Poll: Freelancers/Consultants – What's your yearly income?
There has been lots of polls about freelancers/consultants hourly rates; but I think they miss a point. You can have a high hourly rate but work little hours; or the other way.Here are the rules:
1. This poll concerns any freelaner/consultant/contract that is working on a hourly/daily/weekly rate (or fixed rate).
2. Income after subtracting business related costs (like Office rent, work related hardware...)
3. Passive income should be excluded.<p>4. Your yearly profits before Taxes.
122 comments
[ 4.3 ms ] story [ 100 ms ] threadA fair chunk of your initial datapoints are challenging that assumption.
One could say the same for the $20k minimum: there are certainly people who make $5k or $12k also, but he's grouped them together into essentially "make very little money", just like he's grouped $200k+ into essentially "make a lot of money".
At the moment, people making $200k or more are 15% only.
[1] https://news.ycombinator.com/item?id=6464829
Stick a >$300k on there, and I wouldn't be surprised if a big slice of that group shifts right over to it.
Incidentally, in response to _delirium, we really need to stop thinking of $200k as "a lot of money". That's an achievable wage for a good developer. Describing it in terms normally reserved for fantasy rather than reality is not particularly helpful.
Sure, you can make more than that, but in a general discussion about freelancing, it's not all that interesting to break down fine gradations of the upper-middle-class, which can be usefully bundled into the category of "people who are very successful at consulting/freelancing". Heck, I'd probably put the cutoff at $150k+ if I were designing a poll, since above that threshold you are no longer trying to make it as a full-time consultant who can support a good lifestyle.
I do think it could be interesting to break out the truly wealthy, adding a separate category for $1m+. But there isn't really any interesting difference between $200k and $300k.
Bill G would be seen as "one of us" Larry Ellison much less's so.
Battling against imposter syndrome and finding out how much your worth to a company/business is one of the hardest things about freelancing. I still today believe I'm undercharging for my skill set. Especially when I compare my ability/experience to those I'm working with who are earning a similar amount of money.
At the same time, money really isn't everything. I've worked many more days this year than I did the last, and that's come with certain sacrifices. No longer going for Monday afternoon walks with my sister and niece is something that I really miss now.
The trick is, as far as I'm concerned, not to compare what you're earning to others, and be happy with your own work/life/financial balance.
Having the confidence in you're own ability in order to sell yourself for more money is what I was talking about.
If others are earning more than me with an ability I deem to be less than mine, then I need to learn the skill they are better than me at. Being able to sell themselves.
What about your time? When I was 'freelancing' I couldn't resist piling on hours. I might have stuck with it longer if I could've resisted that temptation (to work all of the time).
Raise you rates and cull some of that work. I know, it's easier to say than do.
With this kind of income you can make a very decent living in India.
Bear in mind that living in Mumbai doesn't mean living in Pali Hill. The suburbs are significantly cheaper.
With a degree one usually one starts at around 1000€ per month and grows from there.
You have to be already quite senior to even dream of the 2000€ barrier, in a few selected companies.
However with the current economical situation, many people are quite happy if they happen to just get something.
The main (uneducated) public is in the same spot though, with minimum wage of 290euros.
Good time for IT guys.
Programmers' wages are an exception, because - unlike most of the population - they have way out from the local labour market.
Anything imported (which is probably a lot for most nations) is going to be about the same. In the Philippines, a lot of cheap stuff gets imported from China that you may not even be able to find in the U.S. because it's total crap. So, that can opener might be cheap, but it won't last more than three cans.
Land prices is another big modifier. In the Philippines, rent is generally cheap even if the land is expensive. There might be a lot of demand for buying your land, but a business isn't going to pay you much for rent if it's having to work off margins from selling cheap products in an economy where most people are making less than $6 per day. The same goes for residential. Jack up your rent and the only people who can afford it are the top few percent and foreigners.
Where you save a ton in developing countries is on labor, which affects the prices of everything just like oil does. And then of course you have savings from services provided to you directly such as medical.
The difference is in SF 50% of your pay buys 20 ipads. In Germany, 50% pays for 4 of them.
