There was a question a couple days ago about hourly rate, and a lot of the discussion revolved around raising compensation by specializing. Of course, generalists can still specialize, but it's a bit different. So, I'm curious what the answers will be like if we hear from only generalist developers.
Everyone here is so incredibly focused on money as the primary motivator, which I guess given the thread question makes some sense. But I'd like to just put in a little word for money not being everything, and client type / work type actually being a really important part of the equation.
HN is a forum where increasingly I see posts every single day about the high level of misery in tech / how can I get out of this rat race / high levels of stress / undervalued / etc etc.
I charge £500 a day. It's not much compared to some of the rates on here, but I work with lovely, interesting clients in the non-profit sector. My clients love what they do and I do good work for them so they love what I do. I have long term, low stress, friendship-like relationships with my clients, not shouty / nasty / high stress ones. I've done this work for 12 years, and had to work with maybe a handful of assholes during that time.
FWIW I think there is a "lower budget bar" under which demands are insane for the money being offered, and we should all avoid this work unless we actively want to take a race to the bottom. But - I think there is undoubtedly a "higher budget bar" over which the stress level and expectation is made exceedingly high. This (I would imagine; I don't know, I've worked in non profits my whole life) is probably also equated with sector - if you're in a FinTech environment I would imagine you're looking at high budgets but also an insane number of highly pressured assholes shouting at you all the time.
What am I basically saying? I guess - yes, charge enough (and this is probably more than you think it should be) - but also, look at the bigger picture of your work / sector. Think about happiness, work-life balance, client motivations, etc - and use this to inform what you charge and how you charge for it. That'd be my advice.
I seriously doubt parent is earning that much. I expect they probably bill avg 10-15 days per month at that rate. Most contractors like them in the UK that I know operate this way most of the time.
£500/day is the rate for software engineering contractors in the UK that guarantees a continuous stream of work: it would be trivial for someone to bill 100% of billable days in a year at that rate. I don't know anybody who only bills 10 - 15 days per month, I personally bill ~21 on average per month and I am always fully booked (I turn down work). All you need is a profile on LinkedIn and you'll get a constant stream of offers at £500/day -- no reputation or relationships required. Anybody billing 10 - 15 days per month is doing so out of choice.
I'm not suggesting they are unable to bill 20 days per month if they want to, I would say they probably choose not to on average across the whole year. I certainly don't like working absolutely every weekday, and I take time off periodically. Working a bit less is one of the huge perks of being a contractor.
£500/day is the rate for software engineering contractors in the UK that guarantees a continuous stream of work
That might have been true pre-COVID but is even that rate a guarantee of much in a post-COVID world with the economic uncertainty we have now and so much pressure to do everything inside IR35? So many of the offers being made in the UK contract market now fall through and so many of the gigs are relatively short that even if you take a rate where you can work "continuously" you could actually be losing 1-2 months out of the year just from things like delayed starts, having several rounds of looking for the next gig in the same year, having "safe" contracts fall through unexpectedly, aborting a "done deal" that was advertised as outside IR35 but it turned out the client or recruiter had no idea how IR35 actually worked, etc.
We've been talking about this a lot in my network this year as it seems to be a recurring source of irritation for those who are still trying to work genuine freelance and outside IR35 contract gigs. A reasonable estimate for this year might be that 80% of gigs people have been approached about on LinkedIn or seen posted by agency recruiters never actually hired anyone and the time taken for a freelancer or contractor to find their next real gig is up maybe 50-100% compared to a couple of years ago.
Python contractor here - in the current market, 500£/day is low enough that you can still bill the entire year if you’re not too picky as to what kind of work you take - just like the parent post, I have to turn down work constantly.
Indeed, the IR35 debacle and general downturn given the current events have put a damper on business, but at 500/day it’s still doable.
How fast are you arranging a new gig at the end of the last one lately? A lot of the negative stories I've been hearing seem to be about gigs only lasting a few months now instead of being 6/12 initially and maybe renewing like before. So then even if there's more work available straight away through your network you probably still end up having to do the interview dance several times per year and maybe losing a few days before the preferred start date for the new gig as well. Has that not been your recent experience?
If you're consistently managing to finish one gig on Friday and have a new one ready to start on the Monday without any downtime or excessive interviewing disruption then it seems you're doing better than several contractors I know at the moment. I think they typically do charge rates a bit higher than £500 though so maybe there's just less work available at that level or more competition for each gig.
My experience wouldn't be representative - my rate is higher and I'm picky about the clients & projects I choose (I prefer quality over quantity and have long-running projects to take up all my downtime anyway).
What I meant to say is that given what's happening in my inbox, if you weren't picky about what work you take on, at the 500 mark you should still be able to fill up pretty much an entire year's worth of work by actually following up on all those emails.
> A lot of the negative stories I've been hearing seem to be about gigs only lasting a few months now instead of being 6/12 initially and maybe renewing like before
Agreed, though in my case I've always preferred short-term gigs so not really a problem in my book. I feel like if you need someone for 12+ months, it looks like an employee might be more appropriate.
> I think they typically do charge rates a bit higher than £500 though so maybe there's just less work available at that level or more competition for each gig.
Correct - I believe that in the current market, you can get a continuous stream of work at 500. Beyond that it gets tougher.
And for all good reasons. They have to pay taxes. So yes, they change £500/day but they’re on progressive tax rate with a maximum of what, 38%? At least that’s what it was some years back when I was based in the UK. Hitting that tax rate in fourth month of a fiscal year easily.
Not an accountant, but I believe if you’re working on a side-project you can expense a lot (essentially, the side project is just another service your company offers) and thus you can “expense” (not technically expensing because it’s paid by the company in the first place) a lot of stuff - hardware, cloud bills, software licenses, etc.
Agree with this. Contractor expenses are low. You can run a lot more through your biz if you want (travel, food, computers) but over the long term i'd say it\s 80-90% profit.
That's true in theory but the software market has been pretty good for the last 15 years. The only holidays I took were when I was an employee and I wasn't quitting that year (you get them in cash otherwise).
I think you and the parent poster are in agreement, insofar as much of HN is simultaneously displeased with their professional life whilst trying to go fro £140k to £240k per annum.
Ha, sadly that's not how a (my) day rate works. I am very comfortable, but take home maybe £60k p/a. It's a very nice salary for me, but in the world of many it's not huge :-)
This is apples to oranges and therefore false. Contracting has much much more deductions from the base rate than salaries. At the very least, with 20 days (1 month) off, you start off with a 11/12 coefficient. Then there's buying your own benefits, dealing with your own accounting, i.e. maybe paying an accountant or otherwise investing the time to do it yourself, which in turn reduces the number of hours you have to actually, you know, contract. They aren't in the 97th percentile.
I think any contract developer will be on the 95%+ percentile. When I started contracting in my mid-20s I was in the UKs 1% for a 40 hour gig done from my bedroom desk. It’s pretty mental.
I get what you're saying, but I work to live, not live to work. My end game is to spend my time doing what I love with those I love and unfortunately, writing code for someone elses business is not what I love. It's traveling the world, hiking mountains, swimming with whales and dolphins, sitting on a swing set with my kid, taking my dog for walks.
Money is my only motivation because I want to quit everything that makes money and only do stuff that doesn't make money but makes me happy.
5 years ago I’d say - Working to live is great. It makes one more well rounded and you discover you have other interests to pursue with time.
As time goes on the cost of freedom is higher and higher. You might meet someone special and want to experience life together. That might lead to realizing the world might be better with little versions of her in it.
In The last 2 years - My kids will be the only people who remember me when the day I no longer breathe, if I’m around for them now. I don’t want them to have to relearn the stuff I had to unnecessarily on my own and be in a position to lean into whatever their potential calls them to.
Wealth moves from not just money, but to time and creating memories. If all my time is spent to get money it’s not worth it.
Wealth as time is all there is. Since I’ve embraced this oddly the professional and product side of life has taken off even more.
From my experience in management consulting, it’s more industry related than rate related.
Clients in finance tend to be assholes even when you are cheap. The field just tolerates it.
Similarly, industrial customers are used to be put under a lot of pressure regarding costs and delays and will treat you as they are used to be treated.
Here is my trick: if you want to work in a nice environment, choose a job in an environment known to be nice.
It's interesting and positive that the top rated comment in this thread is one in the "money isn't everything vein". Programming has made many people so well-to-do that it resonates with them above all the pricing replies. And that is excellent, and speaks volumes about how effective our profession is at supporting comfortable lifestyles.
But I'd like to say something close to my heart, that unless you've felt what a desperate lack of money does, it's hard to really understand why someone would be obsessed about it above all else. Even long after the problem is gone.
Lack of money creates a visceral, chronic fear of death. It's not like "I'm about to be killed", but it's like a feeling of existential desperation. It makes you feel you're not guaranteed to be alive in the near future. It makes you feel you're "close to the earth". It is horrifying, and if you ever feel it you never forget it. And it transforms you and your thinking, often permanently.
It's just something worth remembering. Being able to worry about money below all else is a luxury that many people will never have the fortune to understand.
Agreed, especially the anticipation of a rent increase which you can't afford leaving you potentially homeless. Many in so-called affluent economies now live with this daily reality.
