Are you an underpaid developer?

I’ve been having a lot of conversations with you blog readers over email about making a living as a developer. All the questions follow the same theme. Are you an underpaid developer? If you have to ask yourself then it already means yes.

The definition of underpaid here is in terms of money. We’re not talking about how much fun you have at your job or the amount of learning you’re doing. People want to know how they compare money-wise to other developers. Well, there is always another developer that makes more money than you. The truth is almost all developers are underpaid.

Being underpaid at a regular job

averagesalary

Source: Riviera Partners

You’re always going to be underpaid here. When you get a job offer they always lowball you. Then they make it seem like a big ordeal to negotiate. This system is designed to always pay you just enough to keep you content.

The company you’re working at wants their workers to keep their salary a secret for a reason. So you don’t know someone with your comparable skills (or very likely even less skills) is getting paid more money than you. Someone always is.

Even the highest salaried developers (at $150-170K/year) will be surprised at how much freelance developers make. It will make you realize your regular job is being a slave developer.

Being underpaid as a freelance developer

Screen Shot 2013-04-02 at 12.59.24 AM

Source: Group Talent

You’re a hired gun and you’re paid to come in to execute. So you’re able to command a hefty price tag. Even if your rate is a few hundred dollars an hour there are a bunch of developers who know how to make more. Their earning potential isn’t limited by the number of man hours they spend working.

The highest paid freelance developers learn how to charge based on the value they provide to the business. If you can set the correct context for your client, they won’t have any problem paying you what you want. The amount of money they pay for the project is minimal compared to the amount of money their business will make from it.

I’ve seen these type of developers easily clear $250-500K/year freelancing.

Biggest hurdle of getting paid more is yourself

After the developers I talked to realized they were being underpaid they wanted to fix this problem. The most common solution was to acquire more programming skills — learning backend development if you’re a front end developer and vice-versa or learning new technologies like Node.js. Essentially, developers didn’t feel like they were prepared enough to earn more money.

Well, that feeling never goes away. Programming is a never ending learning activity. The only thing stopping you from making more money is yourself. You just have to jump right in, be agressive and get what you want now. Don’t be scared and wait until you think you’re more qualified. That day might never come.

How underpaid are you?

Join the discussion on Hacker News and Reddit.

 

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41 comments

  1. Freelancer developers also have to pay double the taxes (self employment), pay for their own healthcare, manage hours and clients. It’s not fun.

    1. Hey Keith,

      You also get to write off expenses that you additionally incur as a freelancer. Managing hours is a pain. The highest paid freelancers I know charge on a project basis. Managing clients is almost like managing a boss at a regular job :)

      If it’s not fun then it sounds like all you want to do is be a heads down coder. That unfortunately doesn’t get you paid more money.

    2. Double the *FICA* taxes (because employers pay that other half for W-2 employees), not double taxation across the board.

  2. When you make that freelance money, you also assume the liability of what happens when some script-kiddie exploits a far-fetched edge case that no rational human mind would ever have conceived of during development.

    Don’t get me wrong — your post is right on the money (no pun intended)…but you probably shouldn’t paint a picture of grandeur for an audience of which 5-10% (at BEST) are fit to hold the brush for.

    1. That’s true. Making a lot of money isn’t for every developer. Most just want to make a comfortable living. But I want to help developers realize what’s possible. If you don’t know any better then you will continue to accept low paying jobs.

  3. Salaried positions do offer benefits that freelance positions do not, which has to be added into the equation. I’ve worked both as a freelancer and as a salaried developer. It’s often a different way to get compensation. I’m not saying one is paid more than the other, but maybe both are underpaid. One trump card salaried positions offer is health insurance. People with health conditions or families will take pay cuts just to get decent insurance as it’s nearly impossible to get on their own.

  4. The first graph does not really mean anything if you do not add location data.
    This post will get a lot of attention from college students who are trying to know how much they need to ask, but it all depends on your degree and personal experience..
    As said in the post, this is why people with the same job title will have a different paycheck.

    But I strongly believe that a freelance making 500k would be a lot happier building its own company and work on its own product. But I guess that this is just me…

    1. I think it’s a personal preference on what would make you happier. If it’s all about money then yes 500k/year is a lot of money.

      For programmers who like to be creative, freelancing sucks the life out of you. You basically are fulfilling someone else’s vision.