It's been a very variable year of course. I consider myself as having had a successful year, but I think most people not on long term contracts will have highly variable monthly incomes.
My lowest monthly income: EUR 457 (in January too. That month was difficult).
My highest monthly income: EUR 9185 (this month).
In my experience it's the transition periods where you really have to be careful (unless you have a substantial savings buffer). Switching between contracts with different invoicing cycles; holidays.
I'm still enjoying it. Hoping to break EUR 100K next year.
I had four solid long-term contracts lined up as of a few months ago, scheduled so that I could make adequate progress on them without overloading myself, with the overlap set up so that I'd be protected if any one of them fell through.
So far, two of them have fallen through (in the non-paying fashion) and one of them is in the process of actively falling apart. I ended up sinking a ton of energy into trying to salvage each one and trying to protect clients from themselves, but ultimately it's not possible. So now I'm potentially left with one paying project... if that one falls through I'm screwed.
Maybe in some fields you can be looking for work and have some good contracts in your lap a week later? For me, jacquesm's '3 months or so' is on the money; some of my better-paying contracts take even longer than that to get to the point where I can actually start doing work and billing for it.
A good strategy: 1 background job that is long running and has a reasonably low price tag because it can be pre-empted, one high priority, short bursts of work that are paid top rate and maintenance on a number of old clients that still bring in a part of the income.
That way everybody gets value for their money and the freelancer gets a good mixture of income. You're mistaken if you think that having a freelancer with only 1 or 2 customers is good for you, in the long term you'll need to rebuild your relationship with new people because your old ones will go out of business when you don't need them for a while.
I think there are even situations where having a contract explicitly stating you are not an employee may not be legally binding if you have only one client.
To give you an idea of what I mean, the one that's in the process of falling apart took over six months of negotiation, periodic prodding, and concessions to get them to actually provide me fully signed documents so I could start work. The whole time they were telling me how excited they were about the project and how important it was to them. Clients like this all seem to exist somewhere on a spectrum, and you have to figure out whether they're just a 'less profitable' client because you'll have to put more work in (and set your hourly rate accordingly), or whether they're a fundamentally problematic client that will just never work out. This client turned out to be the latter, even if I am billing hours now.
I suspect once you've been freelancing long enough you can just say no to any client that seems like they could be a problem. For me, it's been a little over two years and the influx of work is not remotely enough to justify that (even if I get way more offers than I used to, and they're better offers)
Though I'm not a freelancer myself I know a guy who was making fairly good money off one client. He knew he should diversify but it was always "I'll look next month for other clients because I'm too busy right now".
Some time ago that said client stopped giving work to him. Now he jobs part time at the gas station to make rent and gets only small contracts because he couldn't build a client network while working for his only client.
If you have a long contract you can make up a big enough buffer in your business account so you can go months without any business income and still pay yourself a decent salary.
Other bonus is giving yourself a massive dividend now and again :}
Is this not the case with smaller projects too, though? I always tend to look for a new project towards the end of the last one, and that has worked out so far.
> You need several customers in parallel to be stable as a freelancer, not one big one.
I actually found the opposite: trying to maintain 2 projects at the same time was a nightmare.
I've been freelancing full-time for 5 years and January is always the hardest for me too. Basically the last two weeks of December and first two in January are impossible (people aren't available to speak to you, pay you, or give you new work).
I try to get more jobs that I can usually handle at the end of Nov/start of Dec, take my usual 50% up front, but give longer than usual deadlines. That way I can spread the jobs out throughout the dry spell at the end of the year but I'm also financially secure as the extra jobs+50% will cover me.
It might not work for everyone but I tend to prefer working on small 1 month projects so it works for me.
Edit: Wrote this before coffee. Thought we were talking hourly rates. Nevermind.
Ruby is quite commoditised now. Take a look at, say, Scala on jobserve.com and you'll see rates are double Ruby. The only way you'll make big money as a Ruby consultant is by differentiating yourself somehow. Better go write a book. All that said, I would be very hesitant about accepting work below £400 a day. A good rule of thumb for consulting is you'll work 100 days a year. At that rate you are making about the same as a mid-level FT employee.