I think it's tempting to think that higher day rates equate to longer hours and a less cordial and more stressful work environment, but this hasn't been my personal experience as my day rates have grown over the years. I think this is a combination of:
* Your rates themselves are a signalling mechanism to clients of the level of expertise and professionalism you will bring -- how closely would you scrutinise the work of a plumber who quoted £100/hour compared to one asking for minimum wage?
* You are filtering for clients that believe "quality comes at a price", a belief they likely apply in other areas as well. So you're more likely working with competant people who enjoy generous benefits, with managers who care about providing a pleasant working environment for their direct reports.
One way of thinking about this is that you’re charging less for doing less work. Maybe that’s what you want (eg less stressful days). Another way to see it is that if you could work for some places you like less for £X per day, you could live off £500 per day and donate £(X-500) to charity (this is basically the argument that was popular 10 years or so ago that ambitious young people wanting to ‘do good’ should go and work in tech/finance to make a lot of money to give to charity instead of working for charities directly). So in some sense you’re choosing to instead donate £(X-500) per day to the nonprofits you work for. I guess if you like what they do then maybe it’s a reasonable choice for you.
Money is everything to me because I'm not getting younger and I don't want to toil forever. I stopped caring about almost everything except my growing family.
I'm 50 and care about nothing apart from my family. That's why I want to be around for them by having a good work / life balance which for me means working as I've described. I can worry about the money when they've left home :-)
Pricing according to the ability to pay and the value it generates is something that seems to make sense.
There is no perfect universal formula. Everyone has different situations, backgrounds, variables to weight and scenarios to ensure. It’s good to advocate for balance because keeping score with money quickly can get hollow when Al your time and best energy is tanked.
Ones pursuit of profit and purpose doesn’t have to be with min the same hour of activity at work. One can be optimized to feed the other.
Surprisingly the world will pay atomically will for solving what appears to be a boring but very real problem.
Solving these tries of problems can lead to interesting ones.
If one some it might be more possible to work for larger rates based on their experience and give back to non profits at little to nothing, or over deliver value.
It doesn’t seem important but within 5-10 years it becomes apparent that ppl on the self or startup path have to create their own retirement fund and healthcare plan not just for them.
The more you can save the more you can have a say in what you do and don’t take on, and for how long.
It is pretty average for a contractor in Europe. Contractors/Freelancers have always been paid above normal wages, because the contracts offer more flexibility to the employers.
About four years ago a friend of mine, who specializes in personal brand consultation, suggested whatever my hourly was that I double it. I didn't believe her. I doubled it and landed the first proposal.
You're probably worth more than you think.
Specialization can increase your rate, but business sense, communication, and ability to articulate and contribute value at the executive level is a 10x difference.
> About four years ago a friend of mine, who specializes in personal brand consultation, suggested whatever my hourly was that I double it. I didn't believe her. I doubled it and landed the first proposal.
Doubling your rate is really only an option when you’re already charging too little or if you’re dealing with clients who have no idea what market rate actually is.
I encourage everyone to explore incrementally higher rates until they are losing deals over pricing. That’s the only way to really know the ceiling.
The other important thing to keep in mind is that higher rates bring higher expectations. I’ve had contractors who charges in the $100/hr range and delivered okay-but-not-great work with mediocre communication. We kept them on because they could deliver eventually and we felt like we got what we paid for. If they doubled their rates to $200 the first thing I’d do is wind down the contract and switch to any number of more diligent and qualified contractors I know who charge in that range.
As soon as you violate the client’s sense of “you get what you pay for”, the relationship is in trouble. If someone doubles their rates, they need to be prepared to deliver work and communication deserving of that rate. There are a number of contractors in my area who have reputations of charging expensive rates but delivering budget quality work. They’re mostly limited to new clients at smaller companies who don’t have enough of a network to check their reputation.
However, if you can increase rates and deliver quality work that matches the price, you could work yourself into a premium market segment. And that’s a good place to be!
You just highlighted why doubling the rates might work for many people. If you charge $100/hr, the client may simply assume you can't handle the higher level/harder work. If you potentially can.. then doubling the rate will make the client feel comfortable giving it to you.
The same pattern happens in salaried work, A manager needs to show that the expensive new senior hire was worth the money. So they give the new hire all the good projects and leave the (cheaper) current employees high and dry. Further, management is incentivized to show the new hire's work in a positive light during performance review as they would be admitting that the manager made a mistake otherwise.
Understanding this dynamic will make you happier at work. Sometimes you need to leave so that you can be the great new hire, sometimes you need to demand more money/promotion so that management sees your worth. People inherently assume that you are worth something approximating your salary.
I specialize in the ability to competently and fully build from the ground up your whole business from design, development, system administration, deployments, testing, seo and other stuff as a single person.
This is a great rate. I’d love to know how you find clients willing to pay this amount. Most people I’ve come across that need a new site/app built have extremely low budgets. Like $10,000…total for an app. Certainly not $10,000 for a week.
Simply put: Talk to people who have more money and higher expectations, and highly value efficiency (OP's selling point of being a "single person" means not dealing with a whole team, back&forth comms, etc). Don't talk to your local barber who wants a website to show up on google maps.
I have a similar weekly rate but $200 hourly; How I bill depends on the client (though yes, gravitating more and more towards weekly over time).
This doesn’t answer my question. How do you find people “who have more money and higher expectations, and highly value efficiency”?
> “Don't talk to your local barber who wants a website to show up on google maps.”
The specific case I was referring to was a series seed funded startup that needed to build an MVP. Even for them $10,000 was too much. They ended up finding someone for half that to build their entire V1. This was maybe 5 years ago. They’ve since rebuilt everything in house and are doing very well now.
Your last point there is the stinger: they rebuilt everything themselves after going cheaper to start. So: they had the money, and they had cause to spend it, but they chose not pay you for your service, and as a result they likely paid more in the long run. It is a (admittedly pretty tough!) sales task, but it is the task: you had to convince them that $10k was worth it for you.
Once they have 3+ programmers working full time, they'll be spending _at least_ $15k every single week on their site/app -- likely way more. Save them even a single near-future month of crap-rewriting, "switching frameworks", infrastructure headaches, "one-click signup", getting their shaky foundations sorted out, etc., and it's a very clear win.
I've seen founder and first contractor tech debt that was really hurting the business take _a year_ to clear out, because once the business is running at all, you can't just swap out the engine. Heck, I've seen it take 5 years! Making the right choice today can really change their whole outcome, from struggling or closing to thriving -- and a bad contractor is not the right choice. (etc...)
You have to show them: your rate is
just a demonstration of your value. If they pick you, they're gonna be laughing all the way to the bank.
> So: they had the money, and they had cause to spend it, but they chose not pay you for your service, and as a result they likely paid more in the long run.
That's one possibility. Another, and one that I think is more common with startups (majority are people using their own savings and family/friends, not raising millions from seed rounds) is that they really didn't have that much money up front, but paying a cheaper way allowed them to minimally get a product out the door until they had enough revenue to "do it right."
A tech seed round can easily be 7 figures these days. A new initiative at a non-tech fortune 50 could start in 8 figures. Hiring someone at 10k per week who can kickstart the project to working production system isn't a bad deal at these budgets.
In B2B it may be quite sufficient that someone has a track record in the industry + good customer contacts/buyers. Why wait for an MVP if the MVP doesn't seem like the risky part?
Would you kindly share some examples of the types of people/orgs to seek out, then? For example, if not the barber shop, then the owner of a barber shop franchise, or owner of a chain of barber shops? Genuinely interwested in learning the archetypes of people to seek out here. Anything that you could share would be greatly appreciated!
With the caveat that I charge a bit less, and have only had two clients (but kept them each >1y, and have gotten other client interest I did not have bandwidth for): Keep up with the talented people you worked and want to school with. If you are in your 30s, some significant fraction are managers with budgets. At any given time, a few will have a need which is too time-sensitive for the whole hiring cycle (which can take >>$10k and still return a dud).
If they remember you as dependable and all-around competent, they would be thrilled to be able to deploy their budget against the problem nearly instantly.
Networking is critical. My clients are mostly in fintech, so I network in fintech, but you should seek out in whatever field you're most comfortable in and have loads of expertise with. If you're good at what you do and produce excellent results, you only need to hunt for the first few clients, and then you'll get a lot of referrals.
For those drooling at this: you probably don't want this work. The clients who pay this amount are typically soul crushingly bad to work with, and you're under the gun to deliver 10k worth of value both to secure future work with the client and ensure your reputation stays clean. One bad experience can sink you with other clients, folks talk.
IMO, build something for you and sell it vs building something for other people.
Having done a little work across the spectrum, this is definitely correct. Years ago, I targeted the cheaper end, and the amount of work expected was absurd. The nonmonetary terms of the deals were often even worse; think business destroying levels of exploitation. (I declined those!)
In contrast, I've quoted hundreds of dollars an hour while explaining that I didn't think I would offer enough value to actually justify that price in context and encouraged alternatives- and got the job immediately. And the project went very smoothly. In another recent case, I requested tens of thousands of dollars for some project-relevant expenditures, and received a deposit without a single question.
Organizations that are willing to spend money tend to be the ones that understand what they're buying and how to value it.
I gave up on the cheaper end long ago - too many trials by fire. Raising my rates was the best thing I did for my own sanity. I still run into an odd client here and there that makes my life Hell on Earth for a while. I also stopped giving discounts. And on the advice of good friend who runs a sizable creative agency in Los Angeles, came up with a "fuck off" rate for when I really don't want the work. Right now, I don't charge a sky-high rate, but I've started applying "9am to 6pm, no on-call, no toxicity, no arseholes, no high pressure to deliver at all costs." I am so over client-induced PTSD & anxiety disorders.
