[wpietri]

Yes! Long ago I read a book that mentioned that freelance professionals (accountants, lawyers, etc) tended to bill around 1000 hours per year. That the unbillable time went toward sales, client relations, marketing, learning, etc. I could usually do a little better than a 50% utilization rate for myself, but as you say that money goes to things most people don't have to pay. So the knock-three-zeros-off-salary rule served me well.

[JoshTriplett]

Common advice is to double your effective hourly rate when going from salary to contracting (which "divide annual salary by 1000" is equivalent to). That's not just because you'll have fewer hours or have to search for clients; some clients will pay you for all the hours you can give them. But also, you'll have to bring your own health insurance, pay the additional self-employment tax, maintain a business, do business taxes, and quite a bit of other overhead. The additional cost helps offset all of that.

[okaram]

Keep in mind it's not really 50%, more like 65? 2,000 hours means you work 40 hours/week, 50 weeks ... Basically no vacation, just a few holidays or sick days. We budget full time as 1,600 hours

[wpietri]

Depends on the people, I'm sure. For a long time 40-hour weeks with two weeks off was pretty standard in the US, which works out to a nice round 2000 hours. A lot of the people prone to going independent are the types to put in more time than that. I sure am. But yes, if you want fewer working hours, that changes the calculations.