Public service announcement: Tech Consultants don't make $40/hr.
If you're a skilled, experienced developer and you find somebody trying to pay you less than $75/hour to program computers on a contract basis, regardless of where in the world you live, say no.
There do exist people who work for rates less than that. They're either called "employees" and receive benefits, or they're called "people being taken advantage of."
I charge $47 per hour - even do business apps in any of the rather-awesome frameworks at that price.
Because my rates are so low, I don't have to spend time making mockups, bid proposals, or have to deal with the know-it-all nephew. I also get to work on fun "what-if" projects and my customers happily pay their bills.
The dirty secret is that I charge for hosting - 60% of my income comes from hosting for solutions made in the past, and I don't even have to lift a finger.... well unless someone finds out about an SSL vulnerability. :)
Especially if you're working independently. You've gotta cover all your costs, including insurance and retirement. That usually puts a well oiled consultant up over the $150/hr mark.
You vastly underestimate the number of highly qualified developers in the world looking for work, and my opinion you vastly overestimate the value of your work. I would never pay your rate. Programming is a commodity. I hire PhD's from Asia and Eastern Europe for less than what would be considered minimum wage in the United States. An order of magnitude cheaper than what I assume your asking rate is. They produce great code and deliver in a reasonable timeframe. Calling this outsourcing exploitative is incredibly ignorant.
It's basic economics. Here are a few terms to start with that will help you see the bigger picture: http://en.wikipedia.org/wiki/Supply_and_demand and http://en.wikipedia.org/wiki/Per_capita_income. The simple matter of fact is that the value of a dollar varies greatly by location. Asserting that a wage of less than $75/hr for programming is exploitative is absurd and offensive towards anyone who's ever off-shored work. I code. I offshore. I do not exploit my employees and resent the accusation that I do. I pay them very well compared to their peers, treat them with the same consideration and respect that I treat any other human being, and do not think it reflects well on this community to have such an ignorant and offensive statement as the highest ranked comment on this thread.
Because I'm fortunate to have a circle of developer friends where there is no longer any taboo talking about rates and salaries and no one is charging less than $100/hr. Maybe even $130/hr now. My rate is now $200/hr for one-off iOS and Ruby on Rails projects, up from $120/hr when I started working independently in the summer of 2012, and I still have to refer folks to qualified friends.
The taboo of talking about salaries and rates is something that only benefits the people employing you and maybe a handful of employees, but never benefits employees at large. As a manager I remember finding out how much my employees were underpaid vs. another friend's team in a different division and after bringing up the issue with my director or VP a company-wide memo went out telling all managers and directors to stop talking about salaries across divisions. I wonder why.
How geographically widespread is your circle of friends? It was the "anywhere in the world" part I was wondering about, not the fact that your friends can discuss wages.
They must not be talking about developers alone. The only developers who work that cheap are remote from other countries. I could see it maybe for IT people who wipe hard drives in computer labs or something like that, and who don't bill directly, but are paid by an agency that bills and takes a cut.
I tried this for over a year and remained unemployed. Finally gave in for a $15/hr gig. It very much depends on where you live. The pool of clients in this region is very dry, and no one is willing to pay.
That's what an average consultant likely makes as a salary.
$42/hr * ~1980 work hours in a year = $83,160
The caveat here is being a technology consultant is relative to the types of technology problems you're consulting for. Tech Conusltants can much more so today be generalists without much depth in a particular tech skill as the average geek might define. Ie., get your company setup in the cloud using basic cloud services. As a result I do see this position opening up to technically inclined folks in general.
A rule of thumb I've found that can be accurate is you should/can charge about $10/hr for every year of experience you have, and should be working for clients or employers that see value in paying for that kind of experience. At some point that might transition from being an employee to a contractor, and ultimately a consultant.
The lower the hanging fruit, the more the rates lower. Focusing less on technology, and more on business strategy which uses technology as a tool has helped keep my rate fair, and high enough to do quality work.
> That's what an average consultant likely makes as a salary.
No, that is what a highly productive (100% utilized) consultant at $42/h makes as revenue. If you were to convert it into something comparable to a salary and account for realistic work schedule it would probably end up being in the 60-70k range.
There's also the self employment tax to consider for contractors working for themselves in the US.
Employers pay 7.65% and you pay 7.65%. If you're on your own in addition to the income tax you have to pay you also need to pay the whole 15.3% of it. To compare salaries between a person working for themself and someone working for a company it should be taken into account since it's a big chunk of the money you're making.
