The Nascent Life of a Consultant

I left off my last post talking about the potential abuses of salaried compensation.  Today, I'll start off with the freedom I've rediscovered being paid an hourly rate as a consultant.

Determining an hourly rate has likely been the most stressful task in my young consulting life.  Even before landing an actual gig, it was something that caused me low-level anxiety.  I'm literally putting a price on my worth and asking someone to pay me that.  As a salaried employee, someone else set my worth and thought, at least temporarily, that I was worth that price.  Setting your own price is like asking someone to document all of your flaws and then still love you.  I have no idea what I'm actually worth.  For all I know I could've just been a consummate bullshit artist performing for a deep-pocketed audience.  However, unless you've already received an offer for a consulting gig at a given rate, you're going to have to explore the limits of your own self-worth (at least monetarily).

The most straightforward calculation would've been to take my last salary, add 7.65% to the amount (for the additional social security and medicare tax - FICA - I need to pay for being self-employed), and convert it to an hourly rate.  If you want a quick back of the envelope calculation, take an annual amount - say $100k - halve it and divide by 1000.  So, a $100K salary is roughly $50/hour.  

Of course, this is where a salary and/or working at a company is beneficial, literally (at least in the US).  Your healthcare is likely subsidized by your employer and you probably get paid for some time off, so take that into account when setting your rate.

I researched the going rate for both software engineer and software engineering manager to determine a rate I thought was reasonable, but, as expected the range is huge.  I ultimately used my previous salary as a guideline.  Someone thought I was worth that amount, and I have a couple of decades' worth of experience, so my price isn't entirely out of left field. 

Could I have made more?  From what I understand about consulting in situations like these, probably.  But the amount I ultimately asked for and received would provide me with a comfortable lifestyle (even paying more for my own health insurance and FICA taxes).  And, this being my first gig, I didn't want to overplay my hand.

Plus, now that I'm getting paid at this rate, I have a number I can confidently use as the basis for future negotiations with clients.  Other clients may disagree that I'm worth this (or may think I'm worth more), but I now have a basis from which to start.

...and none of the preceding paragraphs explain why I'm happy to be paid hourly again.  But that reason for me is simple - I feel much more at ease getting paid for the hours I've worked - no more, no less.  There are some expectations on the number of hours worked per week and the total hours of the project, but those are negotiated ahead of time and are a range.  This means that, on days when I don't feel like working as much or have errands to run, I simply don't work as many hours (and therefore don't bill as many hours).  As long as this falls within the constraints of the contract, I don't have to worry about perceived performance.  No one's going to ask me why I'm not working 50 hours a week when I'm being billed at 40 hours per week.  Additional hours mean additional pay.

Being paid hourly also changes my perspective on the annoyances (*cough* meetings *cough*) that plagued my life as a full-time employee.  If you know me or have been following along with my blog for a while, you know that I'm not a fan of meetings.  Most of them usually work against their own intent and waste time for the vast majority of attendees.

Now, however, because the cost of my time is explicit, I'm much more willing to spend time in a meeting - even one that may have dubious value.  As I write this, I realize that I'm now willing to do things for money that I previously abhorred.  So, I guess I'm a sell-out!  Yay me!  16-year-old Todd would be so disgusted.

It doesn't mean that I now find most meetings useful.  I'm just less likely to push back hard, because the meeting isn't something I'm doing in addition to other responsibilities (or as a measure of my worth as a manager).  It's part of those responsibilities against which, again, I can peg an actual dollar value.  If you think it's worthwhile to send me to 8 hours worth of status updates, who am I to argue (luckily, no one has asked me to do anything remotely close, but I'd be game)?

And though I'd like to think I have a high tolerance for mundane tasks if I understand their ultimate purpose (usually because I like looking for fresh approaches or means to make the task less mundane), an explicit hourly wage helps reinforce that message for me.

I actually learned this lesson years ago while working at Starbucks.  One of the most tedious tasks we had (other than making Frappucinos for pre-teens) was stocking inventory after a delivery.  However, it came to be one of my favorite tasks - I was getting paid, I had an hour away from the pre-teens, and I had a quiet room to myself where I could create order out of chaos.  At the end of the stocking process, I could even see the physical fruits of my labor with all of the various flavored syrups aligned on the wireframe shelves of the pre-teens' favorite Frappucino flavors.

All of this finally leads me to my original point from my last post - Being a consultant means...

I'm a writer!

I honestly didn't know what to expect when I became a consultant (and 4 weeks in, I still really don't), but I was able to stumble my way into productivity by having an inkling about what I should be doing, following a few links people at the company provided for me, and simply taking notes.  A lot of notes.

Once I took a few notes, I went back to the statement of work I generated for the gig to see how I was progressing with my stated goals.

[Aside: A statement of work - or SOW - is another novelty for me.  I knew the large consulting firms we employed at my previous jobs had gargantuan documents outlining their work and referred to them as SOWs, but with a few moments' fleeting exception in 2014 or 2015, I've had zero exposure to them.  A few quick web searches here really helped out.  The results varied between a casual "Hey, buddy! Here's how I'll help you out" and a much more formal "Madame, the party of the 1st part will deliver .25 of task A 15 business days from now to the party of the 2nd part."

I chose somewhere in the middle.  I wanted some structure, but wanted it to be accessible.  Somewhere between flip-flops and wingtips in the shoe equivalent.  So, a nice, snazzy pair of Allbirds (Note: I'm not sponsored by Allbirds, but I'm happy to change that if anyone from Allbirds is reading and wants to pay me).

I've since referred to my SOW several times.  It proves valuable as a roadmap for helping me keep track of what exactly I said I'd deliver and when.

I'll provide an example of my SOW so those in the know can laugh at my ignorance in a future post.]

Comparing my notes to my SOW goals led me to compose a document for one of the processes I'm helping to craft.  And then I started to compose supporting documents to help explain my reasons for the document composition.  And as more ideas flowed from those documents, I realized I needed to take more notes and compose more documents for clarification.

In terms of a novelist, my output isn't quite so prolific (I heard a good rule of thumb for authors is to write 1000 words per day), but I know it's around 15K words (so approximately 1/4 of a novel in a month) after 4 weeks of work.

And with that, I've found my starting niche as a consultant - sit down, sift through a lot of documentation, talk to some people at the company, and write furiously.  There's always that nagging feeling that I'm just writing into the void and no one will ever read my output.  But, I've had this blog for a while, so I'm used to that.  Plus, in that instance, I'm getting paid to write to myself.  The blog is just a labor of love.

Until next time, my human and robot friends.