
$Y, along with other unpredictable factors, such as whether or not the
customers actually want any pineapple this week. Maybe some cooking show
featured it in their latest episode, or maybe Dole decided to run a coupon in
the latest Sunday newspaper. Maybe some scientific study reached a conclusion
about bromelain, and it trickled out past the scientist-journalist barrier.
It's hard to say why $Y was that number, but the purchasers can use it to
inform their bargaining to get the next $X, a number more predictably under
their control.

~~~
tptacek
This person explained at length, before you wrote this comment, all the ways
in which they were not the sole source of value in this arrangement:

[https://news.ycombinator.com/item?id=19029926](https://news.ycombinator.com/item?id=19029926)

~~~
logfromblammo
Nevertheless, a cashier is not responsible for the magnitude of the cash in
their till at the end of a shift. They just ring up what the customers chose
to buy. And the number in the till also includes the procurement cost of the
food that went out the door. The cashiers are necessary for the business to
operate, but they are not directly responsible for the revenues coming in.
They are counting up the dollars, not delivering value to the customers. I
don't go to the grocery store to chat up the cashiers; I go to buy a variety
of foods in less-than-wholesale quantities. A store with robot cashiers is
still able to function, whereas a store without food on the shelves is
completely pointless. The cashiers are therefore responsible for the slight
preference I have for human cashiers over robot ones. I might choose to pay $5
more on a $250 grocery order, to have a live person ring it up for me, and
that's the value the cashier provides, not the whole $255. But the grocery
store doesn't know how much I'd pay for cashiers. I keep it secret, because if
they knew, that's what they'd charge me for it, and I'd lose the value that I
currently enjoy from getting that included in the price of the food. So that
value is not measurable. The store would rather pay the cashiers a fixed rate,
and price their added value into the cost of the food.

The oil-driller is not responsible for the price of the oil that was pumped
that day. They are responsible for the cost of the holes and pipes between the
reservoir and the surface, and the cost of the workplace injury insurance, and
the cost of environmental damage. Those numbers can be measured. A great
safety record is worth a measurable amount of money. Drill bits and mud have a
measurable cost, and using less than the predicted numbers translates to an
amount of money. Government fines for spills and groundwater contamination are
known quantities. The geologist is the one that finds the oil, and the
explorer is the one that proves it's actually there, and the refiner distills
and cracks it into usable goods. Dividing up the responsibility for each
barrel is hard, but counting the cash that comes in when the barrel goes out
is easy.

It's not possession of the cash. It's the responsibility for delivering the
value, and the measurability of that value.

An employee that brings in a contracted rate for each billable hour _is
responsible for delivering exactly that much value to the customer_. Other
people involved in the business may provide value, such as by increasing the
rate beyond what the direct-value employee could otherwise negotiate on their
own, or by procuring more customers, to increase the utilization rate of the
direct-value employee, or in increasing productivity so that it's possible to
deliver that much value per billable hour. But that's not as easily measured.
The support employees deliver value to the worker that delivers value to the
customer.

And that's why the direct employee doesn't ever get all that they bring in,
minus the business expenses to support only them as an employee. That number
isn't all them. It might not even be mostly them. But they're the ones closest
to the number that can be measured. They're the ones that could most easily
shed all the dead weight at the company, and strike out on their own, if they
had the moxie, sacrificing some of their billable hours to do their own
support and development work, to make sure that there is a contracted rate to
bill the hours to.

The 1/4 to 1/3 rule is a concession to the fact that indirect-value employees
are still responsible for delivering a lot of value, that indirectly increases
the revenues of the company. And that represents a good balance in a medium-
sized company. Smaller companies have fewer support employees. Larger
companies have more dead weight.

Cashiers and oil-drillers are not relevant, unless they are on contract from
another company.

~~~
tptacek
This is 684 words that have nothing to do with my response to your comment.

~~~
logfromblammo
I may be confused with regard to the purpose of your response, then. Those of
us who can't write more than a handful of posts in a day have to put a lot of
words in them, and maybe some thought, because if there is an exchange with
multiple posts in it, the system cuts us off for a few hours. I know you don't
have that problem.

I remind you that we can't all write 15-word posts that state that there may
be a problem with the conversation, but without offering any specifics, or any
hints on how to fix it.

