I'm making my full time web dev job into part time freelance work. How do I determine a rate?

May 30, 2007 3:49 PM

I'm making my full time web dev job into part time freelance work. How do I determine a rate?

I'm a .net developer making 65k at a small company that recently lost a lot of it's developers. I'm leaving the position to pursue other entreprenureal opportunities, but let the management know that if they would like, I could work 10-15 hours a week off-site as a freelancer. How should I determine what my hourly rate should be? Advice I've gotten was hourly salary * 1.4 to compensate for the lost benefits, so around 40. Fair? Also, if important, they were disapointed in losing me, but not at all leaving on bad terms. Thanks for any advice.

posted by keame to work & money (13 comments total)

IMHO $40/hour is a tiny amount for a developer of any kind. I'd double it, at least. There are more than just lost benefits to compensate for -- things like stability, vacations, paid downtime, etc. In return, they are getting a lot of flexibility -- they can get rid of you at any time.
posted by TonyRobots at 3:56 PM on May 30, 2007

If you search AskMefi for "fees", "consulting fee", "freelance charge" or something similar, you'll find lots of old threads about this very subject. $40/hour is very low. Your rate should work out to 2-3 times your old hourly rate + benefits. However, if you're interested in a lengthy explanation of how to calculate your fees, my profile has a link to a post I wrote. (I run a site on consulting, which has several hundred free articles.)
posted by acoutu at 4:02 PM on May 30, 2007

$40/hour is too low. I think a good starting point is your salary divided by $1000, so $65/hour. I remember reading on average that companies spend twice your salary on your total compensation package, so using your math, that works out to $65/hour also.

The thing is, you are adding a lot of value by staying. They don't have to pay for your learning curve like they do if they picked up a contractor off the street. Due to this, I'd say $80 minimum. How many years experience do you have?
posted by AaRdVarK at 4:04 PM on May 30, 2007

wow am i glad i asked this. i've been here for a year, only have 2.5 years exp. as a .net developer (i'm 25)
posted by keame at 4:10 PM on May 30, 2007

Put an ad on craigslist gigs, asking for your skillset and a rate/time estimate. I think this is a pretty common practice, as I've had it recommended to me many times.
posted by treepour at 4:13 PM on May 30, 2007

Take your desired annual income, add 25% for taxes. Add 10% for insurance and overhead. Divide by 1000 hours since nobody bills 2000 hours a year. Ask for that.
posted by mrbugsentry at 4:22 PM on May 30, 2007

With 2.5 years experience and given that they don't need to retrain you, I think $80/hour is perfect. Since it's only 10-15 hours/week, I don't think they will balk.
posted by AaRdVarK at 4:30 PM on May 30, 2007

Put an ad on craigslist gigs, asking for your skillset and a rate/time estimate. I think this is a pretty common practice, as I've had it recommended to me many times.

Please keep in mind that, in many jurisdictions, this is illegal.
posted by acoutu at 4:50 PM on May 30, 2007

Double the front portion of your salary: 2x65=130/hr. Start there and see how it goes.
posted by rhizome at 5:03 PM on May 30, 2007

A lot depends on your prior experience. 2.5 years can be a drop in the bucket or it can be all you need. If you've already got experience with the product, however, that's 2.5 years more experience than any other contractor off the street. The fact that you're still on good terms helps a lot, too.

I'd say $65, but it couldn't hurt to start higher--you might very well get lucky if they decide they'd rather pay for a known quantity (you) than some random Joe Contractor with ten+ years and a handful of certs.
posted by Civil_Disobedient at 6:35 PM on May 30, 2007

They need you more than you need them. Not only are you a known quantity, you probably know all the details of their system already, saving them retraining time. Normally, your previous salary, or what you decide you want to make per year, are fairly irrelevant -- it's whatever the market will bear, but if you provide more value than the second best, you can command more. So you can start by taking 2 or 3 times your old hourly rate, but increase that to reflect the higher value you provide to them.

Aside from the hourly rate, you should set up the other terms of the agreement. I'd suggest a retainer agreement for set period of time where you set aside a set number of hours per week for them and they pay you that minimum amount per month, plus any overages. This way they are certain of your availability, and you are certain of the extra income. Again, this provides more value to them and steady income for you. Also, set up the expectation by which you'll work -- how fast you'll respond to requests, when you're available for calls/meetings, etc. so as to fit your life and schedule.
posted by lsemel at 8:55 PM on May 30, 2007

Put an ad on craigslist gigs, asking for your skillset and a rate/time estimate. I think this is a pretty common practice, as I've had it recommended to me many times.

Please keep in mind that, in many jurisdictions, this is illegal.

Well, then, I retract my suggestion. Thanks for clarifying. For the record, though, it was recommended to me countless times when I was trying to figure out a rate. I've just assumed that a certain small percentage of gig ads out there are people fishing for such information.
posted by treepour at 10:03 AM on May 31, 2007

i'd just like to thank you guys for taking the time to answer with all the valuable advice, obviously i'm in a new transition period, and this helps a lot
posted by keame at 11:30 AM on May 31, 2007