Big Cos pay high rates often with less aggressive demands, however, the quote above is 'build a business from start to finish' which is something else entirely.
As someone on the other side of the coin (I've paid contractors on the order of 15-20k a week), your post couldn't be further from the truth. The reason I have to pay that much money is because that person's skills are in such high demand and the value they bring is incredibly high that the last thing I would ever do is piss them off and have them work elsewhere.
That said contracts like that in my case were short term and tightly scoped, usually 6 months long and with very specific objectives. Areas of expertise I've hired people for were security/cryptography, custom database development/optimizations and network optimization (ie. Infiniband).
That wasn't at all my experience when I was doing contract work at higher rates. The more I made the better I got treated and the more forgiving things were. The worst contracts were with penny pinchers. As soon as something cost $500 more they were gone.
Id think your ability to re-use piece parts from one project to another would help save a lot of time too. There are really only say 10 things to build and once you do, simply re-arranging them for different systems probably levels out the workload significantly.
Have you tried asking for more? If you're actually good at everything you say, you could be making the same amount of cash plus benefits at a FANG, so I'd expect the contracting rate to be much higher.
I also charge a non-refundable down payment of $100k to sign non-compete or NDA and that doesn’t guarantee I’ll accept the job.
Both my rates and this keeps people who aren’t serious about working with me away. Anyone else is most likely worth my time and the cost is acceptable because I don’t work a full 40/hr week for the client. I plan the work to be done for a week and let them know. If it takes me 40hrs ok but most don’t.
They’re not paying me for hours logged. They’re paying me for my experience and skills.
Dropped. The rate is mostly a "no I'm not signing your stupid contracts that will harm me accepting future work just because you think your facebook killer is a special snowflake that can be stolen" rate.
meh. I make a little bit more than that at a FAANG and my job is vastly different than a one man show contractor. My work (and any Staff-level job really) is a lot more talking to other engineers and help them being productive, steer the product in the right direction and some high impact coding.
For the OP it's probably a lot more dealing with clients and building stuff from the ground up which you don't tend to do at FAANG at all. I'm not saying it's not as important, it's just very different skill wise.
Why's that? Large companies generally don't need single generalists; what they mostly have is teams of specialists, people who can get much deeper into a subject than a generalist can. Is there some role at a FAANG where generalists would thrive?
> Is there some role at a FAANG where generalists would thrive?
No, generalists typically get pigeonholed into being specialists, and typically not the field they were the strongest.
For example I'm stronger in backend/devops than frontend, but because I do most of my work in Node.js, more specifically Next.js I'm always billed as a frontend dev, so typical companies just want me to do one thing.
Contracts like generalization because I cover more surface area with relatively smaller costs than paying $150k+ for each role I can do.
> Is there some role at a FAANG where generalists would thrive?
In my personal experience everything except infrastructure and mobile UI favors generalists. The people I worked with were constantly jumping around between backends, protocols, business logic, web UI, test suites, architecture, data analysis, small-scale UI design. This was on public-facing products. I'd expect internal tool teams have even greater need for generalists.
Also, the two types of generalists aren't quite the same. Being a generalist in a 10k person company feels different from having to do everything alone at a 5 person company.
I think some heuristic like "earn double a FAANG income" isn't going to go over well with companies that are getting off the ground. Are the companies stupid for not paying that? Maybe sometimes. But there are definitely way more companies willing to hire someone at $200/hr than at $500/hr.
The calculations are just different for the companies. An operation spending $1B gains a lot by shaving off 1% (and small improvements are not strictly in the domain of specialists). But a new venture with $0 in revenue may have a very real risk of running out of cash one day, even if their product idea is great and well-built. "Hire the best people in the world" seems more prudent for a company who is certain it will pay off.
But to be fair, I guess one should occasionally try asking for high amounts anyways. I think jaquesm had recommended aiming to have 50% of your clients turn you down on the basis of price, to find the sweet spot for a rate.
Less that and more that I don't play the FANG game of being under pressure to whiteboard the process of unlinking a doubly linked list or show bubblesort algorithm stuff for a position where all I am doing is stringing some divs together in a React codebase.
I mean if you enjoy that stuff by all means do it, but I prefer to build real stuff that make impact not practice showmanship.
If you say the word 'business' you're hustling a bit ...
... if you say 'product', then ok.
The 'product' part for many businesses is often very easy to do; sales, channel development, marketing etc. which lead to making a 'business' is the hard part.
If you're opening up major clients, or large numbers of small clients through channel sales then you're really worth something.
FYI, first load of your personal website (redirected from Twitter) was surprisingly slow. Subsequent reloads were fine however. Could have been something on my end though or likely just Twitter redirection(s?) process taking its sweet time..
I do these as well, wonder if you happen to know competent people from the sales/marketing/product-design areas to team up with? I can build 'em but don't have time to help folks show up and take notice.
> What’s your strategy for finding clients, if you don’t mind me asking?
Referrals from existing clients, HN monthly threads.
> And how do you handle ongoing maintenance/sysadmin?
$10k/week, pre-paid monthly. I don't do hourly because I don't work hourly. You're paying for my skills and expertise not the geo coordinates of the chair I am sitting in for however long I am working. I charge accordingly.
The price is for your slot in my workload and that is it. Need maintenance then you pay me weekly for any maintenance work.
A client who's paying one person effectively a half million dollar a year rate to be a 'slot' in their workload, which presumably implies they take on multiple such clients at once, would also presumably not blink at pouring another 5,000 or 10,000 a month off onto a robust cloud platform to make sure things don't go down at 3:00 a.m. for trivial reasons.
I would say whole company time, but NiftyCo is no longer just me for the past 25 years and now I have a financial partner. Sooooo just me now, billed under NiftyCo.
I generally bill around $175/hr to make whatever technology problems you have work out :) (Note I'm based out of Europe, though, reading some of the stuff here I should probably charge more anyways)
That's my generalized rate when the person paying me is non-technical and the actual work involved isn't clear or known to them ahead of time. I spend part of the time coming up with a plan so they know what's going to happen, of course, and coming up with estimates.
If it's a technical person or the problem is better-defined, then I charge different 'specialist' rates that vary based on the task and the rough 'market rate' for such a task.
Sometimes, also, it's just an unusually fun task or a task for a nonprofit or something, in which case I work with their budget and my intrinsic motivation and try to come up with something fair.
I build web apps from start to finish by myself (architecture, design, development, database, servers, marketing page etc.).
I bill $500/day, but do project based billing, with 50% payment up-front, 25% on first preview, and 25% on delivery. For improvements and new features on existing projects, I estimate the avg. monthly work and we do monthly retainer agreements.
I usually work with seed stage startups (usually referred to me by the angel investors) or bootstrapped B2B tech companies acting as their dev. team.
My rate is lower than others mentioned in this thread, but I live in Turkey, which compared to EU/USA, has very low cost of living, and this rates allow me to live comfortably.
That said, after doing this for 10+ years, I'm finally pivoting to creating my own SaaS products, and stopped accepting new clients and slowing down the works with existing clients.
When you come back around to missing client work, remember that some guy on HN begged you to raise your rate. Doesn't matter where you are located. value == value; value != location.
I totally agree that value != location, but clients' budgets absolutely depends on the location. I only work with local clients, and my rates are on the expensive sides of the scale.
For comparison, my rates are about 25 times of minimum wage.
I know that I could make more working internationally, but I was happy in my comfort zone. If my indie maker/single founder adventure doesn't work out (happened in the past), I'll keep your advice in mind.
Every time I've said "value == value; value != location" on HN I strangely get downvoted to oblivion. If I am getting $1,000 a day in Los Angeles, just because I decided I wanted to go live in a midden in the Outer Hebrides, it doesn't alter the value I provide, but immediately people trot out the "low cost of living" argument as though they are eager to throw themselves on any business' sword of justification for paying less money for the same thing. If I buy a Macbook Pro in SF or in Upper Tobago (we don't do Lower Tobago, the internet is lousy and there aren't any good restaurants), Apple ain't giving me a discount based on whether I am in a HCOL vs a LCOL (local taxes and minor exchange rate fluctuations not withstanding). I don't understand why so many contractors, especially in this remote era, are so eager to do the same and also tell everyone else why they should be paid less too. I'll keep banging this drum about "value == value" even if it means taking some lumps with it.
Sometimes you're limited to local work. I contracted for a while, a few times when I got US based gigs, they'd raise my rate to what's acceptable for them, which was often way more than my local rate.
If I tried to use that rate locally, I'd likely not get much work.
A good analogy was from a real estate agent recently. She had 2 apartments of same size in a complex, one had been vacant for 2 months, and one had just become available.
She said that the owner of the vacant one wasn't willing to lower their rent, and every month that the apartment remains vacant is an 8% loss to their short-term annual rental.
The one that had become recently avaiable got a tenant in days, because even though it's better, its owner offered the same as the first vacant one.
So I'd often consider time to next gig and take shorter term jobs at low rates so I'm not idle.
I'm a cyber security specialist (in web application security) with a few certifications and 10+ years of experience.
I charge usually $350 an hour unless it's something I estimate will require the help of an outsider to which I may go as high at $1k an hour.
