Contracting Models

Hourly (General)

Hourly contracting is the most common and familiar form of development contracting, in which the contractor is paid a fixed amount (the "hourly rate") for each hour worked. For this type of work, there is generally no distinction in hourly rate between hours 1-40, and hours 40+, although some local jurisdictions may require otherwise. As a result, and other than those exceptions, with hourly contracting there is no concept of time and a half or double time, even if work occurs on evenings or weekends.

Hourly contracting can be further broken down into direct or managed, and payment type (W2, corp-to-corp or 1099), as shown in the sections below.

Hourly (Direct/Managed)

For direct placements, the contractor negotiates terms with the end client, and Placement Partners is compensated by the contractor. For managed placements, Placement Partners negotiates terms with the end client, and manages the billing (but not generally the day-to-day technical work) on behalf of both the client and the contractor.

Hourly (W-2/C2C/1099)

For W-2 placements, the contractor generally works as a W-2 employee of Placement Partners, although in some cases the contractor may work as a direct W-2 employee of the end client. This is the body-shop model generally employed by other contracting agencies. While it provides some streamlined benefit to the contractor, W-2 tends to limit end client access to some of the most top-notch professionals.

For corp-to-corp, or C2C placements, the contractor generally works as an employee of their own corporation (or LLC), with that corporation or LLC contracting either directly with the end client or via Placement Partners, as noted above. Because our contractors tend to be seasoned professionals dedicated to helping numerous clients, they will generally work in the C2C model.

Due to the tax liability risks involved, we do not support the 1099 model, in which the contractor is a sole proprietor paid on a 1099-MISC basis. We encourage prospective sole proprietors to seek professional advice in forming their own corporation or LLC during an initial W-2 engagement, and then converting to C2C as soon as practical.

Fixed Price

For projects in which the requirements are in flux or an in-extremis project where a massive salvage operation is underway, hourly contracting is the best model. However, due to our unique access to trusted and seasoned professionals, Placement Partners is also able to support negotiations for a fixed price model in which the client pays a fixed amount for pre-agreed milestones for projects that can be well-defined in advance. Examples of this sort of project are those in which an existing product is to be replicated to a new platform, or a new subsystem with well-defined features is to be implemented as a black box add-on to an existing product.

During the requirements analysis phase of a fixed-price project, our contractors will typically work on an hourly basis to discover the requirements in sufficient detail for quoting the fixed-price portion.

Equity

Equity projects are a special case of the fixed price model, generally advantageous to startups, in which Placement Partners and/or the contractor agrees to be paid part or all of their fixed-price proceeds as end client equity. In select cases, Placement Partners may also be able to assist the end client in attracting investors who have confidence in the ability of our contractors to create well-designed products.