Need help! Major career change. 1

[FunWithMoney]

I am looking for some advice on what I am worth to my company. I have been a programmer for 3 years now (plus a BS in Comp Sci), and the last 2 have been spent with my current company. I am a programmer for Oracle Forms, Reports, Portal, and numerous PL/SQL programs.

When I took the job at this company I took a salary that was WAY low in my opinion but the experience was going to make up for the bad pay. Now I am moving out of state. I decided to be a good employee and give my boss as much time as possible for making the transition. I was not really expecting to walk out of the meeting with a job opportunity.

My company would like to keep me working for them as an independent contractor. There is plenty of work to be done and it will most likely be a long term gig (6mo - 2yr). My boss (also the CFO) of the company has stressed the need to keep me with the company for the long term. Now I have to come to terms with my current pay status with the company.

I started at 32K and then bumped up to 36K with bonuses. in 2005 I made 40K for the year with bonuses. I did some research and still think this is low for a Programmer II. A salary.com salary report estimmated my base salary should bee around 51K.

Finally.... for the question. I realize that being a contractor requires all the normal things to come out of my pocket like SS, insurance, sick time, etc.... I have read that the benefits should be about 25% of the base salary to cover those expenses. So what should I charge my company? I was thinking that the bare minimum that I would take is $32 and hour. This would put my base pay around 50K. But with the extra risks involved in being a contractor am I justified in asking for more money? If so please give me your opinion.

Also the pay will not be based on hours persay. A project will be defined and a estimate on the number of days will be given to that job. Then if I complete it earlier then good for me, if it takes me longer then bad for me (This is one of the risks that I am talking about)

 

[franklin97355]

Also the pay will not be based on hours persay. A project will be defined and a estimate on the number of days will be given to that job. Then if I complete it earlier then good for me, if it takes me longer then bad for me (This is one of the risks that I am talking about)

Make sure if you do it this way there is a clause in the contract that if ANY changes are made to the specification after you start the price will be renegotiated upward. Also make sure the specification is spelled out in great detail and states if it isn't in there it isn't part of the deal.

The answer has always been 42

 

[Mike2287]

What franklin97355 And

You need to cover your downtime ie:vacations, personal time ect...

Are you going to have 40 hours a week Every Week? Do you have other clients lined up?

32 an hour is fine if your doing this on the side and looking to make a few extra bucks but my time off is worth more than 32 an hour.

 

[FunWithMoney]

Thanks for all the comments. It has been very helpful.

I have decided to shoot for about $40-$42 an hour. My current employer may have a heart attack at this number based on my current salary. But I think my reasoning is sound and will at least be concidered.

i.e. I am the best programmer the company has (not ego, unfortunatly true)
I am the only person that knows the whole Oracle system
I will be taking on significant risk, such as downtime, and mistakes in job estimation.

Does anyone think that $40-$42 is unreasonable for a programmer with 3 years of experience, and the best programmer in the company?

If not then I will be making a stand and be prepared to walk away if my demands are not met. That's the scary part I guess.

BTW This will not be an on the side job, this will be my only job unless I find something else later.

 

[mmorancbt]

I believe you should ask for now less than $50/hour. Here is how you structure it. Because they want you to actually provide a fixed bid on a project, you incur greater risk. My rule of thumb on fixed bid project is 80% of worst case scenario at the highest prevailing rate (there are no discounts for fixed bid projects). Here is what I mean...

Let's assume you look at a project that you believe will take you 30 hours. Estimate what that same project would take if you discovered some business workflow changes during development - or that required you go back and rework some other integrated pieces of the program, etc.

Let's assume that you estimate, given those factors, the project could take 45 hours. There are 15 hours in there that concern you. By the way, this is not out of line. The smaller the project, the more likely that a small problem causes a dramatic increase in necessary time. A little tweak of 1 hour could easily become 3. That is a 200% increase.

Take 80% of those 15 hours which is 12 hours. Bid your project at 42 hours instead of 30. That is 80% of worst case scenario.

Also, you must do this at the highest prevailing rate. The rate of pay for an employee versus a contractor - apples to apples in skill - is not 25%. It is closer to 100% or higher.

You are paying insurance, self-employment tax, office equipment, internet connectivity, etc. Plus you are incuring risk.

When you present this to your employer, you can have the caveat that they place you on 30 hours a week contract, no fixed bid, but periodic reviews of activity and accomplishment. Then, and only then, can you take a rate around $40 if you wish. Also, they must agree to a minimum term and minimum notification to end the contract.

For instance: they must give you 2 weeks notice at minimum.

The minimum term would be for 3-4 months initially.

Lastly, if you are truly contract (they could also keep you as a telecommuting employee) then try to keep your hours around 30. Join a local professional organization and start to market what you do immediately.

I have consulted out of my house since 1995. I will tell you from experience and from conversations with consultant/contractors who ran into trouble; Failure to market during a contract is the single fastest way to go hungry.

Good luck!

Matthew Moran (career blog and podcast below)
Career Advice with Attitude for the IT Pro

http://blogs.ittoolbox.com/pm/career

http://techcareerconsult.blogspot.com

 

[aarenot]

Remember,
If you bid the job, you have to complete it. It is not totaly within your skill set for one or another forseen, or unforseen reason, you have to hire someone to finish it. That comes out of your pocket, and cannot effect the deadlines. Assume at least 1/3 of your rate will go to benefits and taxes. 10% goes to retirement, then business expenses, liability insurance, etc., etc. For the added hassles, it shou;ld replace all your current benefits and compensations, and since it involves more risk, less total hours per year with the same net income is reasonable. Then outperform their expectations.

You do not always get what you pay for, but you never get what you do not pay for.

 

[MDXer]

Agree with what everyone says and would only like to add. Save Save Save... All contracts come to an end. It doesn't really matter if they say they have enough work for X months. You can't garuntee what they will do in the future. If you get stiffed on a few weeks work or the contracts stop comming earliy then your cash flow is gone. It will typically cost you more in time to go to court and then collect if a contract gets reniged on. while the money can be good as a contractor/consultant you must remember that it isn't a job but rather a business.

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