Consulting Rates

Does OmniTI hire Canadians?

Sat, 20 Jan 2007 at 20:45:27 GMT Link

I will certainly discuss this interesting topic in our next local PHP event. ( http://www.php.net/cal.php?id=2427 )

Albert G,

http://www.interlay-union.com/

Sun, 21 Jan 2007 at 00:25:31 GMT Link

I'm entirely self-taught, so I don't think the rates need to have any relationship with education level. I don't have any college degree even. I'm 24, I've been doing this kind of work for six years and I charge between $70-100. I find no problem doing so since I'm able to work full-time doing contracting work.

Sun, 21 Jan 2007 at 04:35:16 GMT Link

Going rates in the netherlands are currently hovering around the 70 euro/hour mark ($85). But we seem to have quite a shortage of programmers of any kind.

Sun, 21 Jan 2007 at 11:07:12 GMT Link

Engineering firms usually need a multiplier of 2.6 - 2.75 to be profitable. An accountant years ago told me that our firm needed to charge 3x salary to make money (and that seems to be a good target with maybe 2.6 as a break even (and who just wants to break even given all the risk).

Sun, 21 Jan 2007 at 16:46:27 GMT Link

I'm used to that factor being referred to simply as "overhead" and being at about 2.5 (Netherlands here, number is from an accounting firm). In a larger firm it represents all the costs of management, administration, and sales, as well as (in any firm) your own improductive hours and educational costs. As a freelancer, without others to do all that non-programming stuff, you yourself will simply have relatively more improductive hours.

Sun, 21 Jan 2007 at 18:30:50 GMT Link

It is called an employee cost factor. It is complicated to calculate and depends heavily on the type of business being run. Some businesses simply don't use it. Consulting companies, however, live and breath by it.

<a href=http://web.mit.edu/e-club/hadzima/how-much-does-an-employee-cost.html

>How much does and employee cost?</a>

A previous commentor mentioned that rates should have nothing to do with education. He's right... they should not. While there are individuals that break the mold -- the average is what it is. The cold hard truth is that salaries are higher on average for better education. It's a hard-knocks life -- get a PhD.

Sun, 21 Jan 2007 at 19:48:34 GMT Link

Hi Theo,

The cold hard truth is the life itself. I think PhD makes only names fancy (generally)

The real knowledge and interest are in our minds.

If we can work hard and ascertain more, we can find our inside Doctor of Philosophy.

Ultimately, who will good at his work, he will (must) get the money...

Mon, 22 Jan 2007 at 02:24:09 GMT Link

I'm a PHP Developer with ZCE certification, Scrum Master certification, a 4 year computer studies degree, a 12 month post grad certificate in internet management & production, 4 years of freelance development doing PHP, and 3 years full-time employment doing PHP.

At my last job in Toronto I was on salary for $55K Cdn, with great benefits and 2 weeks vacation.

I don't think $55K is asking too much, but I recently took a $7K pay cut to move to a company with a better corporate culture and an extra 10 days vacation.

Mon, 22 Jan 2007 at 16:49:03 GMT Link

I am also self-taught and I generally charge $40-$60 per hour based on the customers budget and complexity of the work.

Chris are the positions at Omni IT in-house only? I might be interested in applying lol.

Mon, 22 Jan 2007 at 19:58:35 GMT Link

There is no good salary you can pay for a "good developer".

Tue, 23 Jan 2007 at 11:55:37 GMT Link

I think Chris used the Employee Cost Factor incorrectly. A company uses that factor (2.5x to 3x) to measure what revenue, as a multiple of salaries, they have to take in to be profitable.

The original question seemed to be employee focused: What would an employee have to take in to offset the cost of benefits. When I did this with real costs, I came up with a factor of 1.5x to 1.4x. That is, I would need to make 40 to 50 percent more as a freelancer in order to offset the gain I would get from my benefits as an employee.

Of course, other factors also come into play. If you primarily work from home, you save transportation costs. If you have health problems, you will pay more in insurance than a healthy family. And if you company had an extremely good 401k (retirement) program, then you might have to use different multiples.

Other factors include accounting for vacation (and whether you can tolerate very limited vacation) but also that, in general, working more than 40 hours a week means you make more. Also, in many cases you can get some favorable deductions for being a freelancer versus an employee.

