new Independent Contractor
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Over the years I have enjoyed collecting a salary up until my untimely lay off earlier this year. I'm applying for a full time contract position and struggling to determine what an appropriate day rate would be. The position is in Virginia as a Project Administrator (Jr. Level project manager). One formula I found recommended taking the salary for a similar position and adding 30% to cover taxes, insurance, etc.
EXAMPLE: If the salary was 60K, the hourly contract rate is $39 or a day rate of $312
60,000*1.3= 78,000
78,000/2000 (yearly billable hrs) = $39.00
39.00*8 = 312
Thoughts? Is 30% increase too low to cover the increased expenses of a self-employed consultant?
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You're assuming 40 billable hours a week for 50 weeks. Are you sure you'll be able to bill 8 hours a day each day? My own experience is that actual billable time is between 6 and 7 hours per day. You might want to rethink your assumptions, unless they're willing to pay for your lunch break!
Awesome formula -- I've recently been considering a move like yours, so I've spent time online finding an appropriate project manager salary resources. I actually bumped your 30% up to 35 or 40% since to cover COLA/inflation. Your assumption on 2,000 hours is perfect, as lunch hour is additional and unpaid (usually work 8.5 hours, with 0.5 hours unpaid for lunch.
Best of luck,
John