How do you decide your contract rate?
Everyone has a different formula for deciding their contract rate, and when it comes to your own hourly rate it is your decision, but there are some things to keep in mind.
First, although there are 2080 hours in a year (40 x 52 weeks), you need to keep in mind the holidays you won’t get paid for (80 hours) and the vacation time you won’t get either (80 hours), so always start with 1920 hours in a year. So after you’ve divided your annual salary by 1920 you need to come up with how much benefits are worth to you.
Benefits? - Give a site like BCBSNC.com a try to find out how much medical and dental will cost for you and your family on a monthly basis. Divide that by 160 (average hours in month) to get your benefit number and add it to your rate.
Contractors Premium - Now you may want to have a sliding scale of dollars to add for the length of the contract, for anything less than 3 months you may want a higher amount, you may be out of work sooner. Anything greater than 6 months should bring your sliding scale closer to zero.
Usually your consulting firm will have an idea of how much is too much for their client and will let you know when you’ve come in above the range. If the rate range is below where your comfortable make sure you let them know, really good candidates will often be presented despite the rate.If you still have questions feel free to contact me and I’ll see if I can help!
Posted by sean barclay