I was sort of spitball including that in there in my calculations, but yes. This is an important thing for people to understand when dealing with or becoming a contractor/freelancer.
I think that a lot of people don't realize things like this when they do their back of the napkin calculations for freelancers/contractors. $50/hour != $100k salary.
In addition to assumptions of napkin salaries, the numbers could work in a place with very low taxes (10% on profit under a few hundred thousand), or friendlier contractor taxation locales, like Canada where you can do some reasonable income splitting between personal and corporation expenses.
The 42/h could be something a contractor directly gets from an employer, with perhaps a headhunter keeping another $15-20/hr on top of it that the contractor does not see.
I started when I was about 16, and have worked about another 16 years:
- Certifications are generally worthless I've found. They get outdated, new software comes and goes.
My main plan has ended up being:
- be centered around being an extremely good problem solver across a more complete "full stack" (hardware, software and network), vs the front-end/back-end coders. I do this by solving problems all the time. I don't care how trivial they seem or how they may not fulfill my fantasy of feeling like a special and significant snowflake. Solving problems has lead me to the best problems to work on in my life.
Technologies come and go, the methedologies get additional experience. I started doing JIT manufacturing, into more lean stuff, and conveniently lean startup became popular at a time where I had a good 5-7 year head start in implementing lean software solutions in small, medium and large organizations. Convenient, it seems, but mostly happened to be around not having an opinion on what I was beneath, or above doing. I'm a problem solving junkie, after all.
Its part of the initial conversation you have clients. The goal with the initial meeting isn't to focus on how you can fix all their problems with technology, it's to focus on truly understanding the problems they have from their perspective. Once you completely understand and empathize with the issues their having only then can you formulate an appropriate business strategy (which may or may not use technology) to address their problems.
> A rule of thumb I've found that can be accurate is you should/can charge about $10/hr for every year of experience you have, and should be working for clients or employers that see value in paying for that kind of experience.
This seems REALLY conservative IMO. If I went with this model when I started consulting I would have quickly gone out of business. Have you had clients that ever said your rates were too high?
We're talking about consulting, technology consulting, and not neccesarily programming type consulting.
I should have said charged at least $10 for every year of expertise you have. In the first few years it may very well be higher.
My first client was about $50/hr in the late 90's. I had about 5 years of experience when I made the switch from employee to contractor.
It's really about a mutual conversation of value. If you're fast and good at what you do, you should be able to go in fixed price. Hourly rates are never in anyone's best interests long term. The better you get the quicker you are and the less you can make at any high rate.
Clients say my rate is too high all the time. Then they hire someone to do it cheaper, take 3 times as long, and end up with something they can't grow in the direction they wanted, at which point they realize it wasn't programming they were hiring, but rather a process and a guide for the process.
A bigger thing here is to pay attention to gaining consulting clients who have a budget that does not consist of their own personal money, or money they have directly earned in their own small business as it gets the type of comments that rates are high. Businesses who are making money understand value and need it done well, right, for a fair price.
From the 2080, I'd take out 80 hours for vacation, and the rest for sick/stat holidays.. Of course, this is all relative to how the work arrangement is setup.
This is mostly a useless article. What does the 42 an hour represent? Is it for independent contractors filing 10-99's and is that their bill rate or their EBITDA or their net income?
Is it the average for salaried workers? (avg hours per year divided by salary).
Did the average hours worked include only billable time or time spent on administrative tasks, company meetings and sales calls?
Did they include part time workers and did they properly weight their contribution to the averages or just lump them in?
Any conversation about learning to provide, and communicate value is valuable. If it's not through one particular lens, be it yours, or mine, it doesn't mean everyone has no lessons to learn that you have not learnt. 42 an hour represents an exchange of value for a customer.
After a decade of doing this, there's as many opinions about consulting as there are consultants, myself included.
Having tried hourly, monthly retainers, fixed fee, and contingency based pricing, they all have their merits relative to your skills and ability to deliver value.
It all boils down to being able to add value in a productive way. I work fewer hours than I hever have, deliver bigger results than I ever have, and am making better money with better customers than I ever have. But, I started in the trenches like everyone. These details of how many hours and rates, and utilization rates are much more an issue without paying customers. I was very lucky to be able to get and keep long term customers, which I think is a topic unto itself worth learning more about forever.
ok granted. The last part of the article provides some generic useful tips on being a consultant. I was referring to the statistics and graphs which provide no context when I said it was useless.
The only way for a "consultant" to average 38.8h per week is to either have a full time contract or to work 50+ hours a week. There's overhead in consulting, bookkeeping, marketing, sales, etc. There's no way you can bill an average of 38.8h a week unless you're working really high hours and I don't understand how that could be an average across the industry.
