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I am new to the IT contracting field of employment and I am currently looking for a new role as a Software Developer or Software Development Engineer in Test in the Seattle WA area.

I Googled this and have found various "formulas" for calculating what you should be getting paid as a contract employee (W2) vs as a Salaried employee. Many of these seem very high or very low.

From my research on the readily available salary information (Glassdoor etc.) of salaries in the area for persons with my level of experience it comes to around 80-105k. What would be a realistic hourly wage rate equivalent for a contractor?

I have read that you are supposed to get paid from %20 to %50 more as a W2 contract employee but I have not have not seen recruiters come near those hourly rates.

When I talk to the various recruiters I often get the feeling that they are acting like a pushy used car salesman and are trying to get me to agree to a lower rate than I should be probably be getting. The hourly rates that I am often quoted are often around the equivalent of this SALARIED FTE PAY ($40-$50 hr)!

Is the contract employee field really that scammy? From what I understand these recruiting companies are paid on average 200% of market rate!

If the above is the norm why would anyone want to be a contract employee?

Right now FTE is looking like to way to go. I will get the same amount of money plus all the typical benefits...

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    W2 is an employee. 1099 is a contractor.
    – mhoran_psprep
    Dec 12, 2015 at 12:24
  • A "w2 contractor" may be an employee of a contracting company. If so, you should be getting benefits. If you want the higher numbers (and no benefits), look at being an independent contractor -- but then you need to spend time and effort marketing yourself rather than exprcting someone else to find gigs for you, and pay for your own insurance and so on.
    – keshlam
    Dec 12, 2015 at 12:31
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    If you earn $XXX,000 per year as a salaried FTE with benefits, then you need to charge $XXX per hour as a consultant. Seriously.
    – Jim G.
    Dec 12, 2015 at 13:15
  • To clarify I'm trying to see what kind of hourly rate a software developer should expect for a contract W2 job compared to its FTE salaried equivalent.
    – CodeBreaker
    Dec 13, 2015 at 12:09
  • W2 Contract employee is different from a 1099 employee but still works on a contract. 1099 employees are supposed to get paid even more. FYI
    – CodeBreaker
    Dec 15, 2015 at 4:17

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The last time I was looking for a job, I decided that one avenue I would use to search would be one of those companies that tries to put people into positions where they may eventually be hired as a full time employee.

What I discovered was that the rates they wanted you to bill them were only a few dollars an hour above the rate you needed to match what you saw as gross pay in the previous job.

They did this by implying that the extra would cover the benefits you needed to cover: insurance, social security. Of course those benefits were only the tip of the iceberg. They didn't cover holidays, vacation days, time between contracts...

In the United States the cost your employer would charge a customer for your time is 2X the hourly rate they pay you in salary. That covers your pay, your benefits, their costs, their overhead and a decent profit.

In the situation where I was looking, the recruiting company was also tacking on a fee to the customer.

If you want to do this long term: be your own company. Expect to have to charge something in the range of 2x your salary rate. You can go lower if your costs are lower: no office rent, insurance from your military retirement or your spouse.

Otherwise the rates they are suggesting will only be enough to fill part of the hole in your income, which might be enough to last until you can find a full time job.

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