Ask HN: Freelancer Rates in the US

https://news.ycombinator.com/item?id=22855286

by dirtnugget • 6 years ago

102 91 6 years ago

news.ycombinator.com

Hello,

I have often been somewhat confused when it comes to hourly rates for freelancers in IT. While it is pretty normal to charge more than 60€/h here in Europe I’m always shocked to come across postings like these from the US:

https://soshace.com/jobs/python-back-end-web-developer-remot...

This is a remote python job for an intermediate or senior developer that pays 20-30$/h. And not the first one of that kind I came across.

That would mean a freelancer makes less than half the money as compared to a 9-5.

Is this normal?

gt2• 6 years ago

Like anything else you can find all ranges offered and all ranges accepted. I thought the exact opposite was the norm, with higher rates in US companies than UK/europe.

Senior level rates in US range from 100-300/hr. I know it's a big range, but it comes down to speed, creativity, references, portfolio, fit for the project, availability.

As far as the half the money as a 9-5, it's actually the other way around-- as a freelancer, you need more money to compensate for things like insurance, taxes, risk that come with being an independent/freelancer. So they say to match a 75k salary, you need approximately 150/hr.

AzzieElbab2• 6 years ago

150/hr sums up to 200k/year if you work 30 hours a week for 11 months. ----- Fixed typo

Adirael• 6 years ago

15 * 30 * 4 * 12 = 21600

pulse7• 6 years ago

Mistake: it should be "150/hr" instead of "15/hr"

Arubis2• 6 years ago

Tl;dr: I charge a fair amount (effectively well into $three digits/hr) and making what I have previously at a w2 is a real fight.

Presuming you meant $150/hr: indeed, and if you’re freelancing, you almost certainly don’t have that high a proportion of billable time. Prospecting, marketing, deliberate learning, and other overhead are all necessary parts of the deal and can easily take half your available time. I tend to do all that in downtime between contracts, so it’ll look like 25-35 billable hours per week but with maybe 25-30 weeks/year utilization. Others just overlap everything; works well with longer contracts.

davidmurdoch• 6 years ago

Assuming you meant 150/hr...

Freelancers have costs that W2 employees do not, like self employment taxes and the full cost of health insurance.

SamReidHughes• 6 years ago

What “they say” is 75/hr, salary divided by 1000. I’m guessing you doubly applied the 2x factor.

mehrdadn3• 6 years ago

May I ask how the calculation works? For $75/hr (to take California as an example) you have ~$105k after tax; subtract ~$5k for insurance and you're left with $100k. Whereas for $75k/year you're left with $56k/year after tax. Meaning that when you're on salary, you're pocketing 56% of the money you would as a freelancer. The only way I can make sense of this is if it's freelancers expect to bill around 25h/week... is that normal? And what happens if you have a job where both sides actually expect you're going to bill the full 40h? Is it normal for people to lower their rates in that case, or do they still base it on the 25h?

codegeek• 6 years ago

Here is a calculator I built a while ago when I was freelancing. It won't be perfect but will give you a close idea of what an equivalent day rate should be for freelancer compared to a full time salary.

https://codegeek1001.github.io/salary2consultantcalc/

sourc32• 6 years ago

Expected? Yes. Normal? Yes. Only thing there is out there? No.

For every $30/hr posting on the net, there is another one for $100. I also personally know of folks who are making +$150 with Django. It really depends on who you work for.

Although you will see a lot more of `build Uber for $5K` type of one off jobs, there are some reputable companies who need more capacity on new projects.

If I were you I would cast a wider net and sample the market more.

dirtnugget5• 6 years ago

How much does somebody in this kind of field in the US pay in taxes? As for me (Germany) I have to basically give away half, such a posting would pay me basically like a very entry position after taxes.

jxf• 6 years ago

In the US you would pay roughly 35% to 40% in taxes. However (in general), expenses incurred in the course of your business would not be taxable.

For example, if you earned $150,000 as a contractor, but you incurred $30,000 in expenses then you would have $120,000 in potentially taxable income.

The tax code is very, very complex, though, and there isn't a simple answer to this question. There are a vast array of factors that would shift how much you pay in tax up or down, and this complexity is heavily exploited by lots of folks.

secondaryditto3• 6 years ago

Earned around $130k in consulting last year. After deductions/expenses, US federal taxes were around $8k. Now.. FICA was something else (which I can't remember offhand), and state tax was something like $3k. Federal/state taxes where ~$11k. health insurance - that was around $10k.

mcv3• 6 years ago

As a Dutch freelancer, my marginal tax rate is a bit over 50%, but I think I've got way too many tax breaks and deductibles compared to regular employees. I'm not going to complain if they decide to cat some of those back a bit (thoug I'm sure other freelancers will).

