>> So as an example, a $100K salary, which corresponds to roughly $50 per hour working 40 hours a week, requires a freelancing rate of $56-58/hour to pay for healthcare and time off.
Cringe -- this is bad advice for setting your consulting rate. In the US, the full cost of an $100K employee is not $100K. It's $100K salary + paid vacation time + employment taxes paid by employer + healthcare + office space & pro-rated related expenses (like cleaning of said office space). This metric is called the "fully loaded cost" of an employee and ends up being 1.3x-1.5x of the salary.
But even this calculation fails to capture the flexibility advantages that your clients get from hiring short term. It ignores the fact that as a consultant you are hired only when you are needed and are 100% utilized, while a yearly employee may not be fully utilized every day of the year. Essentially, an employer that hires a full time employee agrees to "buy in bulk" and pay for time that may or may not be fully utilized. By necessity this means that your rate should be higher to account for the additional value provided plus provide cushion for those in-between project times when you are looking for work or doing proposals.
Two quick and dirty metrics I have seen for determining rate per hour are 1) yearly salary / 1000 and 2) 2x full time employee hourly rate. Both of these converge on about $100/hr. Un-official data from HN seems to confirm a median freelance rate in that range (about $90/hr):
http://news.ycombinator.com/item?id=3420203
Keep in mind that those guesstimations are for determining the floor rate one would ask for to maintain an expected standard of living, rather than determining the rate one would actually ask for. Your rate should be whatever you can convince people to pay you, and that can be a number well north of $90/hr.
(While I love HNers, one should not rely on HN salary surveys to set one's rates. There are many factors that drag it down: HN has a global audience but you do not have to sell to global consumers of programming talent. HN, in other surveys, frequently skews to young and inexperienced -- you may not be young and inexperienced. Many HNers are unsophisticated about pricing to extract value from mutually beneficial business relationships -- you should not be unsophisticated in this manner. Many HNers occupy positions which are low on the value chain such as undifferentiated "web design" which do not command high hourly rates -- you should upgrade your skillset or marketing such that you can command higher hourly rates. etc, etc)
Note that numbers in HN (and other) salary surveys can be distorted upwards too; people lie and half-lie on salary surveys, usually in the direction of claiming to be doing better than they really are. And while the HN demographic skews young and inexperienced, it also skews bright and energetic. (Which of course you ought to be too if you're considering consulting or freelancing in the first place.)
So: the numbers can be way too high because of lying, way too low because of demographics, on the high side because of demographics, way too low because it reflects people doing too-generic work, poorly chosen because it's from inexperienced or unsophisticated people, etc., etc., etc.
Better than nothing, no doubt. But use with extreme caution.
My consultancy is now starting to take on American clients, and I'm trying to understand what the average market condition is like to know where to start ourselves off.
That strikes me like "Dating advice: Explain to the average woman that accompanying you to the average restaurant followed by an average movie would make for an average evening."
I'm pretty sure you don't. In fact, I'd go so far as to say, framing it terms of another developer will hurt you if you are charging more.
If you are delivering $100,000 in business value, and you charge $20,000 for it it is a win for the company. If another developer charges $10,000 for it. Going with them isn't twice the win for the company.
You don't say I'm worth x% more because I work x% faster. You are worth $20,000 (which just so happens to be x% more) because you've done this before, helped other clients realize 5x ROI and you've worked around the nasty #2343 bug in the database that will bite them if they go with someone else.
In my experience this is a bad way to approach things. Far better to frame the conversation in terms of how much value the customer will derive.
My personal example: through a combination of political cleverness and tech-savvy, I saved a company several million dollars. That anchor makes me seem much more valuable than if I start by comparing myself to an average programmer, and describe how my services are better (in fact, my technological skills are substantially WORSE than the average programmer's, which would make it an even harder sell).
I feel like I addressed that pretty clearly, as that number takes into account healthcare and paid vacation and sick time. You do pay a self-employment tax, but I think that's made up for by the numerous deductions including home office that can be made. I work from home so it doesn't cost me any more for office space / cleaning / utilities, in fact, as mentioned, I get to deduct a percentage of all those things! I also no longer commute or have to order / eat lunch out, so that's a significant monthly savings as well.
Also, since my stated goals were to work less and take more vacation, the flexibility advantages you mention for an employer are precisely the flexibility advantages for ME that I was looking for! I love the ability to, every 4-8 weeks when a contract is done, decide how long to take off before the next one if I'd like to, or decide which project to pursue next.
I don't want to be sitting bored in an office getting paid because they bought my time "in bulk", like I've done before. If you find that an enjoyable way to spend your finite amount of time alive, that's honestly great as you'll likely face less obstacles, but it wasn't for me.
Cringe -- this is bad advice for setting your consulting rate. In the US, the full cost of an $100K employee is not $100K. It's $100K salary + paid vacation time + employment taxes paid by employer + healthcare + office space & pro-rated related expenses (like cleaning of said office space). This metric is called the "fully loaded cost" of an employee and ends up being 1.3x-1.5x of the salary.
But even this calculation fails to capture the flexibility advantages that your clients get from hiring short term. It ignores the fact that as a consultant you are hired only when you are needed and are 100% utilized, while a yearly employee may not be fully utilized every day of the year. Essentially, an employer that hires a full time employee agrees to "buy in bulk" and pay for time that may or may not be fully utilized. By necessity this means that your rate should be higher to account for the additional value provided plus provide cushion for those in-between project times when you are looking for work or doing proposals.
Two quick and dirty metrics I have seen for determining rate per hour are 1) yearly salary / 1000 and 2) 2x full time employee hourly rate. Both of these converge on about $100/hr. Un-official data from HN seems to confirm a median freelance rate in that range (about $90/hr): http://news.ycombinator.com/item?id=3420203