Should my response have been in reply to the linked post instead of to yours?
Should I have written fewer words or more words? Why is the word count
relevant? Was your response in support of the linked poster, against, or
neutral? Do you believe that your post added enough to the conversation that
my reply should have addressed it specifically, rather than the content of the
post it referenced? I understand that there is a complaint, but I don't know
why.

I could have been more brief, but I didn't have enough of my own time to waste
less of yours. Sorry for that.

------
kator
I consulted for many years of my career and my general rule of thumb is bill
at a rate of what you want your annual comp to be divided by 1,000 ($165k/yr /
1000 = $165/hr). This is based on the basic concept of 50% billable or a bit
higher with overhead. If you're doing independent you will need to bake in
insurance (health and liability), taxes and other costs of running your
business. If you beat the 50% billable you're in the money, if you don't then
it might be time to find a job.

In your situation if your company bills you out at $165/hr I would push for
total comp of $165k (base + bonus + insurance + other benefits). Remember to
also factor in risk/reward, if you don’t mind all the risk you can go
independent and reap more of what you bill, but if you’re worried about not
landing customers then you should consider a job with a company that has a
pipeline and can get you billed out quickly. That said don’t overestimate the
“safety” of working for a company, if you don’t bill well or they have issues
they’ll fire you in an instant.

As a side note when talking to people about setting up their own consulting
gig I always remind them that customers pay for what the perceived value is of
a resource. If you ask for $75/hr billing you may not get the gig but ask for
$250/hr and shockingly they might sign you tomorrow morning. There is an
interesting balance between perceived value, asking price and what people will
pay vs what they expect to pay. Your asking price actually communicates your
confidence you can deliver, and customers have a built in bias on this front
and will make pre-conceived judgements based on this simple part of the
overall negotiation.

------
ddebernardy
Counter question for you: what can you charge when you're selling yourself? If
you're unable to charge anything close to your expected salary as a
consultant, then you're de facto answering your own question.

For clarification, I'm not suggesting you're a cog or that you're providing no
value. Just that, it's easy as a knowledge worker to fall into the trap of
thinking you're delivering more value than you actually are. I've seen this
happen in each of engineering, sales, and marketing departments. I can only
imagine it's true in other corporate functions. (Part of me would have wanted
to make an exception for HR, but I know more than a few HR folks who deluded
themselves into getting in that field to make things better for the rest of
us, and as a manger I'd put forward that HR actually does come in handy as a
business function.)

The truth is that, in reasonably well functioning companies, the various
departments are pulling their weight (admittedly more or less well) more often
than not. And a surefire way to sink a company is when a department decides
they're a worth a lot more than some other guys over there. (You'll eventually
get fired over this if that is your mindset. As your manager I'd give you a
single strike before giving you the boot; it's that toxic.)

Point is, your company is providing value by selling your skills -- by finding
relevant clients and closing them, neither of which are easy. And they've
spent money to recruit you, are continuing to spend money to manage you and
invoice for you and pay you and pay taxes on your behalf if applicable and
extend vacation time and what have you.

If you believe the added value is not high enough and wish to get paid more,
then it's fair game -- ask for one, if only because you never get anything
without asking. But keep in mind that the surefire way to get a raise isn't to
ask for one; it is to resign and sell yourself to the same types of companies.
It's not easy, but quite doable; just think it through, thoroughly, before
giving it a go.

------
brycehamrick
I'm a business owner, and I've had disputes with employees based on our gross
collections vs. the employees pay MANY times, the reality is this: Your value
in what you do is based on what the market is willing to pay you. It's not
based on what the market is paying ME for work you're contributing to. Your
pay isn't based on my gross collections minus costs. No part of what I collect
from customers are you entitled to. I hired you for a job, at a rate we agreed
to, and if you believe you are owed more I welcome you to see what the market
offers you.

~~~
socalnate1
While everything you said here is correct; I hope you've found a way to
communicate a bit more gently than what you wrote above.

