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Originally Posted by RustyBrooks
But also isn't the $65/hour job for a "senior" software engineer? I haven't billed for less than $100/hour basically since about 1999 that I can think of, and with inflation that should probably be $130 today.
This is easy if you only take contract jobs that come through your network and have a full-time job to fall back on. But if you can keep yourself occupied full-time with contracts that pay over 50% of your full-time rate, you need to reconsider your career.
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I currently live in an above-average COL city but mostly I've lived in average ones. I remember I did one contract job for $100/hour for a university in about 2003. It was through a department a friend of mine worked in. When they were ready for the 2nd project he told me I needed to bid higher, because they didn't think a serious professional person would bid so low.
This is because you're competing against vendors. Vendors don't bill top flight engineers who can deliver projects single-handedly for $100 an hour, regardless of what they pay those guys.
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I did that project for them for $10,000 - replacing a team that had failed to do it over the course of 1 year and 2 million dollars. I left so much money on the table that it was literally crazy.
I think you're forgetting to realize that the average contractor is more likely to be on a team that failed to deliver on a 2 million dollar project than be someone that can deliver it for $10,000. It's also quite possible that the failure made them more reasonable on scope and other things though gross incompetence is kind of the norm in this industry. I feel like I've seen you do this before but you probably don't want to use anecdotes where you seem exceptional to drive the narrative about how it should be for other people.
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Employers will pay much more per hour than you think. A full time employee at a tech firm can easily cost 100% more than their salary to the company.
But most contractors also cost way more than their pay. This is where the distinction between a contractor that takes responsibility on a full project and a contractor who's just a part-time employee comes into play. Contractors can very often be harder or more expensive to manage.
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On top of that, hourly employees go into a different column for accounting purposes. Salaried employees are fixed costs, but hourly employees are variable cost. If you want to show investors your burn rate, it is way easier to wave away variable costs than fixed ones.
No reasonable investor will be fooled - burn rate is burn rate and startups don't have enough other costs to hide something this glaring - and there's no way a startup hugely concerned with their burn rate is better off, reality-wise or perception-wise, hiring full-time contractors at exorbitant rates over hiring full-time employees below market rates with lure of equity. Where startups do this, it's entirely about time to market, not burn-rate. Where you're more correct on is for more dysfunctional Fortune 500 types where budgets and standards for full-time hires are centralized and have to go through a lot of red tape but contractors go through vendor management which is more based on ROI.
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At the manager level it's the same way - managers have some discretion over so-called "one time" costs but not as much over base salary. That's one of the reason they use bonus as a tool (among other reasons)
Maybe sign-on bonus because that actually is one-time but other than that, most companies have wised up on this issue as well.