Ididntdothis3• 6 years ago

Who pays >150? I always hear about this but neither as freelancer or as employee who hires freelancers I have ever seen somebody making that much as freelancer. Sometimes consulting companies charge that much but the freelancers probably get paid only a fraction of that.

pxue• 6 years ago

Most likely desperate very short term one off contracts.

Almost meaningless to talk about hourly rate without also providing the length of the contract.

fmxexpress• 6 years ago

Real estate, finance, oil & gas, software development clients. I charge $160/h. 20+ years of experience.

aaronm67• 6 years ago

Where are you?

In NYC and SF, you'd never fill your contract if you were trying to pay < 150.

sourc32• 6 years ago

Industries where money comes in by the bucket have no problem spending it with a shovel for specialized knowledge they don't have.

If you're a contractor, your best bet is to focus on an industry to understand the needs of that industry better. Rather being a Python developer, you can be a contractor who builds usable solutions that happen to use Python.

Industry knowledge, referrals, good prior work and marketing are important. These $150/hr jobs won't fall into your lap unless you put an effort to position your lap that way :)

ryandvm• 6 years ago

Normal start-ups (i.e. not Valley Bubble) and small shops are almost never able to pay that much, but medium and large clients will easily pay that rate for established senior engineers WITH REPUTATIONS.

As much as we like to think technology is a meritocracy, at the end of the day, it always comes down to who you know. The charitable interpretation of that fact is that there aren't a lot of ways to gauge reputation, so it's mostly about who can vouch for you.

Source: I co-founded a software and design consultancy co-op (https://www.fountstudio.com/about).

secondaryditto3• 6 years ago

when I get my own clients directly, and I'm closer to that. When I'm subcontracted through someone else, it's typically < $100 ($70-$90). I consciously make that trade off sometimes because I'm effectively outsourcing some of the risk - negotiations, collections, etc. And it's sometimes got me in to projects on teams whereas I'd normally be an independent, and the dynamics and range of engagements I've had has been a bit wider because of it. The $120/hr+ engagements I've had tended to be shorter engagements - (< 6 months). The subcontract ones tend to be longer. While I know if I'm getting $80, the people selling me are getting $110 or more, again, I understand they're providing some service that I didn't particularly want to do (or... negotiated for a 9 month engagement, for example).

pc86• 6 years ago

If you have a name you can charge exorbitant rates for anything, and large companies will pay it. IAmTimCorey is somewhat of a YouTube celebrity with millions of views on pretty basic (but extremely well-made, all-around excellent) videos. His advertised consulting rate is $300/hr. To your second point, Oracle bills its consultants at $400/hr or more, and they're probably making $200-250k.

smoe• 6 years ago

When I was freelancing (mostly Swiss companies) in the end 180$/hour was my starting point for negotations.

For bigger multi month projects i would come down quite a bit, but for small ones i wouldn't budge.

Its not something you can pull off when new to freelancing and more importantly don't have connections / referrals.

Its a comparable price to what small agencies charge (or charged, haven't been working/living in Switzerland in years).

cs02rm0• 6 years ago

Someone paying not just for a dev but a dev with significant domain knowledge in a niche area.

blocked_again• 6 years ago

Since the project is long term, 20$ - 30$ per hour comes to around $41k - $61k per year. This is a pretty good amount in the vast majority of the countries. The target audience is obviously not developers living in Silicon Valley. Probably looking for developers from Eastern Europe, Asia, Africa or South America. Also, there are a lot of countries that offer tax benefits when you are working as a freelancer.

dirtnugget5• 6 years ago

That’s 40-60k before taxes. I realize that taxes I’m the IS are much lower, but do you have any idea on a rough percentage?

robjan• 6 years ago

As GP just said, this posting is probably not intended to be taken up by a US person. There are many markets around the world where that's a very good salary.

phamilton• 6 years ago

At $60k from freelancing, take home will be around $40k.

lotsofpulp4• 6 years ago

In my experience, taxes in US are not lower if you include health insurance premiums and out of pocket healthcare costs.

