When using external developers it is normal to pay them by the day or hour but permanent staff are paid annual salaries. This often means that staff paid on annual salaries have never calculated their own daily rate, when they do they rarely include the extras that need to be included such as holidays, idle time and equipment costs.
In this table I am not talking about contract staff that work on your site every day, but external developers that spend some time in their own offices and some time on your site.
To try and clarify this I have put together a table that tries to match the daily rates that an external developer would charge to annual salaries. This issue is complicated by the fact that external developers do not get holiday pay, sick pay, have idle time and have to buy equipment but it is an interesting comparison.
In a couple of years time it will be illegal to include bank holidays in an employees 20 day statutory holiday entitlement, so I am assuming that an employee will have 4 weeks holiday plus the 8 days of bank holidays, this is of course 28 days in total
|
Item
|
Total Days
|
Day left for working
|
|
Number of days in a year
|
365
|
365
|
|
Number of weekend days (52*2)
|
104
|
261
|
|
Number of days of holiday (4 * 5)
|
20
|
241
|
|
Number of days of bank holidays
|
8
|
233
|
|
Working days per year
|
|
233
|
We also need to take into account the "Sales days", time spent discussing projects that might or might not ever happen and given that nobody can budget their time perfectly I have included a column with 1 day a week of uncharged time.
Then I have added a column that allows £1,000 per month (£52 per day) for the maintenance of necessary equipment such as software licences, hardware, phones, email and office space. I appreciate that this sounds a lot, but it is not especially generous, if you want a properly equiped developer rather than someone using pirated software in his bedroom.
Finally I have allowed £50 per day as travelling or accommodation costs this is quite low so as to average out the days in the office.
|
Annual Salary
|
Daily Rate
|
Daily Rate allowing 1
day a week uncharged (20%)
|
Inc £1K overheads
|
Inc travelling expenses
|
|
30K
|
£129
|
£155
|
£207
|
£257
|
|
40K
|
£172
|
£206
|
£258
|
£308
|
|
50K
|
£215
|
£258
|
£310
|
£360
|
|
60K
|
£258
|
£309
|
£361
|
£411
|
|
70K
|
£300
|
£361
|
£413
|
£463
|
|
80K
|
£343
|
£412
|
£464
|
£514
|
|
90K
|
£386
|
£464
|
£516
|
£566
|
|
|
|
|
|
|
The above table doesn't take into account any days sick, any months with more than 1 day a week unchargeable or not getting paid for a job! It should also be noted that many employed people at these salary levels (especially outside London) will also have extra benefits such as cars or car allowances/health care/gyms membership etc.
It is unlikely that as an employer you spend £1K per month on overheads but if you include employer's NI (12.8% 2006-2007) you will be getting close to this.