Retired - They want me back - what to charge?

[CardsFan]

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?

 

[freedomatlast]

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.

 

[Cap_Scarlet]

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.

 

[ivinsfan]

Are you going to see what they offer you first?

 

[CardsFan]

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.

 

[Bamaman]

If you happen to be drawing Social Security, you might want to reconsider. Not worth the payback.

 

[aja8888]

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.

 

[RobbieB]

Yeah, charge $200/hr

 

[MichaelB]

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.

 

[CardsFan]

$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?

 

[Philliefan33]

Don't forget that as a contractor, you will responsible for FICA taxes--both the employee and employer portions.

 

[aja8888]

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.

 

[CardsFan]

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.

 

[Sunset]

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.

 

[CardsFan]

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!

 

[exnavynuke]

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).

 

[Souschef]

I had thought about it,but when I figured 25% federal tax, 9% state tax, and 15% FICA, it was not worth it.

 

[Chuckanut]

Any chance you might incur personal liability in case you mess up and cost them a few million?

 

[pb4uski]

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.

 

[38Chevy454]

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.

 

[growing_older]

They could make an offer, but it will be at my last hourly rate, with no adjustments.

Unless you are doing a favor for a friend or are desperate for money, this is not a reasonable proposition. As an employee you had numerous benefits which cost the company money and which now cost you. Also, as an employee you had an expectation of continued employment security. That alone is a significant part of why contractors are paid more than employee's base rates. General rule of thumb in my business is 2x salary as contracting rate, and it can go higher for shorter contracts or specialized expertise.

No wonder they are having trouble hiring if they are trying to pay less than market rates.

 

[broadway]

Take your former salary + benefits and divide by weeks worked to get your former hourly rate. Then tack on what you want. You are in the driver's seat here.

 

[CardsFan]

Thanks for all the comments. You have re-enforced my original thoughts to go back with a "reasonable number", at least reasonable to me. I suspect they will choke, but hey I really don't need the money. I might burn a bridge, but it is not a bridge I ever intended to cross.

 

[Taxman59]

Before I left my last j*b, they asked what my rate would be to work about 200 hours. They were prepared to offer my last salary. I explained that I wouldn't be accruing vacation, sick, health ins, FICA, 401K etc benefits. Then I came up with an estimated hourly rate taking all of that into account, rounding all of the #s in my favor of course. Then I rounded it up to the next highest 10, and told them I was way too high. The HR person recomputed the #s and said it should be about 25% lower than I computed. I then pointed out that I didn't need them, and they needed me and that was my price. They backed down, agreed that the rate was reasonable (the president told me before I left that he would bill me out at over $300 per hour, and that comment came back to haunt him). They finally decided to not get a contract and only call me with quick questions, which I generally dodge if they take more than a couple of minutes of my time.
As a rule of thumb, take your last salary, divide by the stated hours of work (not the actual hours that you put in) and double it as a starting point. Settle at no less than a 50% premium unless YOU need/want the work.

 

[harley]

I contracted at my old job for about 6 months after I FIREd. I charged them 150% of my last salary, and they didn't even blink. Give it a try. If they counter and you want to do it, drive on. If you don't, tell them "no thanks", and go do something retire-ey.