~~~
brycehamrick
Yeah definitely not how I would talk to the employee, but it's extremely
frustrating that they don't get it. As a business owner you can literally be
losing money on a deal and have the employee assigned to it tell you they want
more because they're only getting X% of the total contract amount. Only way
I've found to protect against this is to keep the operations team from having
visibility into finances.

~~~
sridca
> Yeah definitely not how I would talk to the employee,

I actually prefer that my superior talked to me like that.

------
jjcinaz
Such a correlation is difficult to draw from that single data point. You could
look at the entire business model to get a better idea but in reality it’s not
about that at all. Really it’s just what would the company have to pay to
replace you? If it’s easy to find someone who can do the same job for the
equal or lower salary then you have your answer.

There will be a range of salaries for your job position in your market. You
should evaluate your total compensation against these to help you decide if
you are fairly compensated.

------
kxyvr
It's hard to tell without more information, but here are some general rules of
thumb. Most companies have a multiplier based on salary on how much an
employee really costs. Small, efficient companies have a multiplier a little
over 2. Large organizations and the government tend to have a multiplier at a
little over 3. The overhead covers everything from benefits such as health and
401k to keeping the lights on to paying for secretarial staff and management.
Running a business is a team. That said, these numbers don't really include
true profit, so it's important to factor that in as well.

Now, say we assume a multiplier of 2.1, that puts the upper bound at $78/hr.
You're never going to make that because it means the owner is not making their
profit and not that many companies are that efficient. If their multiplier was
3.1, it puts the bound at $53/hr, but again that still doesn't take into
account profit. As such, my off the cuff guess would be somewhere between
$30-60/hr.

And, to be sure, this shouldn't imply anything about the morality of that
decision of salary. However, it has been helpful for me to think about
salaries and multipliers when bidding on contracts because it tells me how
much a company is willing to pay.

------
sdroadie
I've read through most of the threads, and the responses here are interesting.
While some people have made cogent points about the role of prestige in
consulting (this being the reason firms like McKinsey can charge what they
do), I really don't think that the pay differential is as reasonable as people
tend to think. In general, I think it's unreasonable and extractive. Most
businesses aren't McKinsey.

From what I've seen and lived, there is, at best, a weak correlation between
someone's pay rate and what they're billed at. One company I worked at charged
5x my rate for projects. It was usually explained away as "a blended group
rate." More often than not, I was the only developer on those contracts.

I wouldn't claim to be an expert on the economics involved, but I'd wager that
the pay rate/bill rate ratio is, in most cases, due to layers of management,
and a lack of transparency and automation. I'm trying my hand at combatting
this at the startup/coop I founded. If anyone is interested in chatting about
this, screaming at me about how I'm wrong, or learning more about the
business, send me an email at jeremy@tribestaffing.co.

------
oliwarner
Whatever they're willing to pay and you're willing to accept. Likely less than
they're billing your time for.

Just remember that the company has costs on that time. Both through direct tax
on the income but employers also tend to pay out for things like your space,
hardware, liability insurance, and other intangible benefits you get while
employed.

The expectation of work from an agency is also significantly different than a
freelancer. When you're talking to a lone wolf, you expect a level of
flakiness, perhaps you'll need to be more hands on to manage them through your
requirements. With a digital agency, I would expect that money to cover the
local management of you. And if you screw up, I expect the work to be put
right for no additional fee. I also expect their liability insurance to be a
lot sturdier than a freelancers.

All this stuff is essentially what would be covered by introductory sales
contracts. I don't think I've done work with an agency that hasn't tried to
—on day one or two— laid out a vast document of everything that isn't going to
be their responsibility. These cause endless fun in negotiations. And as part
of this, I also understand that part of the $165 is going into the pocket of
the jobsworth sales team who just happened to take my call.

I've worked with and for agencies. The bad ones are horrible places places for
developers. Very rarely will an agency developer have enough freedom to _do
something_ good enough that it _makes_ a sale. Not in the way that Art and
Sales teams can. It's an unfortunate truth that managers are more than willing
—IME— to exploit.

That is not to say you're not worth more than you're being paid. As I lead,
pay is entirely negotiable. Understanding your actual value to the employer is
critical to extracting the best salary though.

------
wilkskyes
$80/hr, no more, but possibly less.

The number they bill you out at matters, but not for reasons you think. You do
not want to work somewhere that cannot make at least twice as much money as
what they pay you. Growth will be anemic, and long term job stability will be
a problem. You may eventually be fired and replaced with someone cheaper. Most
of your skills are commodities.

Ideally, you want to work somewhere that can make even 3 or 4 times as much
money as your salary. This will ensure a healthy cash flow and gives enough
headroom to hire more people, and ultimately win big contracts with big
clients (millions).

If they cannot make at least 2x of your salary, they are either a new company
with little to no reputation or a bad sales process.