Answering everyone asking how we find clients - I love public speaking and so I try to do as much as I can. 80% of my clients saw me speak, the other 20% come from word to mouth. Highly recommend if you have the ability.
Man. I (CISSP, CISA), 20 years of experience, everything from development to dev management to sales and marketing to finance to fundraising, the whole shebang, do ISO27001 ISMS’s and coach through certifications… for $70/hr. But then, my clients are based in the U.K., where technology is still generally seen as worthless.
That's what a (Master-level) plumber charges per hour in Germany. By offering such discounted rates, people consider you 'less valuable' a priori.
I have indeed heard anti-"IT" sentiments in the UK, where managers often come from outside disciplines (e.g. "politics, philosophy and economics" type of oxbridge degrees). Some of these people adjust quickly and pick up technical skills naturally, whereas others couldn't insert a 9 V block battery into a toy without a YouTube video after a decade of "IT" exposure. But they also do not know what something is worth without a clear explanation, so your value is bound by your ability to articulate it.
Fair. Thank you. You’ve just inspired me to fire off a round of emails announcing a 500% rate increase, listing the pretty significant accomplishments I have achieved for each client, and underlining the point that their businesses would likely not exist were it not for my support over the many years I have worked with them. I don’t exaggerate - many of them would never have got off the ground without me dragging them through the startup thorns and driving their first few years of technical sales.
Either they’ll like it, or I’ll just quit technology, as the resentment just keeps growing.
Unless there is a massive recession, I would consider scaring off more than 80% an opportunity to spend time prospecting for better clients. I can’t speak for the UK, but I really suspect you can find them.
Also don’t forget that some fraction of the clients who balk at the increase from their anchor-bias price will come back to you after they see the low quality they get from other vendors at that price. Just be gracious when they leave.
I work in the UK and it's a fair estimate that a good percentage of senior managers haven't got a clue when it comes to IT and technology in general. Having said that, people aren't necessarily stupid: if the pitch is right, they would adopt the solution and pay decent consulting rates. The biggest problem is that both groups do struggle to meet each other.
Venture Capital and FANG pay obscene money because their business models can afford to, they just happen to be powered by software. The actual work of software development isn't somehow worth more to society than your average white collar job, at least in my opinion. It's just another job, and it would be better for the world if the pay came down rather than everywhere get inflated, so that software could thrive in other markets, not just the tech bubbles. Perhaps not the right forum to be preaching for that, and it's certainly not in my best interest either, but that's how I see it.
Their business models can afford to pay a lot because these companies generate that much cash. They drive that much cash because software can be highly leveraged (whereas plumbing cannot). Having salaries come down to means shifting where the profits are distributed and allowing the company owners and investors to capture more in comparison to the employees. I don't see how this is better?
It's still not great, but I am thinking of the negative externalities of tying up all software developers in tech bubbles, and having such a highly inflated class of worker in your cities.
Taxing those profits more readily might be one way to make the value from these insanely profitable software plays be more fairly distributed across society.
If this was true, then then purchasers would not be having to pay so much for the labor. No one is forcing them to.
Pricing is just a function of supply and demand. The high prices indicate more supply is needed to market participants. Maybe the participants can respond and provide sufficient supply to bring prices down. Maybe the participants are not able to respond with enough supply and prices stay elevated.
I think you are right. I also wonder how many people will still be interested in software after it stops being associated with big money and startup culture.
Sounds like it is less technical correct?
I find that there are a lot of auditing firms out there willing to do compliance work for cheap therefor bringing down the prices (still not super low).
Technical auditing and training in cyber security was always a kind of niche that allows you to charge more.
If you're doing $70/hr in the UK at CISO level you're way under some of your competitors.
Heck Pentesters charge more than that and they're 50%+ cheaper in the UK than the US.
My hourly rate in the UK as an Big-4 Infosec consultant 15+ years ago was way more than that and I wasn't doing CISO work. Partners (who were the kind of people doing that kind of work) were 10x your rate back then.
It's actually a similar price in Germany. There are higher paying jobs in Berlin, but in general it's not unusual to have this price in Europe. France and Spain is even lower.
There are definitely companies in the UK that will pay competitive rates for tech. $70/hr is lower than the median contracting rates for the UK, and I'd be suspicious if someone with 20 years experience was that cheap. I'd expect at minimum to be paying 1000 GBP/day.
I had 15 years of experience when I last updated my rates - and I chronically undervalue myself. I’m responsible for the better part of a billion pounds of revenue, without exaggeration, across my clients, over the decades.
Part of the issue I’ve faced is that I usually start working with folks when they’re 2-3 people, and I grow them - but my rates end up stuck at the 2-3 people company level, not at the 1000+ person company level that they’ve mostly become.
I also consistently manage to get gipped out of equity, as I’m always “just madaxe”, who humbly grinds away and doesn’t feel right taking a slice of someone else’s pie.
"and doesn’t feel right taking a slice of someone else’s pie"
I hate to say it, but you need to get over that. This very mindset has screwed me over more times than I care to think about. I'm in the $2B+ generated revenue part of my career. I've got a lot of scars, bruises and broken dreams that brought me here. Built an entire start-up, that sold for $256M, got screwed out of $2M. That was on the low-end of what I've lost in various endeavours. And I have stupidly made that mistake several times. Over the years I've learned some hard lessons.
I now take the approach that "I charge this much per day/week for my time, if you cannot afford that and wish to give me equity in lieu of (some of) my pay, these are my terms." And I don't do 4 year vesting with 1 year cliff. If I am taking a significant pay cut, e.g. 60% to 70% from my usual day rate, the cliff is 90 days on an accelerated vesting schedule. And it is a grant, not options, I'm not giving back money to get what I earned.
You also need to start negotiating your contracts to have a quaterly or bi-annual rate increase from "I'm doing you a solid here with a big discount" so that three years later, after built all the tech for the start-up, you aren't earning less than the Junior who struggles to remember the difference between margins and offsets. On client discounts (I've stopped giving them except where large chunks of equity are concerned), you can backload them too, so that should the client cut you loose because you bumped your rate by 10% last year, as stated in your contract, they pay a termination fee. Some clients will balk and nope out, those clients you don't want. It took me decades to figure out I was allowed to say "no" to potential work.
Right now I am charging less than what I have in the past, $1,000/day as opposed to $1,600 to $2,000/day, because I need some stress free time, and at 6pm, I turn off my computer and forget about my work.
Have you considered finding somebody to act as your “talent agent“? I don’t know exactly how this would work, but with so much money being left on the table I think it makes a ton of sense to be creative. I totally understand how awkward it can be to ask for more, but if part of the block is your own personality, there must be someone out there who would have less of a problem asking for what you deserve. The ROI would almost certainly be huge regardless of their cut.
Every technical meetup group I have been involved with his perennially desperate for speakers. If you make the effort to be present both physically and virtually for about three meet up groups over the course of about three months, I think it’s very likely you could get slotted in to speak by month 6. It’s possible they would add you on as a moderator for the group, guaranteeing persistent visibility if you are willing to put in the work (assuming you are a honest and decent person, this is a win-win because these communities have a huge positive externalities)
Yeah, the fixed “cost“ (in effort) of bringing someone in can totally dominate the financial cost for smaller engagements. Especially when a manager is spending their large company’s dollars.
I’ve seen some companies charge very little ($2-$5k) for a pen test. How are you able to charge $350/hour for essentially the same work? Is there some pitch or playbook you’re using to justify the price for doing the same work?
A $5K is pentest is just some guy running a couple of off-the-shelf, open source, or scriptkiddie tools and handing you the reports.
For $350/hr you get
- someone knowing which pentest tools to start with
- someone knowing how to follow up with more focused attention on problem areas and run additional tests
- someone analyzing the raw reports to understand the causes of the vulnerabilities
- a multi-page written formal report with interpretations and recommendations for mitigation, including a cost/risk/benefit summaries.
Edit to add: in my experience the companies offering cheap pentests and handing you the logs are the ones that then say, "If you want to understand these logs and know what to do about them, you can contract with us at $VERY_HIGH_RATE"
I've seen a couple of the cheap pen tests by a few German companies.
The whole thing looked like a 1-2 days of work and the person doing it was doing the basic stuff, but definitely conducted by a knowledgeable person and when problems were found reasonable suggestions were offered in the report. The apps were standard - frontend in Angular, backend in Spring Boot on Tomcat.
basic DoS, XSS, SQLi, token abuse, open ports with not up to date services, generic vulnerability scanner, basic password brute forcing
Yes! Long ago I read a book that mentioned that freelance professionals (accountants, lawyers, etc) tended to bill around 1000 hours per year. That the unbillable time went toward sales, client relations, marketing, learning, etc. I could usually do a little better than a 50% utilization rate for myself, but as you say that money goes to things most people don't have to pay. So the knock-three-zeros-off-salary rule served me well.
Common advice is to double your effective hourly rate when going from salary to contracting (which "divide annual salary by 1000" is equivalent to). That's not just because you'll have fewer hours or have to search for clients; some clients will pay you for all the hours you can give them. But also, you'll have to bring your own health insurance, pay the additional self-employment tax, maintain a business, do business taxes, and quite a bit of other overhead. The additional cost helps offset all of that.
