Part Time On Call rate

Question

I've been considering consulting in my field - I have a graduate degree and four years in the field. My experience has been accelerated due to the nature of my career position. I've been approached by a company I have worked with via contract with my employer to do work - my current employer has no problem with this.

They stated they would take me as a consultant or an an employee in a "part time on call" capacity. I'm considering the latter as I'm busy with work and family, and this seemed an easy way to enter the freelancing world.

Many websites discuss rates for consultants but this would be somewhere in between. Let's pick a number for my current pay at $50/hr, would should I propose this side work should pay? Their overhead should obviously be lower, I imagine that I won't receive ( and don't need) sick & vacation pay nor medical insurance.

Answer 1

I would ask them for an offer and see what they are thinking.

Assuming you only get paid when they use you, I would charge significantly more for consulting than I would for an employee type position. Roughly double because:

A consultant picks up all their own overhead (insurance, retirement, etc.).

An consultant that only gets paid when needed has zero guarantee of income.

If you are "on call" and have to respond quickly when called, then you're free time is not truly free time as you must remain "ready" at that time.

The company saves by not having to pay the employee overhead (which can be huge).

The company gets the benefit of having your known/reliable services when they need them, but only having to pay when they use you. If they had to keep an employee or had to go scout out a new consultant every time they needed work done, it would cost them a lot more.

Bottom line, companies pay consultants more per hour than employees because consultants are taking all the financial risks and need to stay in business when times are slow to be available to companies when those companies want/need them. The hourly rate is more but it costs the employer much less to use consultants for sporadic work. Everyone wins.

If this is more like a part time job with a guaranteed amount of work, then I would probably charge 25% more than I would as an employee. They're still getting the benefit of not having to pay overhead and the fact that you don't "need" the insurance does not mean your hour is not worth that amount of money. It just means you must maintain a full time position in order to be able to offer them the services they want.

One caveat - if you really want to break into consulting and you think this will help you and they won't pay the rate you want, you might lower the rate to get your foot in the door. But only if you see this position actually helping you get other consulting clients.

Answer 2

This is a bit tricky and really impossible for anyone to answer definitively.

Truth is, any position should/could pay whatever someone is willing to pay for it. There are no solid figures that can be provided. Every person, position, and company is different.

My suggestion would be consulting rates at about two-thirds your full working rate. So, if your full rate is $50/hr then consulting rates would be $35/hr or around that. It's customary that consulting fees for some positions are less than actual working rates. However, some individuals only consult, so their rates are just their rates and there's no reduction for consulting.

Ultimately it comes down to what you are comfortable with and what the company is willing to pay. It's always a bit of a guessing game.