The US is great if you’re in top 10% of incomes, but if you can’t afford to take advantage of the money tax exemptions and credits, then it’s not any better for the middle 30% to 70% of income earners who don’t make enough for government assistance, but also don’t make enough to take advantage of the tax code.

tracker1• 6 years ago

Really depends on your country, but expenses + taxes can be from 1/2-2/3 depending on your location.

wchrisn• 6 years ago

In some countries say like India, a freelancer can register as a one person business/one person company and all income treated as business income. This way your tax payable becomes based on income-business expenses similar to an LLC or corp.

sebastianconcpt• 6 years ago

Yeah. Brazil is like that.

dep_b• 6 years ago

That rate would be considered a reasonable rate in Latin American countries.

yayana• 6 years ago

No, that is a Russian site that uses English/USD (maybe for easier international remote job seekers.)

dirtnugget5• 6 years ago

Yeah thanks for pointing that out. However I’m sure I’ve seen the same thing from US companies

throwaway7281• 6 years ago

I'm working remotely in the US and charge $55/h for development and consulting.

literallycancer• 6 years ago

If you are doing it right, you are charging so much that you don't care whether you bill 50 days a year or a 100.

PragmaticPulp• 6 years ago

You will not find a standard range of freelancer rates, just as you won't find a standard range of developer salaries in the United States.

The $20-30/hr job listing you shared will not attract any experienced Python developers. Experienced Python developers can easily secure jobs with $100K+/year salaries and benefits in any medium sized city. That job listing is searching for entry-level Python engineers who don't yet understand their value in the marketplace. It is not representative of standard freelance rates. The job listing requests a good command of the English language, so it's not even clear that they're targeting only Americans with the listing.

Generally speaking, the best paid freelancers do not find jobs via public job listings. They use their reputation and network in combination with their unique skillsets to find contract jobs with companies who need them.

The best freelancers also negotiate their rates for each contract. Their rate can vary significantly depending on how many other opportunities that have, the difficulty of the work, and other factors.

Personally, I don't know any full-time freelancers who charge less than $80-90/hr. Below this hourly amount, it becomes more financially beneficial to find a full-time job.

Unfortunately, it's difficult to find accurate information about freelance rates from the public internet. Smart companies will not post a high hourly rate on job listings because they could miss opportunities for candidates to negotiate lower rates. Smart freelancers will not advertise their typical rate because it will impact their opportunity to negotiate or change their rates in private conversations with new employers.

The optimal strategy is to constantly look for new contract jobs, raising your asking rate until companies are telling you "No" more than "Yes". This is how you will find your market rate.

mcv3• 6 years ago

But that also means that these advertisements won't find any good developers. These super-low rates are clearly trying to scrape the bottom of the barrel.

The best bet is that these ads are aiming at developers from poorer countries where rates are much lower.

dirtnugget5• 6 years ago

I’m happy with the point that this listing might cater to people in Eastern Europe/Asia/Africa

nunez2• 6 years ago

Almost all of the contractors that I've worked with have used recruiters to help them find most of their B2C contracts.

vitaflo5• 6 years ago

Well said. As someone who's been contracting full time for over a decade, I have never used a public job listing to find a gig (nor would I). Not only are the rates low, they are usually non-negotiable. I've always gotten my gigs via my network and word-of-mouth.

As you said, it allows negotiation in rate, and when you come recommended you already have a leg up on negotiation. After a while you tend to figure out what you're able to charge, and its highly dependent on the client.

Public companies, and especially startups will pay a higher rate. I tend to get around ~125/hr in my MCOL Midwest city (highest has been 150/hr at a startup). That's about where the limit is for me in my location.

Private companies tend to be more stingy. I normally can get ~110/hr out of them. I will never take less than 100/hr, and never have. When your network is big enough you don't need to take every gig and can say no if you don't like the terms. I have to turn down more gigs than I take as it is because I'm so booked up with work.

I would also add that rates are certainly location dependent. On the coasts I would expect a higher rate than I get in the Midwest just because of cost of living. Certain cities also are more accepting to contractors than others (mine is). All of this will have an impact on what kind of rates and gigs you can get.

throw_away_5847• 6 years ago

fwiw my current billing rate is $300/hr. Full stack. Mostly web. 18+ years of experience. San Francisco. Clients all over the Bay Area.

TenJack• 6 years ago

How do you find freelance opportunities in the Bay Area?

throw_away_5847• 6 years ago

To simplify it, it's been:

1. Talk to people and sound like you know what you're talking about. In my (admittedly limited) experience, it's been "be opinionated, and be able to back up the opinions when challenged".