Keep in mind it's not really 50%, more like 65? 2,000 hours means you work 40 hours/week, 50 weeks ... Basically no vacation, just a few holidays or sick days. We budget full time as 1,600 hours
Depends on the people, I'm sure. For a long time 40-hour weeks with two weeks off was pretty standard in the US, which works out to a nice round 2000 hours. A lot of the people prone to going independent are the types to put in more time than that. I sure am. But yes, if you want fewer working hours, that changes the calculations.
Generalist can be a specialization in itself. Imagine someone that can do a bit of front-end, backend, infra, design, would be a specialist in bootstrapping a startup.
Don't get too attached to market/industry defined roles.
Another way to raise rates is to take risks (like deadlines, promises) but every person had their own risk profile.
This is absolutely true. Someone who is comfortable chasing down a problem no matter where it leads, and learning what's necessary to handle it if they don't already know, can provide a great deal of value.
Many clients don't need a specialist in X, they need someone who can do X, Y, Z, A, B, C, and oh we didn't realize we needed D and E but we're glad you're up for that too.
It's a fairly rare set of skills. People in these positive usually are bad in most of them and it becomes harder to ramp up the team later (mentoring, quality).
I think the biggest issue deep generalists fall into is that they can be above average in the entire stack, but not exceptional enough to make the cut for a specialized role in any single thing (i.e the vast majority of publicly advertised roles).
Going down “specialized in boot-strapping startups” route is an interesting remedy. I would imagine the only way to find these opportunities is word of mouth.
I didn't go through, but have seen quite a few. It's indeed a less advertised position since it might be more common in smaller companies (less money/reach) and it might be a founding opportunity (less pay, higher risk), so it goes under the radar compared to very specialized positions.
Or change the language. Instead of 'generalist', sell yourself as a senior developer, architect, lead developer, etc. Nobody asks "what programming language are you an architect in", because the job is supposed to be much broader than that.
Also based in NL, "Amsterdam" area (Utrecht). As people have mentioned elsewhere, it depends. My current long-term (6+ months) contract is at €95/hr, working as part of a great team of developers on an Elixir backend, and being able to learn Elixir (which I didn't know beforehand) on the job. I have also done smaller projects (2 months), a bit more specialized, on the side for €125/hr.
By the way, I am not totally convinced about weekly vs hourly billing. In my case, hourly billing has worked well. I just make sure I bill for _everything_ I do for the client, also the time I spend learning stuff, and communicate clearly about it. People hire me because I can figure out stuff quickly, not because I know all there is to know about programming (though I do think I have a strong background).
Yeah, hourly billing gets knocks, but I think it's the right approach for a lot of circumstances. If I can control the shape of the engagement and it's the kind of thing I've done enough that I can reliably predict the work needed, sure, project pricing is great. But if you're just putting in work on a project somebody else is leading, hourly's the way to go, because that insulates you from all sorts of risks.
I think in the beginning recruiters on LinkedIn. Note however that like all parasites they will try to skim a lot off the top. Worse than that, some will try to lock you in and write in clauses saying that they should get a share of any other future contracts you might have - make sure to never sign smth like that.
Once you have a few 6 month contracts under your belt and you can get good references you can probably find things without relying on intermediaries.
Most recently my floor was USD$300/hour but billed in weeks, and sometimes I didn't do full weeks (like four day weeks during good weather). Usually minimum engagement of four weeks, 25-50% upfront (longer engagements get the lower end).
I increase the rate with respect to beurocracy and scope. If I'm working with a small, single digits shop then the lower rate usually holds. If it's a larger shop and I'm going to be in a ton of meetings all the time, I usually start doubling the rate. For a F500-type company I'd never drop below $500/hour, and minimum engagement would probably grow to eight weeks.
I'm a generalist. I've actually signed a number of contracts on "I will fix ~all your hard to fix bugs".
I'm at a full time gig right now for various reasons but it depends on how many clients I want to have at once. I tried to limit to a handful per year, and the last year in which I did contracting I was working less than half of the year -- but by choice.
Dry spells are planned, as otherwise it's difficult to line work up as often times scope changes during an engagement.
In the repair industry, technician is reserved for folks that can properly diagnose and make any and all repairs.
A mechanic is someone who can throw parts at a car but isn’t likely to be able to perform in-depth diagnostics or advanced repairs especially on newer cars with complex electrical systems.
A mechanic in Alabama should expect to earn $50k-$60k while a tech is closer to $110k or so.
I know at least 9 guys in my county who never finished high school and couldn’t compose a proper sentence if their lives depended on it yet they earn $150k+ per year repairing automobiles.
I tell clients that identifying the problem is at least 50% of the work, and that includes meetings. Well, I call them "work sessions", and I don't think it's an euphemism.
And then they can pay 100 hours for a narrow scope of perfect, or they can pay 20 hours and iterate until it's good enough (bugfixes).
We bill for project management and work related meetings, but not contract and business development related meetings. So if we’re getting feedback for our performance, ways we can improve, or discussing a contract extension we don’t bill for those. But if we’re discussing the thing we’re building, or doing project status updates we bill for that.
Meetings before signing a contract are usually free. Mean people call them "exploiting freelancers". They would invite consultants to their office and try to pickup their brains. They usually asking for free estimation, or some other free work, in the best (and very rare) case they will ask your rate and shake the hands right at the first meeting.
There are very few people who would agree to pay even for the initial meeting.
After signing the contract, you can bill for all the time you spent working, meeting, thinking, answering emails or phone calls, or even being on standby or warming up a seat at a client site.
In case the client set up a meeting and then canceled it on the short notice, or worse, didn't show up at all - you can also charge for this if you've lost the opportunity to work on other things.
Of course it's best to discuss this with the customer before signing the contract, and if possible made it clear in the contract itself.
I'm a contractor on paper and work with my own company (so I can pay 15% in taxes) but it's a long term job, full-time and I don't take holidays.
I live in a nice low cost of living European country, even if everything is slowly degrading and I give it 10-15 years before I'll need to move.
Found the job (like all my jobs) via word of mouth / personal network.
Recruiters offer you significantly less per hour in my experience.
I tried working with the States but I couldn't charge more (they try to pay european prices) and the work was way more stressful. Living in the States is definitely not for me though, way too many homeless and mentally ill people, not to mention the culture gets "progress"ively worse and worse.
If I were employed by a FANG (even ignoring the waste of time of preparing for the interview) I would have to pay way more taxes because I would be an employee. Also they pay way less in Europe.
I guess over time I could make more money, once I progress inside a FANG but that sounds hard, shaky and absolutely not fun.
I need money to build a house so my current plan is to keep contracting and run side businesses to make passive income (currently at around 1/2k per month passive) until I don't need money anymore.
Exactly. Using a day rate has several more advantages. You can skip a lot of the bookkeeping. And companies are a lot more mindful of your time when they buy it by the day. If I have to join a 15 minute meeting, I lose more than just those 15 minutes. It's a context switch, I might want to prepare before hand, reflect on it afterwards. Etc. If I bill by the day, than that's fine. I'm yours for the day. Neither of us will be staring at the clock and it's not like I'll be doing anything else that day.
So - if that 15 minute meeting is all that you do in that day, would you still bill the client for the entire day? Or I have understood it wrong. Just curious how this model works.
I'm considering switching from hourly to a daily model.
Tracking hours is becoming too granular for the work I'm doing. This includes research and development; each of which I find myself "guessing" the hours a lot of the time.
If you bill 2h of DuckDuck-ing for suitable libraries to use as dependencies, that sounds like you're slacking off. But it'll probably save money for the project as a whole.
This is a bit like the clients with low rates or clients with high rates discussion. Clients who will pay high rates actually tend to be more respectful of your time and expertise.
Similarly a chargeable day is a day when you provided the contracted services period. It doesn't come with fixed hours or even a fixed amount of hours. It doesn't come with a guarantee that you won't take a quick call with someone else in the middle of the day or a two-hour lunch date. It does include travel, phone calls, answering "quick questions" on Teams or Slack or whatever they use, and anything else you do to provide the contracted services.
Anyone who doesn't like that can find someone else to work with who is willing to put up with all the other nickel and dime stuff that client will surely try. No-one I worked with on a day rate ever even questioned it. What you get done on the days you charge for will tell a client soon enough if you're providing the value they're paying for and if you are then they won't have any reason to worry about nit-picking the wording in your contract.
When I assign a day to a project, it basically means that I promise to not work on something else on that calendar day. But the actual hours don't matter that much if I get some stuff done.
I mean regular employees also can have a bad day where they can't concentrate well and then you only get 4 hours of productive work out of the 8 hours they are physically present.
Any day, or part of, is the rule we work by, that way once they start you for the day they try and keep you entertained all day.
Otherwise it can be on and off and surprisingly the jumping between different clints/projects on an hour by hour basis is extremely demanding and limiting of productivity when done in an ad hoc fashion.
Germany, mostly doing iOS, macOS native (Objc & Swift), Android (Kotlin), Hybrid (Ionic/Capacitor) & Web (Angular + React). ~ 10 years of experience. Working with lots of low level communication protocols for controlling industrial field devices from native apps or web apps. However I never decline a project based on technology and have done all sort of other things as well.
I usually charge 120€ per hour (working mostly for big german companies). Currently mostly helping various international teams of my clients and not doing much dev work myself anymore. Usually my contracts are at least 500 hours.
