Consulting Fees

[der.hans]

Am 05. Mar, 2002 schwätzte Derek A. Neighbors so:

> Just in case no one has done the math
>
> 60,000 / 2080 (hours) = 28.85

2080 / 8 = 260
260 / 5 = 52

There's vacation, sick days and holidays in there as well. My company gives
us 15 days vaca/sick and 5 to 10 days for holidays. That's probably average
for private companies in the .us. You're a state employee, so you get an
extra 302 days worth of holidays... ;-)

Let's go with 20 days potential off-time. That's 4 weeks, aka 160 hours.

That takes the FTE down to 1920 hours on site.

> Now of course there are things like a normal employers benefits (and
> their tax contribution to factor in)  So say you figure in 10,000 for
> benefits and lump 10% for tax contribution and you are at 77,000 a year
> add another 10% for office supplies space etc... and you are at 84,000.

In my biz classes at the uni they always said employees cost double their
salary. I think that takes into account extra taxes and bennies as well as
overhead ( hiring/firing them, hr, paperwork, etc. ). It probably takes into
account the time off, but let's say it doesn't :). It probably doesn't take
into account managing them. Sorry, don't remember the details.

> The other way is when you hire someone you figure 30% of salary will be
> needed so if the salary is 60,000 72,000 would be the outcome so the
> above of 84,000 is pretty high.
>
> 84,000 / 2080 (hours) = 40.38

120,000 / 1920 = 62.50

That's for full-time rate.

> Based on these numbers anything more than 80 an hour is HIGHWAY robbery.

Ah, but numbers can lie :).

Most consultants will drop their hourly for long-term gigs. I do. How much
do you pay a waitress for her 10 to 20 minutes of work she gave you? Why
does a bar charge me $3.75 or $5 for a $1 cider? If I guaranteed I'd buy a
certain number of ciders from them every year I'd probably get a quantity
discount. Same with work hours. You only want 4? You pay the full rate. You
want 1920, then we can work a deal ;-).

>  As you would only be working half a year to earn 60,000 or if working
> a full year making 120,000 with full benefits etc included in the
> calculation.  I just ask that you re-evaluate bagging on 'the microsoft
> tax' if you are charging more than 80 an hour and ask are you charging
> 'the consultant tax'?

A consultant ( or FTE ) who sets up a business deal with the client in such
a way that the client is forced to stay with them is indeed putting on a
'tax' just as m$ does with their bully-tactics enforced monopoly. The key
isn't how much is charged, rather whether it's fair and if it's obtained via
extortion or other unreasonable method.

Also what do the people on the suit side earn? Sales dudes generally earn
way better than engineers. Accountants seem to earn quite a bit as well.
Just about any engineer at Mot had more knowledge and skill than the entire
accounting dept put together ( not knocking the accountants, some of them
were pretty nice people ). The engineers certainly had more knowledge than
the salesdroids and did less damage to the company by lying about what the
products could do. At one point the group I was in mentioned that they were
paying for a weeks vacation in .hi.us for the top 10 salesdroids. We only
had 12 salesdroids. Ever hear of 90% of an engineering team getting an extra
week's vacation on the company's tab?

What do lawyers make? They're probably the closest to engineering as it gets
on the suit side. Skill-wise that is, not personality-wise ( I don't think
we'll ever see a shark-suit engineer with late night commercials about how
when someone got drunk and ran off the road the engineer was willing to work
for no money down to show the drunkard how to operate the seat belt release
and escape from the burning vehicle :). Lawyers have to learn a lot and keep
up with it, just as engineers do. Even if they specialize, they have to have
a broad base of knowledge, just like engineers. They have to get through a
tough, expensive degree program, just like engineers. They have to read tons
and tons of documentation, just like engineers. They have to *write* tons
and tons of ducumentation, just like engineers ( though many engineers tend
to ignore this part of the deal ). They have secretaries and assistants,
just like, hey, wait a minute. We're getting a bum deal. They get more money
*and* they get peons! ;-)

ciao,

der.hans
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