Also note the OP said he was a contractor. There is a fuzzy but real distinction between contractors and consultants. A contractor is typically treated like a FT employee, without the permanent job. This means working from the client's office, longer jobs (usually 6 months - 1 year), and no simultaneous engagements. Contractors typically get paid less than consultants, but there is more work going.
Yeah bang on - I'm treated as a full-time employee, just no sick pay, national insurance (state pension), redundancy, paternity leave, etc. Sacrificing these benefits pays around 50% more, but you have to file your own tax.
The biggest problem I had was last year when I caught a bug and was out for a week, cost me £2000 - something you often take for granted in a permanent job.
I have American friends that have come and worked in the UK, but all for companies, none have setup themselves, so not sure if it's possible.
The question is how to reach the market?
Edit: Oh for actually getting the contracts? I usually find them via ruby friends, or LRUG - the London Ruby User Group - a healthy supply of companies & contractors scour it to quench a never ending demand, it seems.
I used to live in London, was paying £1050 a month for a shitty one bedroom apartment miles away from the center - had no spare money and took just as long to commute!
Rush hour public transport takes about an hour. Unless you have a serious podcast addiction or an enormous reading list, it's not worth it. Two wheels - motorized or not - are the way to go in London.
I would love to see a distribution among different technologies, such as .NET, Rails, iOS, Android, etc...
Imagining I take a week or two off this year then that works out to about 200k usd
How to achieve this? Find a gap in the market, upskill in it, don't be shy about asking for more money than you think the client will offer you (if they're desperate, they will pay)
does your (own) company also pay social security ?
You just need a decent accountant who understands how to play this game...
Earning $200k, then paying yourself $15k, and then giving yourself 'dividends' of $150k will very likely trigger an audit. Your 'pay' needs to be considered 'reasonable' for the type of work you do.
You might very well do this for a few years, but if you get audited, you'll get fined for this. Make a better estimate - if someone doing similar work in your region might be earning $75k, so pay yourself in that range, then dividend the rest.
"Pay yourself minimum wage, then you can avoid loads of tax!" is a common piece of advice I hear given, and it can be a pretty big red flag to the IRS (got this from my own CPA as well as other CPAs and other financial/tax people over the last ... too many years to count).
The issue is not so much whether you're an 'employee' or not, but in the US, 'wages' are subject to FICA tax (~13% IIRC), 'dividends' aren't. Making $150k, but paying FICA tax on only $15k, and treating the other $135k as 'dividends' is not kosher, as you're avoiding FICA tax on $135k (not really 100% true, because there's an upper cap on FICA-taxable income at the moment).
It's simply not seen as reasonable for someone who's obviously bringing in $150k to claim they only 'earned' $15k, for example. Furthermore, your future Social Security payments are based in part on how much you've paid in FICA taxes over the years, so someone trying to engage in this will find themselves with reduced SS payments down the road, as well as a probable audit and penalties.
Of course, you are right that this is all still a grey area but I'm sure the laws or precedences are clear in some countries.
That's only true up to £32,010 and if you're earning £125k or so and extracting most of that through dividends, the majority of your dividend income should be attracting 22.5% and 27.5% tax after discounting, no?
Good money, low overhead working in the attic (pun intended!), and worked on site about half the time (stayed with a friend who lived there).
That dried up earlier this year and I was getting tired of Chicago, so I applied to a bunch of full-time jobs in California and took a 110k/year embedded software job in San Diego. I miss contracting and working on my own hours, but this larger salary, awesome benefits, and stable income are nice too. Though I just started working on a hardware start-up on the side. I'm hoping this will get big.
XXXXXXXXXXXXXXX -- $20-$50k
XXXXXXXXXXXXXXXXXXXX -- $50k-$80k
XXXXXXXXXXXXXXXXX -- $80-$120k
XXXXXXXXXXXXX -- $120-$150k
XXXXXXXXXXXX -- $150k-$200k
XXXXXXXXXXXXXX -- $200k or more
XXXX -- $300k or more