How to Determine How Much To Charge For Your Linux Skills

Here is a general plan for determining what to charge for your Linux contract. A "subcontractor" means that you do not have your own company but are working on behalf of someone else (such as another contractor):

Start with a Base Salary for Living Expenses

Different parts of the country have different living costs. You need to account for rent, car payments, transportation and eventual retirement. For example, living in Toronto is about twice the cost of living in Niagara Falls.

Factor in Contract Risk

For a contract, you have the risk that you could be "dumped" at any time. Include an amount to cover your risk. For example, you may want to "low ball" the risk to improve your chances of working long-term with a good company, or charge more for a shaky company that may not survive until the end of a single contract. $5000 might be good base amount.

Compensate for CPP

Contractors have to pay Canada Pension Plan benefits out of their salary. Add 5% up to a maximum of $2000 to cover CPP payments.

Add in Vacation Pay (Subcontractors Only)

Subcontractors do not get vacation pay. Add 4% in lieu of vacation pay.

Add in Unemployment Benefits (Subcontractors Only)

Subcontractors do not get EI/UI benefits. Add 3% in lieu of the premiums.

Add in GST

Add 7% for the Goods and Services Tax (or charge that on the top end).

 

There may be other factors based on your particular contract.

 

Example: A Toronto Subcontractor

• Base Salary: $70,000/year
• Add in Risk Allowance: $75,000
• Add in Vacation Pay Allowance: $80,250
• Add in CPP Allowance: $82,250
• Add in EI Allowance: $84,717
• Add in GST: $90,647/year