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Retired - They want me back - what to charge?
Old 10-24-2016, 06:00 PM   #1
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Retired - They want me back - what to charge?

Just got a call today from a former co-worker. This division of Mega-Mega corp is in a pinch. With a big merger about to happen, they cannot hire, but this group is short help due to a maternity leave. The contract position is not the same as my primary position, when I was there, but it was something I did sporadically, so it would be a no brainer. Stated time frame is 2-6 months.

Winter is approaching, DW would not mind me being out of the house a few days a week, so I am thinking about it.

They have already said part time is OK, but we have not discussed pay. It will be hourly.

My first thought is:

My last hourly rate, corrected for vacations and Holidays (which would not be paid as a contractor). Plus an adjustment for my new cost of retiree health care (since I am paying more, this is now an avoided cost for the company).

On top of this I think a nominal 10% to 20% surcharge is fair.

I think they might cringe at $100/hr, but that is what I think it will take to get me to do this.

Does this seem reasonable?
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Old 10-24-2016, 06:10 PM   #2
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You've set your price which seems reasonable to me. Name your price and see what happens knowing you can quit at any time, just like Mega could have fired you at any time during your career.
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Old 10-24-2016, 06:10 PM   #3
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Just got a call today from a former co-worker. This division of Mega-Mega corp is in a pinch. With a big merger about to happen, they cannot hire, but this group is short help due to a maternity leave. The contract position is not the same as my primary position, when I was there, but it was something I did sporadically, so it would be a no brainer. Stated time frame is 2-6 months.

Winter is approaching, DW would not mind me being out of the house a few days a week, so I am thinking about it.

They have already said part time is OK, but we have not discussed pay. It will be hourly.

My first thought is:

My last hourly rate, corrected for vacations and Holidays (which would not be paid as a contractor). Plus an adjustment for my new cost of retiree health care (since I am paying more, this is now an avoided cost for the company).

On top of this I think a nominal 10% to 20% surcharge is fair.

I think they might cringe at $100/hr, but that is what I think it will take to get me to do this.

Does this seem reasonable?
Difficult without knowing what your job was - but if its a mega corp big merger then they will be paying external consultants on average somewhere between $2-3,000 per day (I know - I am in that game). So you may be underselling yourself.
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Old 10-24-2016, 06:12 PM   #4
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Are you going to see what they offer you first?
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Old 10-24-2016, 06:15 PM   #5
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Thanks for the comments so far. Re: underselling, this is a very small part of the company, but I get your drift. They are spending millions on lawyers, consultants, etc. I should not feel guilty about getting a reasonable return on my investment of TIME.
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Old 10-24-2016, 06:15 PM   #6
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If you happen to be drawing Social Security, you might want to reconsider. Not worth the payback.
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Old 10-24-2016, 06:16 PM   #7
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Difficult without knowing what your job was - but if its a mega corp big merger then they will be paying external consultants on average somewhere between $2-3,000 per day (I know - I am in that game). So you may be underselling yourself.
Agree, I still consult part time and I bill at a rate much higher than $100/hr. Heck, auto repair shops bill that at a minimum these days.
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Old 10-24-2016, 06:21 PM   #8
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Yeah, charge $200/hr
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Old 10-24-2016, 06:22 PM   #9
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Winter is approaching, DW would not mind me being out of the house a few days a week, so I am thinking about it.
I would charge more just because of winter. Drinking coffee, reading the paper and looking out the window as others shovel and get ready for work in the cold dark winter mornings is too valuable to give up that easily.
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Old 10-24-2016, 06:27 PM   #10
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$200 might be a stretch. But I like your thinking.

And the last time I was in an Auto shop the posted rated was $125/hr, so that's not a bad position to take.

FWIW, I don't think the hiring manager knows what I made, though she might have inquired. It is very possibly more than she makes!

Would you just throw out the number, or supply the justification, as I have described?
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Old 10-24-2016, 06:30 PM   #11
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Don't forget that as a contractor, you will responsible for FICA taxes--both the employee and employer portions.
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Old 10-24-2016, 06:32 PM   #12
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Ask them for a draft consulting contract to sign, then fill in your billing rate. Or, if they have a rate in it that you don't agree with, scratch it out and put in your desired rate. Send it back.
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Old 10-24-2016, 06:33 PM   #13
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Don't forget that as a contractor, you will responsible for FICA taxes--both the employee and employer portions.
This will be done through a company retiree work plan. So, I am pretty sure the company will cover 1/2 the FICA, but that is an important question to confirm.
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Old 10-24-2016, 06:46 PM   #14
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FICA is 15%.
You will also want to get liability insurance I found Hiscox was reasonable. This is for errors and omissions and is not covered by your home ins.

So here is my view, charge whatever you want, but realize contractors easily make 2x a staff salary, plus when they are hired via a contracting agency which is 90% of the time, the agency tacks on 25% -> 50% more, but they do pay the 7.5% fica.

If you have enough, then you should value your time a lot as you are not getting any more of it once it's gone.

When you ask for say $125 and they say why, just tell them, any less and you won't do it. That is your justification.
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Old 10-24-2016, 07:03 PM   #15
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Are you going to see what they offer you first?
Having worked there, I know the history. They could make an offer, but it will be at my last hourly rate, with no adjustments. I want to be ahead of the curve!
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Old 10-24-2016, 07:08 PM   #16
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My position at my company is billable to clients and my billable rate starts at ~2.25 x my hourly rate. If/when I decide to just work contract gigs, that's my baseline for what I want to negotiate down to (so I'll ask for more off the top if possible).
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Old 10-24-2016, 07:15 PM   #17
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I had thought about it,but when I figured 25% federal tax, 9% state tax, and 15% FICA, it was not worth it.
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Old 10-24-2016, 08:08 PM   #18
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Any chance you might incur personal liability in case you mess up and cost them a few million?
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Old 10-24-2016, 08:34 PM   #19
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When you were an employee, in addition to your hourly rate they paid FICA, FUTA, health insurance, 401k match, perhaps a bonus, contribution to DB or DC plan, etc. Not unusual for the total cost to be 120-140% of your base pay. Consulting is often 2-3x salary cost.

Aim high.
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Old 10-24-2016, 08:49 PM   #20
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I agree, your cost as an employee was likely 150% of your salary, if you include all of the benefits value. Also add in some to cover you don't get any paid time off, and costs of FICA or SS deductions due to income. Now add in you are bringing instant qualified skills and ability to accomplish results. So they need you more than you need them.

I think 2x your salary is not unreasonable. A lot depends how they treat the taxes and if you are 100% responsible for all. Would you be a 1099 contractor? Or a returning retiree where the company may have established program and you get a W-2? You can adjust the 2x factor up or down depending on how much your costs and off-work tax time hassles are affected.
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