Here’s the scenario. I worked 15 years for a guy, and the company was bought by another. That was 4 years ago.
Now I am unemployed (for the second time), and although I’m not in trouble financially, I need to make some bread. My friend is actually rebooting the old company because old agreements have expired and he is hungry.
He wants to hire me but it is a startup (again), money is tight, and he has to get momentum and cash flow before adding employees.
I’ve been invited in for two weeks to consult ie work out some numbers on a big important project. Question: What do I charge him? I very much also want to work for him permanently, hopefully later this year.
I get there is no bennies, my tax problem, etc. I don’t care about that. I’m just trying to figure out how I should approach coming up with my Daily Consulting Fee.
By the way, I’m 55, and planning on working another 4 years. I am at the senior knowledge and experience level in my career path (supply chain and purchasing).
That is a lot of variables to work with. I am a supply chain consultant too but on the IT side. A specific value would require more information than you gave and it sounds like you aren’t interested in setting the highest rate possible anyway because he is your friend and it is a start-up.
All things considered, I will just throw out a range of $75 - $125 an hour. That is a decent rate even when you take into account the lack of benefits and tax burden but it isn’t so low that it would jeopardize any future salary negotiations assuming that you expect less than about 150K in eventual salary. I am basing my answer on the rate that consulting companies that I have worked with charged the client although my answer is purposely on the low side due to the situation.
I should add that my answer is the best that I can do with the information given but it’s accuracy isn’t that important. What is important is your immediate reaction when you read my answer. Your own first thoughts will tell you what it should really be.
This question might be better off in GD, but here’s how I’d calculate it:
If you were looking for a full-time position, either with him or somewhere else, what salary would you be looking for? Take that number and divide it by 2000, and that’s what your hourly wage would be as a regular full-time employee. Now, simply double it to get your consulting rate.
If you are doing IRS Form 1099 work, at least 2 times what you would expect to make as an employee. I charged 3 times for new clients and 2.5 times for repeat, ‘good’ clients. Remember that you have to pay all the taxes, medical costs, and other benefits that an employee would receive.
Thanks for the answers so far. Based on what I’ve read here and pondering it, I’m going to add about 25% to the number I was thinking. Now I’m getting kinda excited to be doing some actual productive work.
Yes. No. Maybe. Probably not. Long story, though. It would take a long cold beer to tell the tale. We went down that road the first time, and while it worked out for me, it didn’t work out for him. :smack:
He’s not going to do too well with that if you mean his salary at a regular job. Doubling that number is the minimum to work from. You’ll have additional taxes to pay, you’ll need your own insurance, there are no paid holidays, vacations, or sick days, no bonuses, and your contracts may not meet up end to end so there will be time with no pay, and no one will be making matching 401K contributions. In addition you’ll be paying higher phone bills, your own internet access, dues in professional organizations and all costs to attend their events, and on top of all that you will need to spend money on getting yourself known and generating new work. You don’t have any backup either, if there’s something you can’t do yourself you’ll have to pay someone else to do it. There’s no company to provide you with a computer anymore, it’s yours, you have to buy, and pay the upkeep.
Many consultants go back to regular employment after a short time, don’t regret the experience, and don’t need to make that much during the adventure, but if you want to survive long term you are usually cutting yourself short if you’re not getting paid at least twice the rate you’d receive working for someone else instead of being self employed.
out of my wife, so it’s been a good day.