Is a Salary Better Than Contracting? It is common knowledge that contracting pays more per hour than a salaried job does. I don't know that there is an exact expected ratio, but in my experience an hourly paid contracting job pays a minimum of 1.333 times better than a salary would. (I know there are caveats, I'll get to those in a minute).

Take your salary and multiply it by 1.333. That is practically the worst case scenario for how much you would make by contracting instead. That sounds totally worth it, doesn't it?

Pros of contracting:

• Lots more money
• You still get paid even if you work more than 40 hours in a week
• Lots of varied experiences which will make you well-rounded
• You can never get bored because things change all of the time

Pros of salary (with cons of contracting):

• Predictable pay
• No "Bench Time" (This is a contracting term that means you are not currently billing any hours to anybody / out of work)
• Vacation time and sick time!
• Other perks like cheaper health insurance, 401K matching, bonuses, etc
• Gaining a much deeper understanding of one line of business (become an expert because you have worked at the same thing for a long time)
• Potential to "move up" within an organization because of how super good you are.

So, is 1.333 times your salary worth the gamble of having bench time? Can you handle the fact that vacation is completely on you, and you will have next to nothing in your next paycheck? Is it worth it to have no income if you get the flu? What about having to prepare for retirement without any help from any company?

So far it is worth it for me because I am pretty good with my money and I believe I have what it takes to prevent myself from being out of work for too long. Is a salaried job the easy way out or is contracting just a long-term Vegas-styled gamble?

Labels: contracting, money, work

  ¶ 9:49 AM