Reply to: Changing from employment into contracting work

[parallelmonogamist]

CAN be. That's best case so all depends on situation.

That's a good figure assuming you don't have many more overheads than an employed person. Also you save a lot of tax on purchases, including VAT. Not to be sniffed at.

So we have a conservative view and now a rosey but not unrealistic view. :-)

Think I'll leave it at that or we'll end up with a cross-border fight! ;-)

[northernladuk]

SJD say take-home can be 75-80%, so not sure it's that unrealistic.

CAN be. That's best case so all depends on situation.

[parallelmonogamist]

Quite a few unrealistic assumptions in there and a load that aren't mentioned but if that's the view you want to take of it then feel free.

SJD say take-home can be 75-80%, so not sure it's that unrealistic.

[ELBBUBKUNPS]

Just do it, this is from someone who contracted for many years, went permy for 2.5 years, f**king hate it and now just want out back to contracting again. Permy sucks big, big time.

[jamesbrown]

I reckon if you're working less than 30 weeks a year, that might be sensible. Otherwise no way. :-)

A pretty fully-utilised year, 575 would bring in £130K gross. Using a few standard tricks, that could equate to £100K net. You'd need a decent bonus/health/etc package to bring £100K basic up to that level, surely.

Unless you used EBTs, in which case it might end up equating to £30K p.a...

In which year? And that's sort of the point. For contracting to be a long-term proposition, particularly for a specialist like the OP, you need to take the rough with the smooth and account for that over a longer period by building a warchest etc. A specialist that extracts everything each year is going to find themselves in pretty bad shape during the lean years, once they (and probably their family) have become accustomed to a certain lifestyle. Speaking from experience analogous to the OP, a daily rate of 575 is, on average, going to be ballpark similar to a 90-100k permie income but, for this to work out, you need quite a few good years of contracting, and the early years are generally tougher (not always, of course). So, everything depends on the time horizon over which you evaluate this. No doubt, a short-term gig on 575pd will beat a 100k permie salary if you extract everything and stay busy. But that's pretty irrelevant IMHO.

[TheFaQQer]

I reckon if you're working less than 30 weeks a year, that might be sensible. Otherwise no way. :-)

A pretty fully-utilised year, 575 would bring in £130K gross. Using a few standard tricks, that could equate to £100K net. You'd need a decent bonus/health/etc package to bring £100K basic up to that level, surely.

Unless you used EBTs, in which case it might end up equating to £30K p.a...

If you are going to guarantee that you contract with no downtime, then you can bank on your £130k a year of invoicing. If you aren't, and someone comes along and offers a basic salary of £100k to be based from home, I know I'd struggle to walk away from it.

I don't know all the reasons he took the job, but if they offered me the same deal (and I know they won't) then I'd be logging out of here pretty sharpish.

[sal]

I reckon if you're working less than 30 weeks a year, that might be sensible. Otherwise no way. :-)

A pretty fully-utilised year, 575 would bring in £130K gross. Using a few standard tricks, that could equate to £100K net. You'd need a decent bonus/health/etc package to bring £100K basic up to that level, surely.

Unless you used EBTs, in which case it might end up equating to £30K p.a...

The only way i can think of to achieve 100k take home out of 130k gross without using shoddy schemes is, if instead of parallelmonogamist you are parallelpoligamist with 3 spouses sharing YourCo ownership and not having any additional income streams.

[northernladuk]

I reckon if you're working less than 30 weeks a year, that might be sensible. Otherwise no way. :-)

A pretty fully-utilised year, 575 would bring in £130K gross. Using a few standard tricks, that could equate to £100K net. You'd need a decent bonus/health/etc package to bring £100K basic up to that level, surely.

Unless you used EBTs, in which case it might end up equating to £30K p.a...

Quite a few unrealistic assumptions in there and a load that aren't mentioned but if that's the view you want to take of it then feel free.

[parallelmonogamist]

Totally this!!

I reckon if you're working less than 30 weeks a year, that might be sensible. Otherwise no way. :-)

A pretty fully-utilised year, 575 would bring in £130K gross. Using a few standard tricks, that could equate to £100K net. You'd need a decent bonus/health/etc package to bring £100K basic up to that level, surely.

Unless you used EBTs, in which case it might end up equating to £30K p.a...