2. They mention opportunity for equity. You mention you only work for money. Sometimes they take you up on it.

3. Do a great job. They brag about you. This gets you more clients. But don't count on that. Ask for referrals.

4. Increase your rate as your utilization goes up.

chvid2• 6 years ago

Is that a high rate in SF? Can you bill a full month of it (160 hours) or are larger jobs at a different rate?

throw_away_5847• 6 years ago

Frankly, I don't know if it's a good rate. I shoot for 80% utilization of my time. If I get busier than that, I raise my rate. So that's the simple algorithm that got me to $300/hr now. I don't think I'd want higher utilization than 80% anyway. You need time to do bizdev etc.

I used to kill myself with 60 hour weeks a long time ago though. That wasn't smart.

I've never had to lower my rate. There were lean periods where I was "between projects" for a couple of months. I just considered this a much needed time off to catch up on my reading list.

zerr• 6 years ago

Working only remotely? afaik face-to-face interaction is highly valued in Bay Area.

throw_away_5847• 6 years ago

I meet the clients f2f a lot at the beginning of the project. Then I'm off to just writing code at home until it's time to deliver the project. It's just the nature of the projects I've taken on. I'm sure there are other kinds of software consulting where you need to meet them everyday, go to their standups and things like that. Fortunately, I've avoided that. I've developed a reputation for "going off and getting it done". That's the brand. So people don't expect constant meetings.

Cheesy title notwithstanding, I found this book to be useful: https://www.goodreads.com/book/show/260218.Million_Dollar_Co...

throwaway49494• 6 years ago

Got any spill-over you'd like to get rid of? Experienced freelancer/consultant here, no hand-holding necessary.

throw_away_5847• 6 years ago

Sorry, no.

ibudiallo2• 6 years ago

When I started freelancing, I did extremely cheap jobs because I didn't have experience and didn't know better. I did what you are currently doing, I went online to find answers. And the answer is, there are no fixed rate. The rate you are seeing, is perfectly reasonable for someone who charges this rate.

At some point, my fee was $40 an hour. I freelanced through a 3rd party who found gigs for me, and took their cuts. One day, I found out that they charged these companies $100 in some cases, while I was still only getting $40.

If that's how much I was worth, then it would be perfectly reasonable for me to charge just as much.

If you want more details, here is the full story: https://idiallo.com/blog/how-much-do-you-charge-for-your-wor...

aneutron• 6 years ago

Excellent post. Thanks for sharing. As a rookie software engineer, this is very interesting for me to read as I myself want to eventually transition to freelance work.

yonig• 6 years ago

Such a good post of a great lesson learned. I see a lot on how zoning in how much to charge, a lot on how to get customers but do you have similar posts about the other stuff on the biz end of things that fill the gaps? Creating proper contracts are daunting

ibudiallo2• 6 years ago

Glad you enjoy it. The business end of things was a messy beginning for me. My contracts started as googling a template the night before and sending it with as many typos as mistakes you can imagine. It improved over the years.

I haven't written about it yet, but I'll add it to my list for this year.

ravenstine• 6 years ago

I freelanced a few times for short periods and charged $90 an hour for front-end web development. At the time I was living in Santa Monica, CA, and the business was located within 20 miles.

fullStackOasis3• 6 years ago

Like someone else said, the agency is Russian. From their "about" page: https://soshace.com/aboutus

197183, Russia, Saint-Petersburg, Polevaya Sabirovskaya street, 54А, office 335

dirtnugget5• 6 years ago

Oh wow that evaded me.

nunez2• 6 years ago

While there aren't published market rates, you can get an idea of what people are charging by computing per-hour compensation from salary data found in sites like LinkedIn or Glassdoor and adding a 20-40% premium on top (to account for additional expenses such as insurance and taxes).

seanwilson• 6 years ago

That would mean a freelancer makes less than half the money as compared to a 9-5

I think as a general rule, if you're freelancing full-time and making the same as you would in a salaried job or even a little more, you're not charging nearly enough.

When you freelance, you don't get paid sick days or paid holidays, and there's considerable risk you might not have any billed hours of work for weeks at a time. This at a minimum is why you need to be charging more per hour than you'd make per hour at a salaried job.

jfmandroid• 6 years ago

Freelance rates vary a LOT depending of your location.

A rate of 20-30$/h is pretty standard for developers "outside" the US.

For developers "in" the US, I think you shouldn't accept less than 50$/h. Regarding how much you could ask, I think that depends (besides your experience) of the city in which the client is.

Ask HN: Freelancer Rates in the US

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