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How should I determine my rates for writing custom software?

I would like to see how you freelancer/small biz owner calculate your fee.

I am putting together my hourly rate to submit to a client.

I use a typical base salary+typical benefits + expenses and divided by (2080 - public vacation and typical number of vacation and sick days)

Now, I need to see what I really should include in my benefits package. One thing is, should I include "vacation & sick days" as part of the benefits package?

The way I see it is, if you're employed by a company, paid vacation is really part of your package, and your billable (worked) hours really doesn't include any vacation. Just like the way I have my calculations. So it may seems double counting, or maybe not!

I know there're ways to come up with the rate and how much a client will pay is another story. Since it's another story, lets keep our response stick to this for now.

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marked as duplicate by ChrisF Jul 26 '11 at 13:16

This question has been asked before and already has an answer. If those answers do not fully address your question, please ask a new question.

3 Answers 3

Rough calculation:

Depending on the country you live, there are around 240 to 250 work days in a year if you remove weekends and legal non working days. If you remove holidays, sick days, trainings, and anything you should do but working.

I've found that the resulting number is around 200. On an average, you work 200 days per year.

So if you bill $750 per day (typical developer rate), you get $150000 per year in income.

From that number, remove all business charges, then taxes. From the resulting amount, I strongly advice you to save the half for your retirement.

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Very similar question to one I just answered, here:

How should I determine my rates for writing custom software?

The "benefits package" is all part of the hourly rate fee you charge.

The only thing you might have to negotiate is when you want to take your holidays.

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You can calculate your rate any way you want. If someone wants to pay you time + benefits, they'd just hire an employee. Private contractors get more per hour than employees to factor: holidays, non-billed time, sick days, expenses, paperwork, tax preparers, etc. It's assumed; no need to create a line item on your invoice.

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