And do not even think about striking out on your own trying to get a full
$165/hr salary. For one, you will have more expenses and taxes to deal with,
and two if you do not have a strong sales skillset you will struggle to bill
at those rates and ultimately get starved out.

------
swanson
Roughly $100k (+/\- 15% based on performance, tenure, location, company
financial health, etc)

Salaries usually cap out at $130k-$150k for the role of "writing the code" at
general software consulting at small-medium (5-150 person) "agile" shops.
Likely higher at speciality shops, but I can't speak to that.

------
zackmorris
As a rule of thumb, I've observed that most businesses charge between 2-4
times as much as the employee is paid for hourly work. So without more
information on overhead etc, $41.25 to $82.5 per hour seems fair in your case.

However, it can be a lot worse than that in non-tech locations. Where I live,
you often see $60-100 hourly rates in shops where employees are only paid
$15/hr. Each business you see on the street supports roughly 1 family, so they
might use turnover or other techniques to stay in business for the long term
while paying wages that are below the going rate. I'm wary of jobs now that
convey a feeling of owing something to the employer, as this correlates with
subpar pay. The best jobs that I've had have felt very mutually beneficial to
employer and employee.

------
bhouston
When I started in business, I learned that you should charge out employees 3x
salary or better is a good rate if you wanted to grow and be viewed as a
viable service business. If you charge out at 2x salary you are going to
roughly breaking even at the business level. If you charge out less than 2x
salary it is a going out of business rate.

I think this is still reasonable advice.

The reason is there is significant overhead. In benefits, support services,
equipment, employer matching taxes, HR, building, hiring, write-offs, and even
getting the contracts and maintaining them. It is hard to charge out the time
of someone negotiating the contract, or dealing with customer complaints,
sending out billing, following up on unpaid bills (collections), not to
mention the cost of sales, etc.

------
crikli
I'm going to do the math below, but your employer very likely isn't billing
highly enough.

Most employees top out billing 80% of time, so 32 hours. Assuming that, you're
generating $5280 / week or $21,120 / month. Agencies need to be shooting to
bill 3x of _actual_ hourly employee cost (this is target and I can elucidate
if people are curious). Therefore your cost needs to be $7040 a month. 20% of
your cost is wrapped up in health benefits, vacation time, and other perqs, so
your hourly wage will be determined by that figure. Less the cost of perqs
your hourly cost will need to be $5632 / month, or $35.20 per hour. That's a
salary of about $70,400 per year assuming a 2000 hour year.

------
jgimenez
At some stage my company charged exactly that for me and I was getting paid
$17. It's up to you to accept or not this price, but bear in mind the company
might have other expenses like office space, sales people, administrative
staff, etc. So the company needs to factor in some of these into your hourly
rate. I'd say the real rates though depend much more on market: how much
employees are being paid and how much is it possible to charge customers

------
raincom
It all depends on what kind of medium-sized firm it is. Is it some kind of
semi-staffing company (like taos.com)? If it is, you need to get paid 80%
(1099 rates), as such companies let you go once they can't get you projects.

If you look at big 4 consulting firms, the partners get huge contracts like
SAP implementations, here that 70-80% formula won't work. The partner takes
home more money, when he gets fat contracts and executes them. You can expect
some kind of job security in these companies, compared to the above type.

------
apohn
I can give you some rough numbers for a company I used to work with a few
years ago in the USA. Billed Customers at $225 an hour. Consultants were
typically paid Between $45 - $65 when you include bonuses for billable hours
beyond X%. 3 weeks vacation was standard and healthcare was great with very
low employee premiums and low copays.

There was a "Principal Consultant" level where the salary was disconnected
from the bailable rate because they were heavily involved in selling services.

------
USNetizen
These two things are not related. There is a lot more than salary and benefits
that go into an hourly billing number. There is no way anyone would know for
sure what salary they set unless we somehow knew their overhead, G&A, fringe
and other indirect allocations.

They bill $X so I should get paid $X is not how the industry operates - there
is so much more that needs to be considered here.

Anyone who has owned a company that specializes in services or even worked
long-term as a 1099 could confirm this.

------
halis
Don’t agree to a salary. Get them to give you a 1099 and pay you an hourly
rate.

Pay your own quarterly and payroll taxes and write off your expenses. Get your
own health insurance.

You’ll come out like a bandit. Since they aren’t paying payroll taxes or
giving you any benefits, the spread they keep is pure profit.

So why wouldn’t they agree to $140 an hour? Why indeed..

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pcurve
Maybe the landscape has changed a lot, but when I was a consultant working at
client site way back when, I was getting paid $40/hour, while client was
billing $65. There was no 401k matching, health benefit, or vacation though.
It was W2 in name only. The only thing the consulting company did was to find
my resume online and send me to client site for interview.

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lquist
Based on financials I've seen of consultancies, staff are ~33% of revenue.
Given a 70% utilization, that gives a salary of $80k fwiw

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mortonpe
Depends on the industry. Services tend to use the rule of 1/3\. 1/3 for the
company, 1/3 for overhead, 1/3 for salary.

