I've heard 1-1.5x your full-time rate is valid. I know this will likely be context driven, I'm specifically looking for longer-term hourly rates as opposed to short-term / project-based, but would be interested in knowing the differences if there are any.
Thanks in advance folks!
What's your goal with the contracting work? When I was at Meta, the compensation for any contracting I did was insignificant compared to my TC at the full-time job.
My benchmark would be: if the amount you're getting is < 10% of your total comp, it's not worth optimizing for. I'd focus more on viewing the contracting as:
To answer your question directly:
This is an obvious answer, but I think it summarizes the complexity well: the highest amount you can charge and still get work.
So, if you charge 1.5x and have more business than you deal with, charge more. If you charge 1x and don't get any, and you have already improved things like marketing, networking, etc, you will have to charge less.
One thing to keep in mind is that if you are very efficient, charging by the hour hurts your profitability. I know you said you are looking at long term contract roles, but usually investing in those gives you much worse revenue compared to project based contract work or regular employment. Jobs at startups are inflated by outside investment, and FAANG jobs are inflated by their leverage as money printing machines with their core businesses. It is much harder for you to compensate for that as a contractor. So instead, you would probably be better off investing that time in improving your regular salary with interview prep, networking, investing time for internal promotions, etc.
However, this isn't the case for project based work and you don't charge by the hour. For example, if you are a 10x developer and charge your hourly rate, you are giving them a 90% discount. If you do project based, that's not the case. In other industries like construction, this is seen as "piece work". It's better to switch to this as quickly as you can since you capture more of the value you generate. For example, if you charge what would take a normal developer 100 hours, but complete it in 20, you are making 5x more. The customer isn't hurt by this at all, since they are still getting the market value. You are just getting the extra value from your productivity. Or, you can charge the cost of 80 hours, when it would take a regular developer 100, and you still capture most of the increase in efficiency but still give the customer a good deal.
However, in practice this ends up being less satisfying. For one, there is tons of competition as you have to compete with developers who don't have access to us FAANG salaries but may be just as productive if not better. Chasing profitability ends up diverting you towards CRUD apps and small websites which are not technically satisfying. Most start off with a smaller network of customer base so they have to charge less to get their foot in the door.
If you want larger complex projects with many stakeholders and working alongside a team, then long term contracts are better for this. However, at that point, it's usually better to invest in your corporate career.