ABS CPI figures, the ATO’s Reasonable Travel Allowances Determination (updated annually at the end of June) and relevant salary surveys are all possible reference points for escalation clauses. Because independent contractors and consultants are such a diverse group offering such a range of professional services in a broad range of contexts, a broad range of circumstances can and do affect the appropriate fee structure in the actual marketplace, there is no-one-size-fits-all way to calculate an appropriate hourly rate. Contractors should also note that where contractors need to satisfy the PSI Results Test, an hourly rates clause and/or disbursements or expenses clause can be regarded by the ATO as indicators that the contractor’s exposure to commercial risk is limited precisely because contractors are meant to cover their own costs and expenses as part of total project cost. From compensation planning to variable pay to pay equity analysis, we surveyed 4,900+ organizations on how they manage compensation. There is no substitute for a well-founded knowledge of the value of the particular professional and/or technical service in the particular field or industry in which you’re operating. Find out what you're worth. and adjust operating costs to the level that’s right for your consultancy. Demand for contractors has been rising in some areas recently, but that isn’t necessarily reflected in a massive change in hourly rates. New research shows that each woman experiences the disparity of gender pay gap in different ways, depending on her position, age, race and education. Fresh market data paired with robust analytics. Fresh market data paired with robust analytics. Software Developer’s Guide to Contracting Versus Salary Employment. 38 hours by 52.1 weeks) and deducting from the year the following factors: Thus the hourly rate should be calculated on the basis of about 1210 saleable hours (1980 – 770). There are two basic types of employment in the software development industry. What your skills are worth in the market is constantly changing. Do you know what people like you are earning? Stop guessing. An example of calculating non-saleable hours and costs. If the contractor/consultant is engaged on a short-term basis, a further factor should be included to allow for the time and overheads involved in seeking contracts (which is non-saleable time). Chances are, the ATO will consider it an indicator that you’re not a Personal Services Business and you’ll be subject to the PSI rules and required to pay tax on your earnings as personal services income. (c) A travel-related expense is defined as costs and time incurred in travel properly incurred to fulfil the terms of this contract. Is Software Engineer Contractor your job title? / 1000 hours = $100.00 p/h. The average hourly pay for a Software Engineer Contractor is $57.00. But what you can do – and what we can help you with – is estimating an hourly rate based on a nominated target annual salary making sure you factor in the time and expenses that if you were working as an employee, your employer would cover. We got respondents from the Netherlands, UK, Belgium, France, and Norway. The formula for a winning company culture. New research shows how to set pay for remote employees. In these cases, the rates should be altered to take account of the costs covered by the agency. / 1210 hours = $82.65 p/h, Short-term contract    $100,000p.a. Under normal circumstances, where travel is required, a Disbursements clause providing for payment for travelling time long with reimbursement of accommodation expenses can be agreed between the parties. Stay up to date on the latest compensation trends. (b) The Client will reimburse properly incurred expenses including travel related expenses (and any other disbursements nominated by the parties such as accommodation, taxi fares, etc). That’s the reason why their rates seemed too low for Europe – only $15 … / 1210 hours = $82.65 p/h. / 1000 hours = $100.00 p/h You need to remember to factor in the risk and uncertainty that you accept as a contractor that you don’t generally have as an employee – that is, the profit you would see as reasonable considering the risk of loss that is now part of your operating arrangements – while there are clearly no hard and fast rules, generally you’d want to see a profit margin of anything between 10 and 30 per cent so take that into account in setting your target annual “salary”.