Going from Permanent to Contract

Hey everyone,

I have been working in IT for 7 happy years now.

In my last role I was paid 75k per year.

I found an amazing contracting gig which is full time (8 working hours a day) but for 9/10 months.

Just wondering what I should charge them per hour?

It’s a Senior Systems Administrator gig.

Cheers !

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Comments

DatabaseHead

Whatever the market can handle. Personally me I would look a those position titles in your area, indeed / glassdoor and mark it up 10 to 15%.

36.05 is your hourly at 75,000 @ 2080. I would add another 5.41 onto your last position per hour or on to the median salary for that position in your area. Annualized that would come out to 86 and some change based off of your previous annual salary.

Danielm7

You lose all benefits, vacation days, health insurance, 401K, holidays, etc. You also have to pay more in taxes, you get more write offs but I don't know that it really balances out. I've heard 1.3x as a baseline, so whatever your salary would be as FTE x 1.3, then figure out hourly from there. Also factor in some cost for the risk of it being 9-10 months and having to possibly have downtime before the next contract. Interesting calculator here http://www.rakkar.org/ContractPayCalculator.html

TechGromit

At 75k per year, you earning $36.05 an hour, good benefits cost at least 12k for a married couple, I would figure 15k for a buffer, that's another $7.21 and hour and it also has to be worth the risk going from a nice stable full time job to the uncertainly of a contracting gig, I would ask for $45 to $50 a hour.

powerfool

I would echo the FTE salary x 1.3, and maybe even look at 1.5. Whenever I look at my total compensation anymore, it is around 1.5x my salary.

The other thing to consider is that each time you change contracts (if you were to move to entirely contract work), you should budget for about 2 extra weeks worth of salary for every contract move you have to make in a year. So, just things to consider.

volfkhat

kalimuscle wrote: »

I found an amazing contracting gig which is full time (8 working hours a day) but for 9/10 months.

9-10 months per year?
Or, 9-10 months.... is the full duration of the contract?

just curious :]

LaSeeno

Depends on your motives. But I assume you had bennies and all that. I would probably want at least $48hr to consider it.

srabiee

I will repeat that losing benefits can be devastating.

How about looking to change jobs and progress to a different full-time position that will advance your career, title, and salary, and still afford full benefits? (Relocation may be necessary, and something else you might want to consider)

LaSeeno

srabiee wrote: »

I will repeat that losing benefits can be devastating.

How about looking to change jobs and progress to a different full-time position that will advance your career, title, and salary, and still afford full benefits? (Relocation may be necessary, and something else you might want to consider)

I would only consider it if there some huge gain. It can be very hard to leap from Support to an Admin role. In that case I would do it, if maybe if the compensation was way higher.

iBrokeIT

x1.5 MINIMUM. You are comparing $75k + benefits to straight hourly pay.

Things to consider:

Taxes, taxes, taxes... will you be W2 vs 1099? If you are a 1099 then you will be on the hook for the full 15.3% FICA tax whereas if you are W2 you will pay half that rate. Factor that consideration into your rate.
Benefits: 401k, dental, vision, health, pto, sick days, unemployment insurance, paid training ect.. add up the value of all of those an add into your hourly rate.
Additional time outside of work for paperwork such as invoicing, submitting quarterly estimated tax payments and increased tax complexities.
What is your rate when you go over 40 hours in a week? Over 60 hours?
Is the contract directly with the company you will be working for or through another party? What happens if there are issues with non-payment?
Are you factoring in the cost of the risk of the temp contact vs stable employment? How long would it take you to find another job of equivalent salary and work if you were laid off in the first month?

Im sure there are other things but those were the ones off the top of my head.

TechGromit

When I add up the employer paid benefits on my paycheck (medical insurance, 401k, etc) totals 20% of my base pay, add on to that the additional 7.65% additional FICA tax, that 27.65%, 75k * 127.65 = 95737.50, that works out to $46 a hour. This figure doesn't include paid training or vacation/sick days, my employer spent over 20k on my this year in training + travel, that's at least 25k, sick and vacation days add another 9k to that number.