As a contractor, can you charge a higher rate?

As a contractor, can you charge a higher rate?

Q: As a contractor, can you charge a higher rate?

A: Yes you can, and yes you should. Let's suppose your contractor skills are in demand, and your W-2 rate is $50 per hour. If you work on a 1099, you should charge a 20 to 40 percent higher rate. In this example, if your W-2 rate is $50 per hour, you should charge between $60 and $70 per hour.

Why? Because, when you work on a 1099, you want to be competitive. And if you've eliminated the broker, you've also earned the broker's commission of 20 to 40 percent.

Additionally, if you work on a 1099, you also take a higher risk. The risk of not being able to collect your wages. And, if you can't collect, you'll take two hits at the same time. You'll be out of money and out of the job. Then what do you do? Hire a collection agency? They will discount the debt by 50 percent — if they can collect it. And, what if they can't collect the debt?