At a modest $200/hr, that's 85 hours. It definitely can be hard to line up that much work month after month, but I've had a few months in a row where I achieved that level of consulting revenue.
Happens all the time. As a consultant you're responsible for self employment tax (7.5%), benefits, vacation, sick leave, etc. You also have no job security, so you need to make enough that you can cover gaps in between gigs that ended. You price it into your hourly rate accordingly.
So yes, your hourly rate is significantly higher than a comparable salaried employee. No, you're not actually ending up with double the money at the end of the day.
Fair, but what's in it for the company? Why pay me a huge hourly rate when they could hire an employee for less? There are various answers to this: specialized knowledge, limited engagement, and so on. But it's important to establish your value as a consultant along these lines.
Employees are extremely undesirable to have. They're highly regulated, and mean that you have to hire HR departments to mitigate the constant risk of being sued. And there are many many regulations that kick in after you have X number of employees, so many companies stay at X-1 employees until they're ready to make the jump to 2X employees.
With a consultant, you cut them a check, they do the work, and then they go away. No hassle or risk.
It's the difference between logging onto a website like Fiverr and putting in your credit card, and paying a lawyer $500/hour to help you set up an employee health care plan.
The only thing you need to get paid (picking a number) $40,000 for solving a business problem is to be able to sell a client you have identified on the desirability of paying you $40,000 to solve a business problem. This is the hardest thing for engineers to stomach about business. Being good at what you do is table stakes for consulting; a major determinant of one's success is one's ability to get good at selling.
There are ways to use OSS contributions or networking to assist in developing that client and making that sale, but they are not required. "I worked 5 years at Google" does not entitle one to a consulting gig.
You need to be able to find clients without spending a fortune on marketing. Networking is good for this; there are a ton of blog posts about how to build up a professional network. Low-cost "thought leader" content marketing might work too, like blogging, an email newsletter, social media presence.
You also need to understand what problems your potential clients are facing. This takes experience, which can come from working as an employee in that industry.
You need to convince your potential clients that you will reliably solve their problem--not only the technical skills, but the ability to apply them on time, on budget, and do what you say you can do. Case studies and client referrals are key here.
Working at X company for Y years is a good way to learn all about the problems that companies like X face, and to develop some stories about how you have solved those problems professionally. It can also be a good way to build a network.
GitHub is useful if it demonstrates skill and perseverance. If it is filled with half-done hobby projects, it will be useless or even a detriment. It is less important than a good track record on actual paying projects.
Finally, to be a profitable consultant, you need to know how to run the business--to estimate your expenses and set rates that are competitive but still make enough money.
EDIT: the blog at http://www.kalzumeus.com is chock full of detailed content on how to start your own software business, including consulting.
I make $30k+ in months when I am asked to work longer hours (50h of billable time). I wrote a book about how to break into consulting as a programmer; link in profile. The key is prospecting. I offer a fee chapter, devoted to 15 channels for finding clients.
You need to be well known in the academic community, have worked on important and well known products, and spend a lot of time on potential clients. We have one person (the one with the most connections) who just finds contracts by going to trade shows and curating connections, and the rest of us work on them.
There are tons of programming gigs at $100+/hour. $100 * 40 * 4.33 = $17320 per month. It's usually tough to fill 40 hours consistently, but if your rates are higher, you can work less hours.