~~~
panzagl
Don't know why this was dead, it's a rule of thumb for a wide variety of
industries.

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rebelde
$165k/year.

When in that situation, I tried to earn 1/2 of that. At ~2000 hours per year,
that comes to about $165k/year. Whenever making less than half, I knew that
some other company would be willing to pay more for my services. This was
government contracting, so your situation might be different.

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tinktank
Without knowing anything about the particulars, I'd say $80/hour, so about
$150K

~~~
maxxxxx
Usually it's much lower. I know people who are billed at $300/hr making close
to 200k or less.

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DATACOMMANDER
I don’t have experience being billed out at astronomical rates, but I
speculate that the consultants’s take-home is sublinear in the rate he’s
billed at, and dramatically so. I’m very impressed by someone who makes $100/h
or more writing code, but I think I’m even more impressed by a
person/team/system that can consistently find quality clients willing to shell
out $500/h or more. I have a feeling that someone could be well worth such a
rate but struggle to get anywhere near it on their own.

How do you even go about finding those clients? I can’t help but think that
they’re almost all going to be companies going through an unexpected
existential crisis...

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maxxxxx
I know a guy who can talk to CEO types and keep them interested. That’s the
skill you need.

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logfromblammo
Between $41.25/hr (0.25) and $55/hr (0.33).

Lower means you might leave for somewhere that pays you better. Higher means
the company won't be able to spend enough on business overhead, support staff,
and benefits package.

~~~
hnick
This is in line with a place I worked at (more towards the lower side). It
wasn't the sort of job you could just freelance for, it absolutely relied on a
team doing "enterprise" work for large clients using very industry-specific
tools and experience. Relatively easy work but basically impossible to get out
there and do yourself.

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tracker1
As many have said, it will depend highly on other benefits offered, generally
should see 25-40% of the billing rate. $80-130k/year roughly speaking.

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bdcravens
You're a product, being sold at a markup. What's typical? Typically 3x, so I'm
guessing about $110k would be a fair salary.

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Bucephalus355
I’m billed at $105/hr + expenses I accrue traveling to whatever company hires
my firm. I make $70/hr. I live in Texas.

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corbett3000
Easy math = divide by 3 and multiply by 1800.

You’ve got a $99,000 job including the value of benefits and bonuses.

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gesman
In business, you don't get what you deserve.

You get what you negotiate.

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chrishynes
Quick rule of thumb for consulting is that your yearly salary in thousands is
the same as the hourly rate. i.e. if they're billing $165/hr, you should
expect 165k/yr.

That doesn't hold for low or high extremes but is pretty reasonable for most
cases.

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effnorwood
As little as they can pay you and whatever you agreed to.

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gist
If I had someone that was working per diem that I could bill at $165 per hour
I'd be happy paying them $125 per hour.

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maxk42
Well if you're paying a salary then you automatically have to tack on 15%
employment taxes above the cost of salary plus costs of payroll and any
benefits. For most employers this falls in the range of 20 - 30%. So that
potentially increases your cost from $125 to $162.50. Good luck turning a
profit if you ever have to pay them for an hour you're not billing a client
for. (In most consultancies that would be about 30 - 40% of the employee's
hours.)

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onetimemanytime
50 an hour.

