pay rate increase for contract programming
October 6, 2020 11:29 AM   Subscribe

I do occasional contract jobs for a single client in my specialty niche, once or twice a year taking several weeks each. I've been charging the same $100/hour rate since 2017 and wonder if it's time to bump that up, perhaps to $125/hr ... so asking here if that seems reasonable. Have contract programming costs increased by a quarter over the past three years? I've been retired a while and have no real contact with "software engineering" now, nor contacts to ask.
posted by windsock to Computers & Internet (11 answers total) 2 users marked this as a favorite
Best answer: (I've been a project manager working with contractor developers for several years now)

For highly specialized work, yes, $125 entirely reasonable, especially when it's well below full-time.

That's entirely separate from how your specific single client may feel about a 25% bump YOY. If one of my contractors raised their rates that much in a single year I'd probably at least check to see if I had an alternative, because if it's full-time work for several weeks, that'll add up fast - assuming it's a relatively small org or small overall budget, that is. If you're just one expensive part of a huge expensive project, you may not encounter as much pushback.

I would still be prepared to discuss why the rate is higher, and/or negotiate.
posted by Tomorrowful at 11:50 AM on October 6, 2020 [2 favorites]

Best answer: You could consider stepping the rate increase -- $110 this year, $120 next year, $125 the year after.
Or, you could consider giving a discount for a pre-agreed amount of hours -- $125/hr with no commitment or $100 with an X hour commitment.
Or, if you want to be really retired unless you get paid more, tell them the price has increased and keep it firm.
There are a lot of options.
posted by elmay at 12:07 PM on October 6, 2020 [2 favorites]

Best answer: I am not a programmer, but the advice I got when making the leap from salaried jobs to freelancing was that your hourly rate should be 3x what you made with a full-time job (ie, breaking down your yearly salary into hourly pay and multiplying that by 3). So someone who made 100K/year in a salaried job would charge $150/hour - (100,000/2,000)x3. So it might be useful to figure out what the salary range is for someone doing your kind of work, with your level of experience.

That said, I have my "standard hourly rate" but I do charge less per hour for bigger jobs because I'd rather spend that time working for a reduced rate than hustling for other clients (and I personally prefer having a few big jobs than lots of small jobs). However, I'm far from retirement - if you don't need this income to pay your bills, then it may be worth it to ask for more.
posted by lunasol at 12:09 PM on October 6, 2020 [3 favorites]

Best answer: We have a variable rate, depending on the number of hours the client is hiring us for. So, if you literally want to buy an hour of my time, it's $165, but if you hire us for a big project or put us on a big retainer, it might be more like $110.

It has been a LIFESAVER in terms of clients not nickel-and-diming me for small changes, and seems to be very acceptable to corporate clients. So maybe a change along those lines could be of assistance in letting your client know about your rate change. (Similar to what elmay said.)
posted by nosila at 12:55 PM on October 6, 2020 [2 favorites]

Best answer: I work in an engineering, but not software engineering, capacity.

I think this is highly industry and locale specific. As a single point of anecdata, I recently increased my rates from $150/hour to $200/hour for some (very) specialized work to a small company at roughly the same number of hours per year. I received no pushback beyond, "okay, please update your invoices accordingly." If you bill, say, four weeks a year, your cost will be going from $16,000/year to $20,000/year - only $4,000/year variance. I think any place that is significantly concerned over a $4,000/year billing variance is essentially broke, and if they are concerned, you should take it as an indication of poor fiscal stability.

In my current role, I tend to see rates between $100/hour to $225/hour for (non-software) engineers. $100/hour would be closer to a junior engineer where the rates include only the person's time. $225/hour would be for a specialized in-demand engineer where the rates include office space and significant software expenditures (ie, specialized software that is covered by the hourly rate). $125/hour would not cause anyone to blink an eye.
posted by sockmypuppet at 1:00 PM on October 6, 2020

Best answer: Is step-down pricing a thing? $125/hr for the first 40, $110 for 41st to 160th hour, and $100/hour for anything on top?
posted by porpoise at 1:43 PM on October 6, 2020

Best answer: If this is a rare niche and you are a good programmer, $100 an hour is incredibly cheap. That's the hourly cost of a full-time programmer making $200,000 with 48 weeks a year at 50 weeks a year and a 20% benefit and overhead load. These days a LOT of programmers who are merely good in a fairly common skill set are making that kind of full time money.
posted by MattD at 4:16 PM on October 6, 2020 [1 favorite]

Best answer: Yes, that seems reasonable.

(If your rates are now too high they will tell you, you can barter from there.)
posted by love2potato at 6:05 PM on October 6, 2020

Best answer: I recently was in this exact situation and bumped my pay up. I had been using the same rate for 2 years and bumped it up by 10%. Consensus online is that a 5-10% increase per year is reasonable. When negotiating remind them how many years you've been contracting so it's seen as a spread out 5/year increase instead of a 25/year increase
posted by JZig at 6:46 PM on October 6, 2020

Response by poster: Thanks everyone! all very helpful and much appreciated (even makes me feel I should go back to work haha).
posted by windsock at 10:18 PM on October 6, 2020

And in the future, just make it a thing that you do to increase your rates at least the cost of inflation. It’s basically tech debt for your billing.

My dad is a consulting engineer and hasn’t increased his rates for several decades, and now is concerned that his clients (the same ones he has had since he started, he is in a tiny niche) wouldn’t like a massive increase, so he doesn’t.

If he had increased his rates 3-5 bucks a year, nobody would have batted an eye.
posted by rockindata at 3:57 AM on October 7, 2020

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