[northernladuk]

Personally I think you'd be daft to go from 90k to £450 a day. An ex contractor I work with moved from a contract rate of about £575 a day to a £100k permie job a couple of years ago.

If I was offered a permie role on £100k a year, I'd be sorely tempted to take it, and my day rate is typically above the range you are talking about.

Totally this!!

[TheFaQQer]

I might not be a seasoned contractor but I am a recognized expert in my field and well known around the world in my field.

Is that in something which has a constant demand? When I work in my niche (recognized expert, known around the world, conference speaker etc.), my rate goes up. But there isn't enough of that to keep my fully occupied, so I have to factor in those gigs where my expertise is a bonus rather than something which they are actively looking for.

It does help - gig before this one, I was the only name in the frame because as soon as the client told the agent their requirements, he immediately said "you need this guy". But unless it's something you can rely on for all your roles, you may need to look at what else you can do between those niche ones.

[TheFaQQer]

Currently they pay me around 70k but that's below market value (one of the reasons why I want to move away from them). I get offers to start elsewhere between 90 and 100k.

I know that when I get into contracting work, I will probably get around 450 a day. Recently I got an offer for a 6 month contract for 475/day.

Personally I think you'd be daft to go from 90k to £450 a day. An ex contractor I work with moved from a contract rate of about £575 a day to a £100k permie job a couple of years ago.

If I was offered a permie role on £100k a year, I'd be sorely tempted to take it, and my day rate is typically above the range you are talking about.

[jmo21]

I'm reading this and wondering what it is that's different about me!

Comments range from "don't do it for the money" to "permie salary/1000" as an hourly rate. Personally I'm in contracting primarily for money and then flexibility. The "/1000" calc would leave me with a pretty poor annual salary, compared to my take home now. In fact, back of fag packet, it seems like almost half of the take home.

Maybe I'm missing something, but I have been doing it for 16 yrs now and have been almost fully employed in that time. Damn I need a holiday!

So in short, I would offer a different experience to most of the other commenters, but best talk to a lot of similar people face to face (i.e. networking as others have said) and make your mind up after a good while of mulling).

I suppose the point about money is really for newbies in terms of don't just assume you will be working 48 weeks a year, contracts always running to the end, lining up back to back contracts, no holiday or sick pay etc.

In realistic terms like you, it is a lot about the money for me too. I reckon my company earns approx 2.5 - 3 times what I could get permie AND allows me to stay strictly coding which is what I like to do. To get more in permieland in my area, I'd need to move into management, which I am in no way interested in.

So unless I start hitting a dry patch of 6 months or more all the time between short contracts, then contracting is a no-brainer for me.

[malvolio]

I'm reading this and wondering what it is that's different about me!

Comments range from "don't do it for the money" to "permie salary/1000" as an hourly rate. Personally I'm in contracting primarily for money and then flexibility. The "/1000" calc would leave me with a pretty poor annual salary, compared to my take home now. In fact, back of fag packet, it seems like almost half of the take home.

Maybe I'm missing something, but I have been doing it for 16 yrs now and have been almost fully employed in that time. Damn I need a holiday!

So in short, I would offer a different experience to most of the other commenters, but best talk to a lot of similar people face to face (i.e. networking as others have said) and make your mind up after a good while of mulling).

The salary/1000 thing is a very approximate rule of thumb so permies can get some idea about the relationship between their salary and the likely rate for the role as a contractor; it reflects the probability that you won't work 220 days a year. There are those who do of course, which throws the numbers off.

That said, unless you are very special (or very overpaid, or cheating!) the overall personal income differential between contract and permie for most roles these days isn't all that wide, given the other personal overheads you typically get with contracting, like working away from home and the general uncertainty. Moving from perm to contract just for the money may well not work out too well, hence the advice always to look at the wider picture

[parallelmonogamist]

I'm reading this and wondering what it is that's different about me!

Comments range from "don't do it for the money" to "permie salary/1000" as an hourly rate. Personally I'm in contracting primarily for money and then flexibility. The "/1000" calc would leave me with a pretty poor annual salary, compared to my take home now. In fact, back of fag packet, it seems like almost half of the take home.

Maybe I'm missing something, but I have been doing it for 16 yrs now and have been almost fully employed in that time. Damn I need a holiday!

So in short, I would offer a different experience to most of the other commenters, but best talk to a lot of similar people face to face (i.e. networking as others have said) and make your mind up after a good while of mulling).