I've never understood all the salary-to-hourly conversion formulas. In my experience, they are different markets and different kinds of workers. It sounds like this particular formula roughly equates a $100/hr contractor (working at fulltime) as a $100k/year employee. Other people say that you should take your salary (in thousands) and then double it to get your freelance hourly rate, but to me that seems ridiculous. $100/hr sounds great to a 50k employee, but 50k sounds laughable to a $100/hr contractor. Others say to take your salary (in thousands) and add 20% overhead, but that still seems pretty ridiculous.
At more senior levels, it seems swapped. Contractor rates seem to have a pretty strong resistance point around $120/hr (if you go by a recent hacker new survey), I think partly because if you go above that point, that's what agencies and consultancy firms and teams tend to charge. Meanwhile, salaries for the same general technical fields seem to go higher than that pretty easily. I'm seeing 130k - 150k pretty commonly in java enterprise positions, more when you figure in bonuses with big companies.
Seems like people at around that level would be well-served to switch to daily or weekly billing, but when you're working with larger companies or vendors, that's a pretty big switch for them. I've tried that approach with a Very Large company and was shut down pretty quickly.
$100/hour * 40 hours * 50 weeks (fulltime) is $200k, not $100k -- that's where the doubling comes from. (2000 billable hours, roughly.)
If you're doing freelance, you also have to cover downtime, business development, benefits, and all the stuff that a normal employer might cover, so you would probably be prudent to charge more than ($YourSalary/2000) per hour.
Hah, I can barely get clients to pay $50/hr an hour for Graphic Design and Web Design work let alone $100/hr. These formula conversions baffle me as well.
At more senior levels, it seems swapped. Contractor rates seem to have a pretty strong resistance point around $120/hr (if you go by a recent hacker new survey), I think partly because if you go above that point, that's what agencies and consultancy firms and teams tend to charge. Meanwhile, salaries for the same general technical fields seem to go higher than that pretty easily. I'm seeing 130k - 150k pretty commonly in java enterprise positions, more when you figure in bonuses with big companies.
Seems like people at around that level would be well-served to switch to daily or weekly billing, but when you're working with larger companies or vendors, that's a pretty big switch for them. I've tried that approach with a Very Large company and was shut down pretty quickly.