  5. 500k a year? Even if you work 50 weeks a year, that’s 10.000 a week. And even if you are a workaholic and invoice 50 hours a week (meaning you *work* 70hours a week) that would mean you charge $200 an hour.

    Saying that someone “easily” clears 250-500K a year is bullshit. Not many freelancing developers will be able to have a fulltime gig that pays $200 an hour. The average pricing seen above of $90 to $120 depending on where you live are not for full time jobs, but for per hour short-term projects. As a freelancer you do not have that all of the time. And you need to put down a lot of work looking for customers and learning new technologies, time you don’t get payed for. Most freelancers invoice 20-30 hours a week, for maybe 40 weeks a year. With $120/h in income, thats around 120k a year.

    I’m sure some “easily” clear 250k, but 500k is bullshit.

    1. Hey Lennart,

      Charging by the hour definitely makes earning 500K/year very hard. When you move beyond that and charge by project or by value, your income is no longer capped at the number of hours you put in. So that makes 500K very doable.

      1. Freelancers generally charge by the hour, often as subcontractors to other companies.

        Charging by the project also means you take a risk in that the project might overrun, meaning you have to work much more without making any more money. Often the middle-man companies take that risk and pay the freelancer by the hour.

        Essentially what yo uare saying here that if you are in luck and have customers who doesn’t know how much the work you are doing actually costs on the market, then you can overcharge and make a lot of money. That’s true, but it’s hardly “easy” to find that sort of customers. Most customers that have no idea what the work is worth aren’t willing to pay more than a pittance.

        1. Almost all the developers on GroupTalent.com charge on a project basis. There are a lot more than you think. I can’t provide you with raw statistics of hourly vs project, but none of the freelancers I know charge hourly.

          1. OK, so I’ve applied to GroupTalent.com, then. Let’s see how easy it is. I’m very experienced and highly talented so I should have absolutely no problem making $250.000 a year then.

        2. Awesome. Do keep me updated! They’re a great group of people that love developers.

          1. Lennart Regebro · ·

            I recieved no answer. I’m a top Python developer, and if what you say is true, they should have been delighted in having me on board. But all I got was silence.

        3. Hey Lennart,

          I reached out on your behalf. They said you were in Poland? I believe they recently narrowed down the developers they accept to SF and NYC.

          If you need help getting more leads, feel free to use the contact page and I’ll reply!

  6. as a salaried emp then i’m highly underpaid even with benefits included. one has to wonder how easy it is to become a freelance developer. i’ll bet there are a lot of sacrafices in the beginning not to mention the stress of not knowing when, where and if there will be a next job. Probably need to build up a reputation also. so how does one get started as a freelance developer.

    1. It’s easy if you’re good at sales and marketing. Once you nail that down all you have to do is write the code.

      1. I wouldn’t say it’s so easy as a self-employed consultant/contractor. In the (capital) city where I work, unless you’re with a large consulting group, getting your own foot in the door at any company around here is 99.9% impossible. Companies here view you as a lone sheep, and simply don’t want to bother working with you, regardless of how good you may be.

      2. Is that all it takes? How long do you suppose it takes the average software developer to be good at sales and marketing? How good do you suppose the average software developer is at sales and marketing right now?

        I did a little bit of freelancing, and I realized that being good at both development and sales/marketing was going to be a really rough road. I chose sales/marketing, which is not necessarily easy to master. I can’t go on stack exchange and ask questions if I am stuck in a difficult situation. Hell, just finding books on the subject that are anything more than topical is a challenge.

        If someone out there just wants to be in charge and make $500k, I am sure they can pull it off. However, to suggest it’s easy if you’re good at sales and marketing makes the effort required to be good at sales and marketing seem quaint or almost an afterthought. I don’t see it that way.

      3. Well, duh. If you are *both* a good developer, *and* a good sales person *and* know marketing, it’s easy to be a freelancer. Exactly how many people do you think fit that description?

  7. When do people learn that averages don’t mean much at all? Show me the medians and I might get interested.

  8. You sound pretty confident in your ideas, so I’ll tell you what: I’m a senior-ish software engineer in SF who can more than hold his own. You find me a freelance 40 hours a week at $125 an hour, and I’ll pay you $5 grand. Resume, github, discussion available upon request. If interested, is there an address I can email you at?

