12 month contract position how much should I charge?

myhittermyhitter

Hey everyone,

currently I work full time and is on a package of like 80k a year,


I am being interviewed for a 12 month contract at a enterprise where they are looking forward to migrating their onpremise resources to the cloud.


I am a experienced cloud consultant and was wondering how much for a 12 month contract like this I should charge?

The reason why i am asking is I know my worth but i do not know about contracting as I never contracted before.
What do yall think?

Danielm7

If you know your worth then just figure out what you lose by being a contractor vs. standard employee and go from there. I work as a contractor currently on a 12 month contract. I don't get anything in the way of benefits until they hire me on in a few months, but during the first year I know I would have gotten 3 weeks vacation, what my health insurance costs, what you'll pay in different taxes, what their 401K contributions would be, all that gives you a good place to start.

If it was a much shorter contract I'd be looking at increasing the your rate significantly, in my mind though a year+ starts to get closer to FTE+benefits rates.

Deathmage

You need to take into account health/dental insurance plus taxes at the end of the year.

Also if you go contract track everything: gas, tolls, lunch, tires, study materials, certification exams. Anything that can be use for tax reimbursement.

With that being said if you want 80k a year tack on 15% more to cover the above fees and costs.

Hope this helps!

gespenstern

The Joel on Software Discussion Group (CLOSED) - W2 vs W2 hourly vs 1099 vs C2C

Google Answers: 1099 Contractor vs. Full Time Employee (FTE) Salary - Take Home Comparison

Nice discussions on links above.

In short, is it 1099 or W-2, on W-2 you file your taxes once a year, 1099 once a quarter. On W-2 employer pays 50% of your social taxes, so your rate on 1099 should be slightly higher to compensate.

Go to healthcare.gov and browse for health insurance. In short, for my family of 4 a decent insurance is above $1000 on premiums each month. FTEs usually have better benefits from their employers but since Obamacare many insurance offers became more expensive.

If it's a contract with high chances to be hired, i.e. a company does that to play safe and see you in action and you are confident that you will perform well, then the rate shouldn't be that high. If you are positive that the contract won't last beyond its timeframe the rate should be higher.

Make sure that you know how much time you can bill them. Some companies are okay with 40 hours/week and this usually plays well. For some companies billable hours are lower. Some companies pay nice overtime hours on increased rate and you can make good money on that. Make sure that you know how this company treats such situations.

Reserve some weeks for a vacation cause you won't have PTOs. So remove all vacation days, holidays, some days when you won't be able to bill them for some reason from your year and then compare to your regular FTE yearly salary. Or add overtime hours if you are sure that you can make them.

zcarenow

I would charge minimum $45/hour....though i think you should charge $50-55/hour.

GreaterNinja

0. Every $1/hour is about $2k/year difference in pay ($1 x 2048 hours in a work year = +/- $2048 depending on how much you take off. Every $5/hour on w-2 is $8-10k/yr

0b. Make sure you negotiate salary or time and a half overtime pay. Many new companies like to screw consultants over with terms like "full time hourly-exempt employee", etc. There are federals laws on how employers can classify and compensate you (FLCSA). Some must pay you time and a half based on conditions x, y, z, a, b, c (only 1 to 3 conditions) must be met for you to be eligible. Federal law supersedes state law, etc.

1. Do your research on cloud engineer salary. In US the average cloud engineer salary is well over 100k/yr with benefits. In some cities the average goes higher than 140k/yr.

2. make sure you do w-2, ideally with 401k matching. Don't do 4% and 25% vested each year for 4 years...crap like that unless the pay rate is high. Do 1099 / Corp-to-Corp if you have your own business or are a self proprietor. Its ideal to be good at bookkeeping and you should have an accountant to do your taxes if you are inexperienced.

3. if you go w-2, your employer has to provide affordable healthcare coverage under the obamacare law or you are exempt from penalty. 4a) Contrary to what many people here know, health insurance plans can be purchased for as little as $500/year if you are single and healthy.

4. Like others have said, factor in holiday pay (8-12 business days/yr) + PTO (5-25 BD each year), 401k/ IRA Matching (extra money), sick days, tuition reimbursement, Employee Stock Purchase Programs (another loss).

5. Are there any state laws to your benefit as a contractor? Is it overseas in a warzone and 90%+ tax exempt, etc., etc.?

Sorry to be brief, but there are tons of things one should know for contracting and employment.

I would charge at least $70/hour w-2 for Consulting as a Cloud Engineer.

dave330i

Figure out how much you want to make, then double it. You'll need that much to take care of the overhead.

zcarenow

GreaterNinja wrote: »

0. Every $1/hour is about $2k/year difference in pay ($1 x 2048 hours in a work year = +/- $2048 depending on how much you take off. Every $5/hour on w-2 is $8-10k/yr

0b. Make sure you negotiate salary or time and a half overtime pay. Many new companies like to screw consultants over with terms like "full time hourly-exempt employee", etc. There are federals laws on how employers can classify and compensate you (FLCSA). Some must pay you time and a half based on conditions x, y, z, a, b, c (only 1 to 3 conditions) must be met for you to be eligible. Federal law supersedes state law, etc.

1. Do your research on cloud engineer salary. In US the average cloud engineer salary is well over 100k/yr with benefits. In some cities the average goes higher than 140k/yr.

2. make sure you do w-2, ideally with 401k matching. Don't do 4% and 25% vested each year for 4 years...crap like that unless the pay rate is high. Do 1099 / Corp-to-Corp if you have your own business or are a self proprietor. Its ideal to be good at bookkeeping and you should have an accountant to do your taxes if you are inexperienced.

3. if you go w-2, your employer has to provide affordable healthcare coverage under the obamacare law or you are exempt from penalty. 4a) Contrary to what many people here know, health insurance plans can be purchased for as little as $500/year if you are single and healthy.

4. Like others have said, factor in holiday pay (8-12 business days/yr) + PTO (5-25 BD each year), 401k/ IRA Matching (extra money), sick days, tuition reimbursement, Employee Stock Purchase Programs (another loss).

5. Are there any state laws to your benefit as a contractor? Is it overseas in a warzone and 90%+ tax exempt, etc., etc.?

Sorry to be brief, but there are tons of things one should know for contracting and employment.

I would charge at least $70/hour w-2 for Consulting as a Cloud Engineer.

in texas, i was told that if you make $27/hr or more, the employer doesn't have to pay you 1.5x overtime and thus every employer i worked for as a contractor paid straight time for each hour over 40 hrs per week despite working overtime.

i think $500/yr is a bit low...i am single and healthy but pay $1,200/yr which is actually the lowest i could find for my age. So i guess 500/yr is for a young person, but someone in their early 40s like me would not get insurance for that low.