However I do this in addition to my own software projects that sell pretty well. This gives me the flexibility to decline any customer project I don’t like. (Or if they want me to do scrum)
$150/hr for small (<= 10 hour) projects but I did lower my upwork to $90 before the pandemic to try and see if it got me any inbound leads (it did not).
$4000/week with no Fridays for bigger contracts.
It usually gets negotiated down for startups and non-profits.
I’m not sure if I qualify as generalist, but this should still be relevant:
It depends. Did I go through an agency, or find the client myself? Do they need _me_ or a butt in a seat? Will the work be fun, or awful, or is there any on-call expectation (which is worse than awful and probably a hard no)? Discounts for bulk and prepayment.
Also, hourly rates are the worst. Value pricing is a hard leap; a much easier thing you can do today is at least bump to a flat day rate, or a weekly one of the shape of your clients makes it seamless. Just do it; it’ll make you a happier, saner person and immediately mitigate a terrible incentive misalignment.
I think incentives are misaligned either way. You have to match the structure to the situation.
I have a friend, a great sydadmin/devops/infrastructure person. He never takes full-time jobs; his deal is always for 32 hours/week. His reasoning? 32 hours is 32 hours, but full time is all the time. He leads a much happier life than most ops-ish people I know.
Maybe you have the sort of clients where day/weekly rates work. But for the sort of client that has crunch mode or deadline rushes, there is no way in the world I'd give them a weekly rate. If I'm going to do an 80-hour week to get something out in time, I'm going to get paid for every bit of it, and I want them to feel the pain when they see the bills.
> If I'm going to do an 80-hour week to get something out in time, I'm going to get paid for every bit of it, and I want them to feel the pain when they see the bills.
That's a great point, maybe a way to mitigate that is a combination in your contract of a weekly rate + hours cap, and then just really good communication on time you're spending. But I must admit, that ruins one of the incentives for weekly billing for me, and that is not having to atomically track time and nickle and dime every little task.
It definitely depends on the client. If the team is crunching to hit a deadline and I'm saying, "Sorry, I'm at my weekly cap, so I'm leaving early today and won't be joining you this weekend; see you on Monday" then I'd be surprised to be invited back for the next project. I certainly wouldn't expect to be given any important work.
But I also feel you on time tracking, so I think a weekly rate is great if the client's culture is such that there's a natural cap and it's a good match for the work.
I charge 75 EUR per hour but my main client is very loyal (15 years working together), pays on time (24 hours) and I might soon become a business partner.
I de design, backend in PHP test and do server administration of a PMS for hotel.
I’m also curious what’s a good way finding projects for generalists. My contracting experience was that I ended up doing specialized work even though I would able to complete the project from start to finish.
They don't have money at first. The ones who hit product-market fit and then want to scale quickly used to be a gold mine for good generalists though.
A few startups are run by veterans of several previous adventures who can spot when the real game is about to kick off and it's time to ramp up hiring. But almost no-one without that prior experience can hire a bigger permanent team as fast as they want to during that period of rapid growth.
Also these companies often have relatively inexperienced teams as they start to scale just because of the earlier budget limitations. They benefit from having some more experienced hands on deck for a while to stop them making dumb mistakes and help them train up their early hires who stick around and suddenly find themselves operating a level or two up the ladder as the head count grows.
Are you paid primarily for product design, graphic design or engineering? That's a killer trifecta of skills. It reminds me of some advice from Scott Adams: "Become very good (top 25%) at two or more things."
If that's net after pension and everything it's not really that surprising. In Finland for example the employee pension rate is 25% of gross. Then tax and employer insurance on top of that and you're left with about half of the total paid sum. Of course, as independent contractor you can set your own pension rate as low as you want but that's a different debate.
Virtually all contractors in the UK are operating through a LLC and paying themselves in dividends, so there's no pension at all, and legally they are not even employees of their businesses (because board members can provide the business with whatever services without being employees).
If you go through PAYE, you make yourself an employee, and you must pay yourself a pension. But going through PAYE is a net loss, because then you also have to pay national insurance not only on your side, but also on the employers' side. Paying NI if you can perfectly legally avoid paying it is stupid.
That's not universally true. Most of the contractors I know are a mixture of PAYE and dividend (pension requirements don't apply to directors and paying nominal NI secures a state pension on retirement). It's usually the setup a good accountant will suggest.
Virtually all contractors in the UK are operating through a LLC and paying themselves in dividends
This hasn't been entirely true for a long time and it's almost the opposite of true today. The vast majority of contract work in the UK today is now forced under umbrellas where you'd be an employee of your umbrella firm and not working through your own Ltd. There is still outside IR35 work around but close to 100% of larger (and typically better-paying) clients don't want to get near it because of the risks since the recent changes in the rules.
If you go through PAYE, you make yourself an employee, and you must pay yourself a pension. But going through PAYE is a net loss, because then you also have to pay national insurance not only on your side, but also on the employers' side. Paying NI if you can perfectly legally avoid paying it is stupid.
I urge anyone considering working as a freelancer or contractor in the UK to take the time to talk to a real accountant before trusting this advice. The above paragraph is all kinds of wrong.
> There is still outside IR35 work around but close to 100% of larger (and typically better-paying) clients don't want to get near it because of the risks since the recent changes in the rules.
I left the UK about 2 years ago, and I still get recruiters emailing me about all kinds of contract opportunities. Not a single one of those opportunities were inside IR35.
Sure, for an IR35 work you're better off with an umbrella company, but it's definitely not the case for outside IR35.
I left the UK about 2 years ago, and I still get recruiters emailing me about all kinds of contract opportunities.
I get recruiters emailing me about all kinds of contract opportunities too. Many of them are probably just trying to harvest a CV. Many more want silly things like a senior Java engineer with a decade of enterprise experience for £350/day (which is a type of work I've never done and never enquired about or listed on any profile). You really can't read anything into what recruiters casually email you about or send to you on LinkedIn or list on sites like JobServe. The only thing that counts are the gigs that real developers are actually getting.
Sure, for an IR35 work you're better off with an umbrella company, but it's definitely not the case for outside IR35.
You're never better off using an umbrella. The client is. Umbrellas are just a vehicle to dump all the tax obligations that were supposed to fall on them onto you instead while pretending they're offering a much higher rate than the effective rate you're really getting paid. And with large clients they are mostly now used as a blanket policy even though they're supposed to assess each gig individually. This is a big change in the market in the last year or so because the IR35 rules changed to make the client/intermediaries responsible for determining status and liable if the determination is wrong.
I know more than one person who was independent for years but has given up and gone permanent again now because once you're getting hit with umbrella arrangements you usually get all the downsides of full employment anyway plus the extra costs that should be met by the employer and with none of the perks and protections of real employment. There are still a few umbrella gigs with rates high enough to make up for that but from the discussions I've been having it looks like the vast majority aren't now.
I'd recommend stashing the money inside a ltd and investing them from there paying only corporate tax.
Then in 20 years move to Dubai for a year, withdraw as dividends at 0% and close off the company.
I bill anywhere from 85/hr to 350/hr depending on what’s going to be done, who and what I’ll need, location/commute, etc. In the DC area.
I imagine a not quite bell curve with the center around ~150/hr for “accomplish X task and leave” contracts that I’m willing to entertain. Sometimes you bump into some juicy ones, sometimes not. That’s life.
I’ve always told clients that above all else, they’re paying for my ability to provide them certainty, quality, and a hard deadline. I charge what I charge because I’m worth it.
Depending on your reputation, if applicable, it can however be smart to work below your worth for a contract if it means a greater chance at better contracts later. You gotta build your network somehow.
It varies widely based on how much I think I gain from your project (experience, learning, networking etc). I'm an AWS specialist DevOps ish person, and bill around 1k/day on retainer and a bit more for "live" work. In general, if your aws bill is smaller than my invoice, we do something short term and results focused and I bill at a higher rate, if your aws bill is higher, you get a lower rate, but keep me around on call because when someone really fucks up, it balances in the wash when you're back online in hours instead of days.
I charge $150/hr. for new work and do pretty much exclusively hourly-based work. I have many clients that I grandfather on lower rates.
The second half of this equation is how many billable hours you can get as freelancer in a week. Plenty of the things I do are not billable, and the more different small contracts I'm working on the less billable hours I'm able to fit in. I would say I average 20-25 hours billable on a regular work week of 40-ish hours.
I do fixed project fees against tight scopes rather than hourly rates. When things go out of scope, it's expensive enough ($250-300/hr) to create a pain point.
One thing I don't more of and it surprises me: There's no reason to charge all clients the same rate. If you're solving a five-figure problem for one client and a seven-figure problem for another using basically the same solution, why charge them the same?
> If you're solving a five-figure problem for one client and a seven-figure problem for another using basically the same solution, why charge them the same?
Do you have a script for sussing out the value of solving a problem for any given client?
I guess savvy clients might pretend that it's not all that important/valuable to them, to prevent contractors from bidding it up.
£75/hr was my last freelance rate for some PHP dev work I did.
Got a few too many plates spinning at the moment though so only doing oldschool Linux sysadmin stuff (pets vs cattle) outside the day job. I'd probably bill cheaper for that as it's less of a time sink and the tasks are either easy fixes or interesting.
Because I'm desperate for the money and solving an interesting problem is the closest thing to feeling happy I'll do this year. If just one financial plate falls down I'm homeless.
