Advice needed - George Costanza moment

[SecondCor521]

OK, I'm such a dork it's amazing I've made it this far in life.

I'm caught in a George Costanza moment in a job situation here. I have a regular day job as a software engineer. I'm finishing up my MBA. I've been in contact with a company that wants me to do some sort of work for them - business analysis, writing reports, etc. I agreed to work for them on a very part time basis on sort of a project basis. It seems to be a "try before you buy" sort of arrangement on both sides of the table.

Here's the thing...they haven't mentioned anything about salary or benefits, and it appears that they aren't going to bother doing so.

I *assume* it's just an hourly wage with no benefits. I'd like it to be on a "bid basis" where they say it'll be $X per hour and this project should take 5 hours, so we'll pay you $5X for the job regardless of how long it takes you. I *think* the wage they're able to pay is lower than what I'd make at my current job, but I don't really know.

Should I bring it up at all? If so, how? Should I ask just an open-ended question about compensation or should I ask my specific questions?

2Cor521

 

[TromboneAl]

Absolutely, bring it up right away. No one will fault you for getting the finances straight. You might say "BTW, I charge $X/hour." Where X is a large number.

 

[Rich_by_the_Bay]

Should I bring it up at all? If so, how? Should I ask just an open-ended question about compensation or should I ask my specific questions?

Like, "How do you suggest we handle the compensation?"

 

[Sheryl]

Or just say, "Here's my proposal for the work." Call me if you have questions.

I'm always scared to tell people what my work is going to cost them, but when I finally do, they rarely blink.

Go for $7x, so if you have to come down to $6x you'll still be ahead.

Don't forget if you do it as a 1099 contractor vs. an employee you will have tax liabilities.

 

[crazy connie]

Also, since you are doing them a favor and they are not paying for bennies you should be getting a sustantial boost over your real jobs hourly rate of pay. Additional taxes and health care as well as time off paid should also be part of the equation.

 

[SecondCor521]

T-Al,

I could do that but I've already (in my mind) accepted the job. Doesn't seem fair somehow.

RIT,

Yeah, that would be the open ended version. Is that what you suggest?

Sheryl,

Good point about the tax liabilities. I will try to remember to ask them about that.

Connie,

Good point about bennies. I guess I'm not sure of the ratio -- if I'm making $X as an engineer should I make $2X as a contract business analyst?

To me I think what is more important is that my 45th to 50th work hour has a higher marginal cost -- I'd simply not rather work that much. Also, I have overtime at my current job if I wanted to take it, which I don't because I'm kinda bored with engineering.

I guess another question overall is should I get them to say what they think first or should I say what I think first? I've heard he who names a number first loses, but OTOH I do have some preferences. Maybe I'll discuss the compensation structure first and then I'll know what the number means.

2Cor521

 

[Rich_by_the_Bay]

could do that but I've already (in my mind) accepted the job. Doesn't seem fair somehow.

RIT,

Yeah, that would be the open ended version. Is that what you suggest?

It's what I would do. They'll either say, "we generally pay $65 an hour, is that OK" or else, "what do you charge and how many hours do you estimate," in which case you need to have answers in reserve. But of course, what you say must be genuine for your personality and worth the client. Most of all, I suggest you get it squared away in advance and don't low-ball yourself.

 

[SecondCor521]

OK, here's what I sent just now:

"<CEO/hiring manager>,

I had a few clarifying questions for you about my compensation structure.

1. Am I correct in thinking that I will be a 1099 contractor?
2. Am I correct in thinking that this role comes without any other benefits?
3. Which makes more sense to you: for my compensation to be on an hourly basis or on a project basis?
4. What rate did you have in mind?

I apologize if I am being overly blunt or forward. However, I need this information in order to make the best decisions for myself that I can.

Thank you,

<2Cor521>"

It's already sent, so now you can critique after the fact if you wish.

2Cor521

 

[Sheryl]

Sounds good 2cor - no critique here. Let us know how it turns out.

In our industry consultants can charge about 2.5 - 3x salary. But they pay for all their own taxes, insurance, benefits, office overhead, marketing, support staff, etc. etc.

It's still more profitable than being an employee, I think.

 

[SecondCor521]

Sheryl,

Thanks for the data point. In this particular case I expect to work off site on my own PC, so my overhead, other than the tax burden, should be slight.

I've made a note to remind me to let you all know how it turned out.

Thanks to all for the comments!!!

2Cor521

 

[BUM]

Is this generational? My #2 daughter accepted a job recently without asking about benefits :

 

[SecondCor521]

As promised, and because I can sorta remember things from one day to the next, here is the reply:

"<2Cor521>,

Thank you for your message. No trouble.

What we agreed before the holidays is that, because you have not done this type of work before, it would be best for us to work together under a contractor model for a project or two.

So, yes, we are presenting discussing a 1099 contractor status. I would want you to start out as a Business Analyst I, so the rate of pay for these first projects that <Company> can offer is $XX per hour. Depending on where we go from there, we can discuss a different rate and/or status later.

Correct, <Company> does not pay benefits for its contractors and they are required to provide their own equipment (read computer & Internet access). Work site is flexible.

Please let us know what you’re thinking.

Thanks,

<CEO/hiring manager>"

Which answers most of my questions but not all, particularly whether it is per hour or per project. The pay rate is slightly less than what I am making at my day job in engineering, but her point about a lack of experience is well taken. I don't think I will counter higher because I've already accepted the job in my mind, and also because I accrue to myself the benefit of trying out a new job and a new company with very little downside risk. It will, however, determine how available I am to work for them.

2Cor521

 

[Martha]

From the email, it sounds like per hour to me.

Don't forget you will have to pay self employment tax, which really cuts into how much you will make.

 

[Caroline]

The pay rate is slightly less than what I am making at my day job in engineering, but her point about a lack of experience is well taken.

I thought I heard you say that you're bored with programming. Is this new work something you want to move into for the long term?

If it is, I'd suggest that you think strategically. Yes, the money is important (and learning how to set a price for yourself is even more important), so you were right to bring it up. Well done!

The opportunity to gain experience and references at the work you want to be doing for the next 10 - 20 years is also invaluable. If you're content with what you've got, take it. Then go knock their socks off, and remember to hit them up again in 6 months for a big raise! ;-)

 

[SecondCor521]

Martha, yes, I understand (at least intellectually if not intuitively) about the SE tax aspect of a 1099 contractor. The nominal rate is about 5% less, so with the extra 7.65% haircut that makes it about 13% less compared to my first 40 hours at my day job, and about 42% less than overtime hours at my day job (I'm a non-exempt employee now). But I am going to try it out for a while and see if I like it. I figure if I like it and do well, we can always renegotiate later as Caroline points out.

Yes, Caroline, I am bored with what I was doing in my day job, but I am famously bad at determining ex ante whether I'll like a new job. Interestingly enough, my day job boss just today discussed changing my role to be more in line with what I want to do, so all in all it's good to have two good options to work with.

2Cor521