    1. Instead of charging an hourly rate why don’t you charge on a project basis? That immediately removes the cap on the amount of money you can make. At $125/hr and 40 hours/week you’re capped at only $20K.

      You can definitely contact me on the form to chat more about tactics – http://blog.goodsense.io/contact/

  9. Everyone everywhere is underpaid. Warren Buffet may feel he’s underpaid.

    Before you start ranting about how underpaid you are look at your friends in other industries or with different skills and compare your salaries. Chances are you will feel guilty at how much you earn for a fun job that you don’t really do 40h/week (let’s be honest, the office/environment that you with in is so much better than your colleagues).

  10. anon developer · · Reply

    Freelancing is a joke for some languages or even particular fields. Such as a game developer. You aren’t going to get much work knowing SFML, Unity or even the UDK off the back of your hand. People want full teams that are usually going to be non-freelance positions that you usually work for free at until the project is done. Also as a freelancer gone commercial, I am making more money with more benefits and nothing stops me from taking a few side jobs as well. Have the best of both worlds to maximize potential. Also you can always keep adding to your resume until you possibly can’t fit another interesting thing in.

    Also I see you are targeting web developers not “actual” software developers. I personally dislike web development, way to tedious and dealing with customers who think you are just a ideas to webpage convert is way to taxing. You can quickly end up hating your job and wanting more out of it.

  11. Hi Sherman,

    Nice article. You’re kick starting a great discussion. However I think that your point is getting lost as commenters are focusing more on the numbers than on the fact that it really is possible to do this.

    Two points of feedback:

    1. A follow up or expansion of value would be great. Showing people how businesses understand and pay for value will help people price by the project instead of by the hour. The next step is to price the project by the value and not expected time * a fair rate.

    2. The non-monetary perks of freelancing vs being a full time employee.

    Finally, point people to resources like http://earn1k.com so they can see how they can start freelancing on the side vs quit now and immediately start freelancing.

    Hope this was helpful!

    -Naveen

  12. Don’t think that first chart is worth anything without location. People on the coasts might make that kind of money where the cost of living is a lot higher but those numbers in no way reflect salaries in the Kansas City area.

    I remember interviewing a new grad and at the end asking what sort of salary he expected. He came up with a rather high figure at the time, close to double what we would have considered offering for someone with no real world experience. We asked where the number came from and he admitted it came right out of an article such as this in one of the trade magazines.

    Second set of charts are more useful but still only reflect the coasts. Face it not everyone lives in these areas making a lot of this very misleading. Plenty of developers work smaller cities and can easily get depressed when seeing these numbers. Of course if you show a chart of average apartment or house prices in the midwest to a NY, LA or SF native they would freak out too saying they are paying way to much in rent each month.

  13. So I’m seeing lots of these posts/blog entries lately about being underpaid.

    Do these annual numbers that are being bandied about mean for salaried positions?
    With benefits included or just raw gross salary?

    I’m an experienced developer (20+ yrs), and every time I’ve looked at other positions in my area in the past year (midwest), they would always be a step backwards, across the board (salary, benefits, PTO). Yet I am constantly bombarded with recruiters and colleagues trying to get me to switch. If a company is not going to make it worth my while to give up the seniority I’ve build where I am, why should I switch?

  14. the basic message of this post feels kind of dishonest. the notion that all developer should aspire to be freelancers is a bit absurd. its also a bit absurd to claim that freelancers are actually better compensated. they have much higher overhead costs and no access to benefits and options.

    1. The message of the article is realizing that you’re underpaid.

  15. I would rather get paid for what I do determining the amount I’m paid instead of the standard hourly rate.

  16. sorry but … first graph is totally disproportionate

  17. We are intrigued and considering what you’re talking about here

  18. Damn. I make 7K! I feel like an exploited child in China (but I’m in Portugal)

      1. Yes. It’s the minimum wage in Portugal. I’ve been reading articles on this subject and I can’t sleep.

        1. Want to chat more in depth about your situation? I want to help! Feel free to email me any time: blog.goodsense.io/contact

  19. […] a talk today to 167 people at Silicon Valley Code Camp. They all came to seek advice on being an underpaid developer and the steps they could take to sell products. You can check out the slides at the end of the post […]

  20. Hello Sherman, thanks for the great post. That last line about insecurity in one’s own mind rings especially true.

    1. I’m glad you enjoyed it Aditya. What are you currently struggling with?

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