Freelance PHP Developer Hourly Rate – a Comprehensive Guide
Understanding a freelance PHP developer’s hourly rate can be difficult at best. In this article, I break down the factors that lead to a PHP freelancer’s rate based on many factors.
Freelance PHP developer hourly rates range from around $12 an hour in India to around $140 an hour in the United States. A freelance PHP developer’s hourly rate is a function of many factors. These factors are experience, business model, and geographic location.
Let's break this down so we can understand how these rates are determined.
- Entry Level – An entry–level developer is more than likely willing to work for less.
- Junior or Mid–Range – A junior developer might work for less than they are worth due to being inexperienced in business. They may not understand that the hourly rate is a function of what a developer is worth and the number of hours they can bill.
- Senior Developer – At this level, a senior developer might be pushing 6 figures a year plus benefits depending on the employer.
- Business Experience – As the freelancer gains more business experience they may start to learn that they can no longer program for 40 hours a week. The number of hours a freelance developer can bill each week is a function of many factors such as business administrative time (accounting, marketing, and sales).
- Junior High or High School Kid – At this level, this type of business model is more of a hobby. While the hourly rate may be low, your project competes with school, family, extracurricular activities, etc.
- College Kid – This business model is pretty much the same as the Junior High or High School Kid with the exception the college kid might be more mature and might take their business more seriously. Your project is still at risk. At this level, the hourly rate may be lower than a full–time professional freelance developer.
- Person Between Jobs – This might be the riskiest business model of them all. This is a person that is looking to make some money by bringing on a programming project while looking for work. The price might be right, however, you should be asking “What happens when they find another job?”.
- Agency – The agency business model is one where a lot of fingers are in the pie. They need to bill at a decent rate so everyone can get compensated appropriately. On its face, forming an agency is an indicator they are in business and will reasonably complete your project.
- Freelance PHP Developer – This person sets their rates based on many factors such as experience, geographic location, and the number of hours this freelance developer can bill.
When I talk with developers who are new to freelance work they always tell me they are willing to work on projects 40 plus hours a week and they expect to consistently bill 40 hours a week. This is inexperience talking.
The number of hours a freelancer can bill is a factor of business administration overhead such as accounting, marketing, billing, and the time it takes to keep one’s skills up to date.
Around 2015 the demand for PHP developers exploded. From my vantage point, there is a shortage of PHP programmers.
I’ve received many phone calls where the caller tells me they struggled to find a PHP developer.
The supply and demand theory says as demand for something goes up while the supply remands constant, the price will increase until price reaches equilibrium.
Equilibrium in this case is reached when the price can go no higher without causing demand to decrease. In this economy, I’m guessing equilibrium is around $100 to $140 an hour in the United States.
Countries like India have a very low cost of living. This contributes to why an Indian developer will work for as low as $15 an hour. I have had multiple conversations with developers from India that tell me $15 an hour provides for a decent living.
In the United States, we have a standard of living that is constant, for the most part. Silicon Valley is at the extreme with the highest cost of living followed by New York City, and then all of California. Texas might have the lowest cost of living.
Silicon Valley developers are compensated at $200,000 plus a year when figuring in stock options and other benefits.
A freelance developer who lives in Silicon Valley would need to charge $200 – $300 an hour because of the extreme cost of living in that area.
The following table is based on a senior developer’s compensation of $100,000 a year plus benefits.
The first thing we need to do is convert employee compensation, which being W2 into contract compensation, which is 1099. The cost of benefits is an estimate.
|401k matching||Which is probably at 3% or $3000.|
|Health Insurance||This is tricky. Usually, the employee pays part and the employer pays part. Let say this developer is married and has 2 dependent children. Insurance for a family of four might be over $1000 a month in premiums. Let's say the employer pays half. That means the employer is paying $500 a month. That amount needs to be added to the total compensation figure.|
|Self Employment Tax||This is Social Security and Medicare. The employer and the employee usually half this amount of 15.3%. The employee pays 7.65% and the employer pays 7.65%. A freelance developer is both the employer and the employee. Since the freelancer is the employer we need to add 7.65% into the 1099 compensation.|
|Vacation and Sick Leave||I base a month on 4 weeks. This leaves 4 weeks (12 months * 4 weeks = 48 weeks and there is 52 weeks in a year.) per year for holidays, vacation, sick leave, and training.).|
|Business Costs||Let's say this is $100 a month even though under the law there might be more business expenses.|
Next convert W2 (employee) to 1099 (contractor)
|Pay per year||$100,000|
|Health Insurance per Year||$6000|
|Self Employment Tax based on $100,000||$7650 (employers half)|
|Vacation and Sick Leave||Included|
Then determine the number of hours that can be billed per year by a freelance developer based on a 45 hour workweek.
|ACTIVITY||HOURS PER WEEK|
|Administration of business – things like accounting, managing the developer environment, etc.||5|
|Marketing – Things like maintaining a website, Maintaining a YouTube channel, attending meetups (lead development and skill development), Attending business meetups.||10|
|Sales – Fielding sales calls, responding to project form submission, estimating the number of hours to complete the project, completing contracts, and getting them signed.||10|
Billable hours – 20 hours a week / 960 billable hours per year.
Doing the Math
If a freelance developer can consistently bill 20 hours a week and the goal is to make the same as a senior developer –
$114,850 / 960 = $119.64 per hour, is reasonable.
I’ve been a freelance PHP developer since 2006. During this time I have experienced high demand that started immediately. I watched as demand for PHP developers exploded around 2015. During my tenure as a freelancer, I have received many phone calls where the caller stated they were having a tough time finding a freelance PHP programmer.
If you hire a developer that undercharges for any reason your project is in jeopardy. Let me explain.
Several years ago I watched as a colleague hired two freelance Drupal developers for $45 an hour on a contract basis. This was a short–term, part–time project. I remember thinking these guys were not going to last. Within 6 weeks they both took on jobs.
Since a freelancer has to pay for their benefits while not being able to bill a full 40 hours a week, a full–time job with benefits will always be tempting when a freelance developer is paid less than $100 an hour.
Not being able to get to full capacity – consistently billing less than 20 hours a week could drive a freelancer to take on a full–time job.
About 27 years ago I was talking with a client about my rates. He did not want to pay the full rate and was complaining. At that point, I asked how much he paid his auto mechanic. He gave me the rate and I responded “Don’t I at least deserve what your mechanic charges?”. He agreed I should charge at least what his mechanic charges.
During some research, I discovered that mechanics are charging $80 to $100 an hour.
Hourly rates for freelance PHP developers vary based on the experience level of the developer, the developer's business model, demand, geographic location, cost of doing business, cost of benefits, and the number of hours a freelance developer can reasonably expect to bill out regularly.
Based on what I have laid our in this article, it is reasonable to expect to pay over $100 per hour when contracting with an experienced PHP developer.
My name is Keith Smith. This is my website. It was handcrafted by me as an example of my skills. It is not as beautiful as what a website designer might have been able to create, however it is clean, simple, and functional. I am not a designer, I am a programmer.
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