US$ 6000

There's a bit of commotion around the amount of 6000 US dollars that's being paid to the RMs for a month of work; some people seem to think that this is a lot of money for one month of work.

My guess is that these people have never had to run a business.

Steve does run one; I don't know about aba.

But let's just make some calculations here, shall we? I'd make them with the US system in mind, but as I have a business in Belgium, that's kinda hard to do. So I'll make them with the Belgian system in mind instead.

  • First, you have to pay VAT. On computer services, the amount of VAT in Belgium to be paid is 21%. That's roughly one-fifth, or 1200 US dollars. Had dunc-tank been a registered company (like, say, SPI) then they could get that money back. As it is, this is 1200 US dollars that goes to the government and stays there. So that's 4800 left.
  • Steve has a company; I presume he rents an office somewhere. Rental prices for floorspace in office buildings is insanely expensive when compared to private apartments. 500US$ per person per month would seem to be approximately right. So, 4300 left.
  • You'll be having to pay for utilities, such as phone, water, heating, electricity, Internet, and so on. In my experience, this is a few hundred each month. Say, 400? 3900 left.
  • If you don't want to pay too much taxes and fines at the end of the year because you didn't fill out the right paperwork at the right time and in the right way, you'll want to pay an accountant. These people are not cheap; 300 each month (on average) would seem to be right. 3600.
  • in Belgium, if you work as an "independent", you have to pay an amount of money to social security, which gives me basic health benefits. In addition to that, you pretty much have to pay an amount of money to a private institution for additional health benefits if you don't want to be left in the cold in case something happens that the basic health care doesn't cover. The amount you need to pay each quarter depends on your income; a guess could be somewhere around 500US$ each month. 3100.
  • There's going to be insurance. This will involve both hardware insurance, and something to fall back on in case you make a terrible mistake and need to pay someone some compensation. The former depends on the amount of hardware your company has; the latter depends on the amount of invoices you get to write each year, i.e., the amount of money you make. I can't guess how much this is for Steve, but let's say 700? So we've got 2400 left.

And now if you want to pay yourself, you get to do the above dance all over again. You get to pay income taxes, insurance, rent or mortgage, Internet, phone, water, and whatnot. Plus food.

In addition to all of the above, I don't know how much Steve has to drive around to talk to his customers, but if that's "quite a bit", then he may be leasing a car. I don't know whether he's got an ad running somewhere to attract more customers for the months after his paid Debian work, but if he is, he may have to pay a considerable amount of money to do so. And there can be any number of things that I've forgotten to include, but for which you still need to pay.

In addition, if you want to run a business in a sane way, you need to ask a bit more than what your costs are, because there'll always be a few days that are not billable, and on which you need to live and pay expenses, too; but I could imagine that these were dropped for this particular month.

Obviously the above numbers all involve some guesswork. I've been running a business for quite a while now, but it's only recently become profitable; many of these numbers will go up when your business is profitable for a long time.

6000 is nothing. I've had customers tell me you're cheap five seconds after I asked nearly twice as much. Trust me, that's no fun.

It's one of the things I've had to learn while running a business: some amounts of money that seem hugely expensive in a private capacity are next to nothing in the business world. That's just the way it works...

Finally, let me note that this is not meant to take any position one way or another in the matter. I did feel that experimenting with paying fellow developers was a good idea, but not at all costs; and certainly, I don't feel that going ahead with this by setting up something of the likes of dunc-tank is a very bright idea. I just thought it good to put some numbers into perspective.

Update: Set the numbers straight. 6000 - 1200 is 4800, not 5800. Whoops. Yes, usually I do use a calculator :)