That 15% is not taking into account base salary (I'm including bonus + 401k matching)... it's more like 25% if you look at it that way ;). And this is a pretty entry level rate... in a year from now I know I'll be able to command at least 50-70% more.
Health insurance can be had for barely more than the cost of fuel I was using in my daily commute, which is $200/mo. Yes, I have to do my own taxes, and yes they'll be a bit more, but as a sole proprietor I can also deduct many expenses. It's pretty much a wash. I firmly believe people make a bigger deal out of this than it is, it's a fear thing.
But this is beside my point, I'm transitioning out from Windows dev, and it doesn't have to be some huge sacrifice like many make it out to be. I have a plethora of full-time work I can take in front of me if I wish, I decided the 1099 route makes more sense for me at this moment in time.
As someone who left full time about 2 years ago to do 1099 work only, I recommend you definitely work on pushing your rate up as you go. Not only do you have to account for the extra costs, it's also likely you won't always be billing 40 hours a week. I've finally gotten my rate to a point where I feel alright if I only bill 20 hours of work a week. I am working a full week, balancing programming time with managing existing clients, connecting with potential new ones, and taking time to stay involved in open source projects which have been my best marketing strategy. Also account for the fact that all time off is unpaid. My hourly rate is now about twice what I was paid as a full time employee. Good luck!
Is it weird that I love doing this stuff so much, that the simple idea that I can go work anywhere means I can go on a 2 week road trip and work while doing that is vacation enough? Granted, me from 2 years from now might have a different take. But the fact that 'work' means going into a coffee shop, staying at home with my dogs on the couch, or going into a cool co-working space and collaborate with like-minded people... it's like my whole life will become this big vacation. Because I really love writing software, it's just exhilarating. 'Work' to me is having to slave through rush-hour, deal with water cooler talk, walk into a sea of cubes in a faceless corporation, spend hours upon hours in meetings that accomplish little, then put on my headphones and pretend I'm somewhere else. The work itself is what actually takes me away from that reality.
Yep I'm right there with you, and a lot of those points are exactly why I left to do freelancing and enjoy it for the most part. I've definitely done "working trips", and I do work each day when it's best for me. That being said, the part I'm struggling with right now is how to take a real vacation. I mean like 2-3 weeks off, full disconnected. I have 3 clients I'm working with right now on an ongoing basis, and trying to find 3 weeks where I can break from all 3 (and have anything to work on when I get back) is next to impossible so far. But that's part of the challenge, and I've learned to allot time to figuring out strategies for running the business, both in drumming up work and making it a better experience for myself (hence I only end up billing 20-30 hours a week generally).
The starting point for your contract rate should be the thousands number of your salary multiplied by 1.5
i.e., if you make $50k a year, charge $75/hr. If you make $100k/year, charge $150. How much do you think an associate attorney at a law firm that makes $150k per year is billed out at? CPA? Management consultant? All of these professionals are generally billed out at a median rate of nearly $200/hr. And the top end is astronomical, like $800/hr or more.
The hardest part about software consulting/contracting is learning to say a polite "fuck off" to the people not willing to pay your price. Everything else is easy. Making some money is the easy part. Earning respect is the difficult part.
"No less than 5 offers" - CHARGE MORE MONEY. As an engineer it is your responsibility to the craft to increase the prestige and respect of the job.
First and foremost, I named my price on this contract, which will be 27 hours per week average for the first 3 months, then option to renew for another 3 months. By your metric I should have asked almost 3x as much. But I'm not charging for a principal .NET guy, I'm charging for a jr. Rails dev. Put it another way, I'm probably at 1/3 the speed of a sr. Rails dev. There will be a day... so in a way, perhaps by this scale I took a huge pay cut against the risk. More than the $$, I get tremendous amount of value from this experience. It's my first paid 1099 (well not quite, but in this space it is). I get to work with a top-notch client and design firm, and I have a very sr. guy on retainer the client pays for for my use to help out on areas I get stuck and review all my code (FWIW, he is actually the one who introduced me to this client, we worked together on the prior project as well).
I also have another client who wants me to bid shorter term work (they did offer at a rate that's 40% higher) but I told them to hold off for now because I want to get used to the new contract first and make sure I'm comfortable with the cadence.
Key point - I will consistently be raising my rate, but for now I'm making almost as much as my day job and working much less hours, and I need to get out there network, get good, etc... and the rest will come. I'm approaching this in a way that aligns with my own principles. I'm not trying to be a bottom feeder in this market. I just am getting my feet wet with a minimal portfolio and simply happy to be in a position that I can make the transition into something I'd much rather be doing.
According to this rule I should be charging around $200 / hour. I would love to be able to do that, but I think your logic is flawed. I've found that multiplying by 1 or even less actually nets you more overall income after expenses (considering you get to expense some toys like that brand new macbook pro / air, ipad, etc.) for the year.
This is in Canada though, so I'm not taking the requirement to pay for your own medical insurance into consideration.
Health insurance can be had for barely more than the cost of fuel I was using in my daily commute, which is $200/mo. Yes, I have to do my own taxes, and yes they'll be a bit more, but as a sole proprietor I can also deduct many expenses. It's pretty much a wash. I firmly believe people make a bigger deal out of this than it is, it's a fear thing.
But this is beside my point, I'm transitioning out from Windows dev, and it doesn't have to be some huge sacrifice like many make it out to be. I have a plethora of full-time work I can take in front of me if I wish, I decided the 1099 route makes more sense for me at this moment in time.