So, using that factor, $60/hour is equivalent to a $80,000+ employee salary.

-R

Wed, 24 Jan 2007 at 14:40:18 GMT Link

Sounds about right to me, people can charge £25 - £50 here in the UK for a decent developer.

Mon, 29 Jan 2007 at 06:09:57 GMT Link

I always referred to the "employee cost factor" as "overhead factor". This number accounts for all of the overhead (office space, operating expenses, insurance, etc.). I agree with the ranges stated by others. The number is basically derived based on the companies actual overhead.

Sun, 04 Feb 2007 at 14:16:45 GMT Link

If you just want a straight hourly -> annual conversion, it would be to multiply by 2000.

That's based on a 52-week year, with 2-week vacation, at 40 hours per week, which is pretty standard in the US. (52 -2) X 40 == 2000

You could adjust that for your own country/cultural standards.

So the $60 per hour is $120,000 per year, no benefits.

Of course, we all know that freelancers can seldom get paid for a full 40 hours per week, 50 weeks per year, even though they often work way more hours than that, when all is said and done.

And, if you want to factor in benefits, well, then the math gets interesting, as you have to decide whether you are calculating cost to business, or value to employee.

It's often interesting to see posts to various mailing lists and their job requirements and the pay rate, when that's listed. Sometimes the mis-match makes me laugh.

One time just the job requirement made me laugh, since it would have required the applicant to have been using PHP since 1993...

The longest, steadiest PHP gig I've ever held pays me in food & beer, doing the website for a restaurant. :-) If I'm hungry, and I got gas in the Jeep, I'm all set!

Ultimately, if you take a gig only because it's "more money", what's the point? More money and miserable is no way to live.

PS Can anybody explain how a professional recruiter could see this:

Full-time, Part-time, or Consulting employment developing dynamic web-sites using PHP, MySQL, PostgreSQL and related technologies in Chicago city limits or telecommuting.

And then cold contact me THREE TIMES over the course of 6 months for a 3-month contract in San Diego?

Sheesh!

Killfile.

Mon, 05 Feb 2007 at 21:44:29 GMT Link

I think that the industry needs to set standards for pricing IT professionals, with regards to country, market demand, current number of available professionals for the specified discipline, years of experience, and other elements that may affect the equation.

Tue, 06 Feb 2007 at 10:27:38 GMT Link

I had offers down in Florida for $100.000 and more as a permanent PHP architect. Other offers usually turn around $75.000 to $90.000. I guess it depends on the level of responsibility you have and what type of work you do. Just writing code probably doesn't pay that much and designing architectures involves much more than PHP skills. I'm conducting a lot of interviews these days and I'm sorry to say that most programmers lack enterprise level skills required to build scalable and secured application. Keeping that in mind salary will vary a lot depending on if the candidate will need guidance or is able to work by himself.

Fri, 16 Feb 2007 at 15:10:18 GMT Link

Chris - what is OmniTI's policy on Zend certification? Does it make any difference?

Mon, 19 Mar 2007 at 18:48:22 GMT Link

Thanks. I was just curious, since we recently (well, in the past few months) discussed the certification on the NYPHP list.

I've been working with PHP for two years (with four years of Java prior to that) and thought about getting the certification, more because it's an opportunity to learn more than for the certification itself.

Oh, and my apologies for posting on such an old blog post. :P For some reason Google Reader was inexplicably showing your old posts as new again.

Mon, 19 Mar 2007 at 20:40:42 GMT Link

Anony Mouse, I was going to comment on how you're practically getting rapped by your employer compensation-wise in with all you qualifications. Then I remembered that location is also a factor. 55,000 in Maine is probably the equivalent of only 40,000 in Los Angeles or San Francisco.

As a rule of thumb, no developer one with graduate education or certificates in LA should NEVER work for less than 70,000/year. Most of my friends entry levels salaries out of college were about 50,000 with a CS degree.

Mat also brings up a good point about your responsibilities being a factor in your compensation. A good PHP architect with enterprise planning skills who understands business cases and can communicate them effectively to business people will fetch a fare more handsome sum than the run-of-the-mill coder who only cares about making the code in front of him or herself work.

Sat, 02 Feb 2008 at 20:06:14 GMT Link