We are very upfront with clients that they cannot book us 40h a week, because everything else means that I cannot shift the work of synchronizing with my colleagues, organizational stuff and the whole thing of "being a company" to one day in the week. My pitch is: "either, you get us 4 focused days a week or I have to do my company stuff from your office". Exceptions are short stretches of full on-site work. Works very well, I must say.
On the other hand, I once had a agency billing: "Assembling Desk". The employee in question was a very honest book-keeper, that was his first day in the company and management didn't check and billed. We replied by asking whether the employee is sitting well and healthy ;).
a consultancy employee doesn't have to do business development, marketing, accounts payable/receivable/collections. A freelance consultant does. In most cases an employed "consultant" should be able "bill" 32 hours per week.
I wonder if they're including people who have a full-time salaried position with the job title of "Consultant" in this mix. It would make the numbers make more sense.
I started working as a tech consultant in my teens (not just building PCs for friends but actually developing relationships with local small businesses, translating tech-speak for them and advising them on the best course of action for things like servers, backups, security, and networking) and my hourly rate started at $35/hr.
Within a few years the demand for my services outstepped the number of hours in my day, so I pushed my rates up, peaking around $75/hr in my early 20s when I finally got sick of dealing with people who wanted a magician instead of a tech consultant.
That was about 10 years ago. I have friends who stuck with it and every single one of them makes more than $100/hr, so I laughed when I saw this article say, "the average hourly salary for tech consultants hit $42.17 in February—an all-time high."
It does say "average hourly salary", but I wonder what percentage of tech consultants work for a salary vs billing the client by the hour.
A good friend of mine took a contract job (to be hired on fulltime within 3 months) for $30/hour, doing simple company support IT related stuff. He is most certainly considered a consultant. I think this is a very common case, 1-6 months as an outside contractor before being hired on fulltime. Lots of the listings on places like dice are specifically tagged as contract work, leading to fulltime.
Thanks. I wonder how I stack up against other developers...
Let's see... Applications Engineer, well I do create web applications and I think I'm pretty dang good so I'll choose "V". Oh but wait, I'm also a programmer right? Or am I a software engineer? But I also "architect" most of our applications. Ugh...
I looked under Web Developer and I'm getting underpaid based on almost all definitions. The closest I came to (but still somewhat under) is Webmaster (small company). I'm so glad that's not my title though.
It's very hard for me to take the info in this article seriously with a statement like this:
And given how that’s an average, it’s certain that many consultants are working far longer in order to keep their clients happy.
Well, yeah, and if my understanding of averages is correct, it's also true that many consultants are working far fewer hours. Compared to most jobs, certainly in the field of consulting, an average of 38.8 is pretty low.
The quality of data representation in mainstream journalism is really poor. I guess it's to be expected - most journalists don't really have much of a scientific background and so miss out on having graphing considerations hammered into them. Even publications like the Economist often squeeze and deceptively label graphs. It's a shame that the people informing the general public about science, technology and maths are so illiterate in it themselves.
I think they took IT staffing companies like Adecco, Manpower(contractors that work 40hrs/week at clients) instead of IT Consulting (Accenture, etc.) or freelance tech consultants to calculate this- It is too low for someone that calls themselves "tech consultant".
1) Meet with business people, 2) sell them on a solution that will save them time/money or increase sales/revenue, 3) very often implement the solution, 4) and maintain/add enhancements to said solution.
This might be average in say the Midwest where the cost of living is much lower than say NYC or California. Most "consultants" I know on the West Coast are making more in the range of $85-$100/hour.
If I lived in NYC and was billing $40/hour, I'd practically be hovering on the unemployment line with the cost of living there.
If you bill 38,8 hours/week you need to spend ~55 hours in front of the computer every week. Sometimes it's hard just to bill 30 hours...
And $42/hour for US contractors it's surprisingly low.
Wall St consultants (let alone HFT 'experts') should make somewhere close to double that. The same is true for London/Frankfurt/Singapore/Hong Kong financial industry consultants.
I'm inclined to agree with the consensus here, so far. As soon as I saw that 38.8 hours a week was the consideration for "long hours", the rest of the article became suspect.
If you're a skilled, experienced developer and you find somebody trying to pay you less than $75/hour to program computers on a contract basis, regardless of where in the world you live, say no.
There do exist people who work for rates less than that. They're either called "employees" and receive benefits, or they're called "people being taken advantage of."