Ten-some years ago I started at $100/hour and I thought that was a good idea. "Great, I'll make $200k a year and pay 45% in taxes, that's fine, I can live on that." I thought that being attractive to more people was a better way to find clients.
I didn't have a problem finding clients, but they were clients that I didn't see panning out — they gave me vibes of being poor executors. I looked for a way to filter out these "app idea bros" as I called them.
The first thing I did was change my rate to $150/hour.
Again, I didn't have a problem finding clients; they were still the clients that I didn't see panning out, though.
I kept increasing it until I got three prospects in a row that had huge concerns paying what I was asking: granted, it as a lot more than anyone should ever pay for any skillset that wasn't life or death, but it helped me find a balance.
Eventually I settled on $375/hour, prepaid, and prepaid weekly. I still have no problem finding clients, but the quality of client has significantly increased. I also now am much more happy to filter clients out — I let them know that, too.
I rarely negotiate on it. I'll negotiate on scope (time), or really narrow focus so that my value can be had in a much more focused manner.
Before, my marketable skill was "developer, with business chops". My acumen has evolved, sure, so my marketable skills have too. But how I approach it has changed greatly.
My value prop is quite extensive: I am a one-stop shop for all things idea, from both a business and product standpoint. I contribute at the executive level, I build the product, I share fifty ways that a product could fail and find new ways that it could succeed.
Most importantly, though, I tell clients what they don't need, and I don't spare any time to do so. "Well, my friend said that they use AWS and Kubernetes, don't we need that to scale?", to which I reply, "Cool, I'm happy for them, but you don't need it, no; $PaaS is fine until you reach their limits and it starts becoming a problem — you have three paying customers who are operating off your hacked-together MVP; thus, it's not a problem. Please, do yourself a favor and stop talking to friends about what they use and go talk to customers and potential customers while I'm building this."
This builds trust, and is the most important tool in my bag of tricks: not my background in Ruby development, not how productive I am, not my experience in having already solved seemingly 99.9% of the problems people face in building and scaling web apps. Those are all superficial and nice-to-haves.
Trust is the most important thing I sell, followed by my ability to say "no". The practical and tangible experience in design, development, systems, content, email campaigns, copy, branding... my clients could hire anyone to do those things better than I could — people can specialize in it. I specialize in saying no, and, while the jury is still out on this, I haven't quite been proven completely wrong yet — and one of my biggest kinks is being wrong.
I miss client work. It was stressful at times, and at times kind of lonely. I've pivoted to other things to build skillsets that were practical, but I still find myself picking up the odd job here and there.
I'm a full-time employee but I can see myself in your comment. Too many people do not realize the power of "no" on one hand and the power of being able to build a valid opinion on many topics quickly, opposed to having the perfect, expert opinion on one single topic, on the other hand.
It took me a lot of experience to learn that and now I'm more listened to by my reports, peers and superiors alike, while feeling much quieter and more efficient at the same time.
I have 12 years of experience working as a backend engineer full time for medium-to-large sized software companies, and breaking into consulting has always seemed really difficult to me.
I mostly excel at system architecture and writing technical documents to describe the trade offs of those systems. I really don’t enjoy full stack/web programming or marketing - is it possible to consult in strictly this capacity? e.g. as a principal or higher level engineer?
You need to define your question better. What is a generalist? I would have considered myself a generalist but thats with a focus on embedded/systems programming and an ability to make a shitty website/database backend. Other folks may consider themselves generalists because they handle front & backend web design or because they write applications from start to finish. What sort of information are you looking for?
I’d actually go at a different argument than generalist versus specialist, some fairly commonly heard wisdom in UK was if you were risk-tolerant you could “always make more contracting”. What you also hear is “charge more”. I would instead say to both of those things that one should seek to understand where they want to be in 5-10 years, earning what and doing what?
A lot of these threads do boil down to the few making $350 per hour, the many making $100 per hour, and both cohorts seeking to make more. I can’t actually tell you how to do that while contracting, I can tell you my story and perhaps it will help someone :-)
I pursued contract roles for a few years typically resulting in me making £100-250k gross per annum range, typically billing at £1000/day or £15-20k/month and optimizing UK tax using all the usual and perfectly legal means. That’s a good income and my family had an okay standard of living.
These roles were anything from software development to systems engineering, mostly a “make problems go away” situation - clear connection for the client to business value. I worked for everything from US startups through to UK financial services.
Before that I’d done some full-time roles with big and small companies typically in the £80-150k range. Striking out as a contractor was partly the desire to try something new and partly a particularly interesting opportunity arose.
Eventually, I ended up going back to what I’d still consider generalist roles with larger FAANG or FAANG-adjacent employers, that’s something of a “loss of freedom” versus contracting, the nature of growing a “career” with them (not the same employer necessarily, just the same set of companies).
For me, long term goals were twofold:
1. To have interesting work and problems to solve, ideally to engage with smart people;
2. To make money, lots of money, I’d like to retire at some point, and I’d like my standard of living to be high, I’d like to never really worry about money.
In outcome terms, making that jump back to FTE and “getting in the door” of FAANG, which took effort both to get in and then to excel in the new roles, it has paid off in ways where generalist consulting could never take me, I relocated, now take roles that are FAANG or FAANG-adjacent executive-level roles in “Engineering”, these involving a multi-disciplinary mix of duties — Product, Software and Program Management, the full spectrum of working out what the customer needs and what that means for the business, building that technology often with a large team, enabling the field to sell it, feedback loops to improve it.
I’ve had several years of W-2 employment in the $2-4M USD range, that’s >10x from contracting rates, achieved in <10 years and I’m on track to punch my retirement ticket around 43 years old and then only work for interest, not for money.
In my humble opinion, it is much harder to sell yourself as a contractor when applying to FTE roles (particularly those at bigger companies) and to tell the story in ways a Hiring Manager will appreciate and see your value. Therefore you really need to consider whether the “hustle life” of contracting is something you want to do through retirement, what’s it mean for you when 35+ or even 45+ and is it setting you up for the endgame you want in life?
I haven’t done any significant consulting since moving to FAANG. Occasional due diligence on M&A. Occasionally a Board Advisor. Nothing that creates conflict with the day job.
So, I’m a W-2 employee now in an executive-level role, have been for several years, and this is my second such role (meaning two companies now have hired me in from outside as a senior leader). Right now I’d say FAANG-adjacent, it’s not a company in the acronym, it’s still a huge employer. They’re paying highly competitively and matched the deal offerer by a FAANG when I moved jobs in 2020. I would expect this is probably what I’ll be doing until I “retire”.
Retirement to me doesn’t actually mean entirely ceasing doing work but I’m only going to be pursuing interesting problems with interesting people in a few years.
Overall my point though was you’re doing something today not just to make a paycheck this month, but hopefully to lead up to something next year or the year after, and you should have an endgame. Evaluate whether generalist consulting/contracting really supports that endgame for you, and don’t just focus on how do I get from $50/hr to $200/hr and then have a “Oh, crap, this skillset and my resume now makes it even harder to get to the endgame that I’m seeking”.
Which back-end programming languages do you find are most commonly required by clients who pay good rates? I'm particularly interested in the relative popularity of statically typed frameworks such as Spring Boot and ASP.Net vs Rails, Django and Laravel where serious money is at stake.
Do you guys charge the same rate no matter the task ? if a customer wants a quickfix or some trivial change do you adapt ?
On the other side of the spectrum, if you spend way longer than thought on a feature, do you stop charging or do you consider your work is still worth for them ?
I only work on the products I've built myself. Bug fixes are always free, even if the project has been delivered years ago. Trivial changes are sometimes free if I have a good relationship with the client. Mostly I group the work for a day and charge my daily rate.
For the 2nd question, if it's a fixed budget project, I bear the cost myself and take it as a lesson for the future to do estimates better. If it's not, I always inform the client that it might take a longer than the estimates if it's not something I've done before.
When I was early in my career I spitballed $180/hr as something they'd surely try to negotiate. The client jumped at the opportunity. I've been employed normally since then, but I imagine the market rate is substantially higher.
There are 100 clients who expect to pay $15 / hour for every one who will pay $125. It's really really hard to find them but you will find them if you ask 101 potential clients.
I'm based in Germany, so the tax pressure is quite high, thinking of moving back to Italy (where I'm originally from) to benefit of the massive tax break for "returning Italians" (or anti brain drain tax advantages).
It's not that great, you still have to pay social insurance. It's been a long time since I checked but you end up paying 30-35%.
In Europe your best options are Malta (5% corp tax + progressive rates on what you spend and keep everything in the company until you leave and withdraw at 0% from eg. Dubai) or Cyprus (12 corp tax +2.5% dividends tax).
I'd consider Montenegro as well if it makes sense for you or other eastern European countries.
In Australia, the most common scenario is a "contractor" being a borrowed casual employee from a labour hire company and the worker gets paid per hour worked whilst being able to work 40 hours per week until the end of a project (typical durations being between 1 to 3 years). This is generally a better arrangement than being a permanent employee because:
1. Your leave (that most people can never use as they aren't sick enough or aren't going to wait around 7 years for long service leave) is paid as you go and thus you accumulate the leave between contracts.
2. You don't have to waste as much time on company/organisation bureaucratic processes such as training you didn't want to do, having to write out performance agreements, attending all staff meetings talking about the 2% pay rise you might get each year, etc and instead you can focus on getting your job done and building out your CV faster.
