> In San Diego, a senior sw guy can expect to pull $120-160k(there are outliers... I have a friend making $240k, but it's unsustainable) as an employee with benefits.
The benefits, if they are competitive, will cost the company ~20-25k. The employer's portion of social security taxes and medicare is another 10k. Add vacation and holidays (~25 days a year, out of 260 work days), so you have to multiply everything by 1.106. That employee sick for a few days? Had a kid? Grandpa died, and they are taking unpaid time off for bereavement?
After all that math, the 120k/year employee will end up costing the company ~$80/hour to employ... But only $60 of that goes to their salary.
And, of course, he needs a manager. And a desk. And bathroom facilities. And HR. All of these costs keep running up, both for the employee, and the contractor. At the end of the day, if overhead is another $20/hour, said employee will cost you $100/hour.
Or you can pay a contractor $120/hour in cash, $20 in your own overhead, and the end cost is $140/hour. You're paying 40% more for someone who is probably an expert in whatever you want them to do, that you can fire anytime there's a lack of work. (Yes, you can fire FTEs at any time, but that scares the rest of the company - not extending a contract doesn't.)
The benefits, if they are competitive, will cost the company ~20-25k. The employer's portion of social security taxes and medicare is another 10k. Add vacation and holidays (~25 days a year, out of 260 work days), so you have to multiply everything by 1.106. That employee sick for a few days? Had a kid? Grandpa died, and they are taking unpaid time off for bereavement?
After all that math, the 120k/year employee will end up costing the company ~$80/hour to employ... But only $60 of that goes to their salary.
And, of course, he needs a manager. And a desk. And bathroom facilities. And HR. All of these costs keep running up, both for the employee, and the contractor. At the end of the day, if overhead is another $20/hour, said employee will cost you $100/hour.
Or you can pay a contractor $120/hour in cash, $20 in your own overhead, and the end cost is $140/hour. You're paying 40% more for someone who is probably an expert in whatever you want them to do, that you can fire anytime there's a lack of work. (Yes, you can fire FTEs at any time, but that scares the rest of the company - not extending a contract doesn't.)