3. Generally contractors are kept on longer than permanent staff if a project or organisation is on the slide as contractors can be cut off abruptly and without reason when things get really bad, whereas an organisation needs to spend much more effort reducing permanent staff numbers and therefore have to start the process earlier for reducing permanent staff. Permanent staff get 4 weeks minimum notice of being made redundant whereas contractors on paper get 1 hour/1 day notice. In reality, contractors get more notice because they'll see permanent staff redundancies on the way and know to start looking for other work and if it doesn't arrive quickly, the organisation will have got rid of permanent staff quite often before they let their last contractors go.
4. It's easier to get labour hire work because there is less risk to both parties in just having a single meeting and then agreeing to a start date of tomorrow. If it doesn't work out for either party, the agreement can just as readily and easily be cancelled soon thereafter and not much is lost by either party. Permanent staff have to jump through multiple rounds of interviews, waste the valuable time of those in their work network to complete references, etc.
5. It forces workers to re-evaluate their worth at the end of each project as they're back on the market and will ask for current market rates for their next engagement. Permanent staff that stay more than 2-3 years in a role won't be re-evaluated at current market rates and will fall behind significantly in salary.
Labour hire rates are readily discoverable on AusTender (Australian government website for publishing awarded contracts). For example, a SAP consultant at [1] was recently hired for what is likely a 1 year "full time" (1762hrs) term and charged to the Australian government at AUD$363,000 (including GST). From this published figure you can then deduct 10% GST, 6.85% payroll tax (ACT), insurance costs, payroll costs, etc to arrive at approximately AUD$300,000 equating to an hourly rate of AUD$170/hr (at 1762hrs worked in the year which is 40hrs/week x 44 worked weeks of the year). For low overhead labour hire firms, a casual employee may take home AUD$160/hr from this arrangement which is roughly equivalent to a AUD$280,000 salary assuming long service leave, 4 weeks notice and redundancy payouts are negligible if a permanent worker was changing jobs at the usual rate of every 2-3 years. A permanent employee would be lucky to get a salary package of AUD$220,000 from this arrangement in part because the company has to cost in the chance of the employee staying long enough to be eligible for long service leave, redundancy payouts, etc.
General labour hire rates for Australian government work (and this generally transfers across sectors to private sector rates in ICT fields that are competing for similar talent) range from casual employee take-home rates of AUD$120/hr (business analysts etc) to AUD$190/hr (architects etc).
The second type of "contractor" is where a services business is established that has numerous clients and/or may hire employees or engage subcontractors, accepts risk for work completed, carries a variety of insurances, manages more complex finances, performs a significant degree of business development to find more clients, etc. They are generally engaged for intermittent work at a week here, 2 days there, three weeks later, etc and rates can typically range from AUD$250/hr to AUD$400/hr. Typically work is not performed for less than a day at a time and there is a form of retainer agreement (often exceeded or extended). It is harder to find typical market rates for these services. Whilst you can see these arrangements pop up on platforms such as AusTender, you're never really sure how many hours of services have been included and the conditions of those services. For example, whether travel is an additional expense charged separately (typical case) or whether travel expenses are built into the rates.
For readers not familiar with salaries in Australia, [1] indicates that a labour hire employee in Canberra on a take-home rate of ~AUD$120/hr places that person in the top ~3.6% of income earners in Australia and easily within the top 1% of the world. Per the OECD Regional Well Being Index[2], Canberra shares a 10/10 score for income with a small number of other US regions and is the only non-US OECD region with a 10/10 income score. When considering other quality of life factors, Canberra easily leads the OECD regional index at a sum of 106.74 vs. 82.81 for California, which also scored 10/10 for income. New Hampshire, Minnesota and Vermont share second place at a sum of 96 with income scores of 9.9-10 and fifth place was Victoria (Melbourne) in Australia at a sum of 95 with an income score of 5.8.
> When considering other quality of life factors, Canberra easily leads the OECD regional index at a sum of 106.74 vs. 82.81 for California, which also scored 10/10 for income.
Although ... Canberra is also incredibly small, boring and barely anything ever happens while California is a cultural hub.
"The second type of "contractor" is where a services business is established that has numerous clients and/or may hire employees or engage subcontractors, accepts risk for work completed, carries a variety of insurances, manages more complex finances, performs a significant degree of business development to find more clients, etc."
Yeah so in private small/medium general engineering (eg electrical, mechanical, safety, controls etc) it's hard for the organisation to be profitable on any less than AUD200 per hour, paying out 60-70% of that to their best people and less for less experienced, but also slightly lower chargeout.
Larger public companies I am hearing maybe $50 more, but they have really been screwing contractor rates down, while seemingly putting little effort towards overheads.
Genuine talent is getting hard to find, people who can develop design from first principals rather than just what they have seen before (if that) is getting tougher and tougher, mainly because it is a specialised skill but EPC management views all engineers as fungible and hate to pay extra for even obvious talent, fearing a tsunami of rate increase claims from the donkeys.
Page 54 of a Professionals Australia report [1] despite the low sampling size and less reliable methodology mirrors your comment that engineering contractor rates are much lower than ICT contracting rates in Australia.
I'm a qualified engineer in Australia and amongst those who graduated at the same time as me, almost all of them are working in the ICT field. That is where the demand for workers is, and probably the main reasons driving ICT salaries and contract rates higher.
Defence sector engineers also seem to have high rates on par with the ICT field for various reasons including high barriers of entry (Australian citizenship for starters), high levels of federal government investment and little effort expended in training people to join the sector. There are Civil Engineering degrees offered everywhere, but not widespread "Design some ships for the Navy" degrees.
For the mining boom starting about 2010, engineering was highly sought after but was mostly conducted by engineering firms in Europe, America, etc due to the lack of experienced workers in Australia (partly resulting from a massive lull in investment in preceding years). Given that exploration investment is currently at record highs, perhaps engineers with mining industry experience could again be in high demand soon. Engineering related to the renewable energy sector I assume would also be starting a boom cycle too.
The cooling effect on engineering as a profession though I think is the use of standards and resulting cookie-cutter approach of clients being able to almost get the point of saying "Give me an AS/ISO 1234 bridge" or "Give me an AS/ISO 5678 substation". Hence there is not a significant amount of original nor complex engineering performed for most projects, rather, it is performing minor tweaks to existing standard designs. Then there is seemingly more supply for engineering services than there is demand for the services, and qualified engineers end up performing non-engineering roles such as project management and sales within the engineering sectors.
I think the cost of professional indemnity for the more tangible branches of engineering really cuts into revenue in a way software production does not.
You need to insure for life of design, in practical terms it means you pay a premium for 7 years for a design delivered today, dropping off in premium/coverage each year as it is viewed the owners ops and maintenance acquire responsibility over time.
It can get expensive when you might consider an event of, say, blocking Pt Hedland harbour at cost of up to ten billion dollars a month.
I am an EE in the West consulting on electrical, controls, safety, integration etc and holding my own for rates vs IT for all but the most extreme IT rates I have seen or heard of, but only just after the recent run - my wife just changed jobs (in IT field) for an extra 100k, I am on the same rate as 12 years ago, but it was an awesome rate 12 years ago...
Keep in mind that contractors don't receive benefits (health care, dental, etc) and have to pay about 30% in taxes. So in reality, the pay is about equal once you factor in that.
I live in Canada & I've done the spreadsheet math. I can probably ~triple my salary if I go balls to the walls. Insurance is a drop in the bucket (I can just outright buy my drugs). I'm just kinda comfy where I'm at, and I'm having fun at my job.
Agree, I've never seen a benefit package that gets me excited. With our health care system here, the FTE jobs are a lot less compelling vs the contractor route. About 1/20 that go the FTE equity route seem to hit the jackpot.
I gain security and confidence in my employment by knowing the code base, the stack and the business domain. I pick projects that are core to the success of the company. In twenty five years, I was only laid off once and in that case, 18 of 20 were let go in 2008 when an engineering firm lost all their work.
Some people are just unable to stop. My wife was like that in her small business. Her mindset was something like: I can't watch TV, I'm wasting money I could be earning. Even if there's no work right now, you can always do business development. It can become a trap.
HN is a forum where increasingly I see posts every single day about the high level of misery in tech / how can I get out of this rat race / high levels of stress / undervalued / etc etc.
I charge £500 a day. It's not much compared to some of the rates on here, but I work with lovely, interesting clients in the non-profit sector. My clients love what they do and I do good work for them so they love what I do. I have long term, low stress, friendship-like relationships with my clients, not shouty / nasty / high stress ones. I've done this work for 12 years, and had to work with maybe a handful of assholes during that time.
FWIW I think there is a "lower budget bar" under which demands are insane for the money being offered, and we should all avoid this work unless we actively want to take a race to the bottom. But - I think there is undoubtedly a "higher budget bar" over which the stress level and expectation is made exceedingly high. This (I would imagine; I don't know, I've worked in non profits my whole life) is probably also equated with sector - if you're in a FinTech environment I would imagine you're looking at high budgets but also an insane number of highly pressured assholes shouting at you all the time.
What am I basically saying? I guess - yes, charge enough (and this is probably more than you think it should be) - but also, look at the bigger picture of your work / sector. Think about happiness, work-life balance, client motivations, etc - and use this to inform what you charge and how you charge for it. That'd be my advice.