Know-How Exchange : Career/Training

I would say it depends. If they offer you a long term contract... let's say one year and the contract calls for a large number of hours - say 40/ month. Your fee would be much lower than the "rack rate".

I would guess that you will need to charge somewhere between 200-250 hour as your normal rate.

I have adapted my rate many time to appeal to the budget of the project. You can also take pay in other forms (barter) when dealing with clients that may have a service or product you desire or could use in your own business.

I agree with Square Peg. There are two factors hourly rate + hours. With a low rate, you might bill for every little thing. With a high rate, you might let small billing events go unbilled.

So your rate, by itself, shouldn't mean much to prospective client. Determine the measurable goals and estimate your fee to achieve them, with some guidelines that prevent the client from wasting your time in the process.

Good luck,

Steve

I have also heard a general rule-of-thumb: to double what your full-time employment hourly rate would have been.

So say you were making $55,000 - $60,000 annually; that's roughly $30 hour ... you'd bill $60/hour working freelance. (hopefully my math is right !)

Theoretically that covers expenses you wouldn't normally have and that your freelance employer now doesn't have to worry about -- health benefits, corner office, office supplies, etc.

Having said that, my own experience is that I typically have to adjust according to client, their budget and the situation at hand. You can also "forecast" a given project and give your client a range so they have a more firm budget to work with.

Hope that helps a little ... good luck in your new adventures!

I think many of these responses are looking at the wrong end of the telescope. In your case, what you charge is not related to any fixed formula.

Firstoff, is this just something to get some income, or do you think you want to transition to being a consultant? That will affect your view of project billing . If you want to use this project as a future reference, then it is in your best interest to give them a very good deal and get as much follow-on work as you can. Also, you have a lot to learn in being a contractor (consultant) as opposed to being an employee. That mental and operational change is often the most difficult for many. An experienced consultant knows how to both structure the contract and execute the project so as to protect themselves from corporate politics and also to get paid - on time. In my experience, cash flow problems are the number one reason that people leave consulting..

The short answer, in any case - is to charge (or rather bid) exactly $1 less than the amount that causes the client to say "no". So what the client thinks it's worth is all that really matters. This is where you can get into one of those those sticky areas where an experienced consultant would decline the project, but to someone starting out - it would be in their best interest to take it.

In some cases, I simply ask what the client's budget is for the project. If it is too high (yes, I've had that happen), I tell them that amount isn't necessary. If it is too low - sometimes I offer a truncated project in line with their budget, sometimes I decline to bid. Too many variables to forecast any of this.

With regards to any books (especially the one referenced above) - that book is mostly theoretical. Consulting services aren't sold that way. You need to be very careful about authors who are simply working their Rolodexes from past jobs (or writing theory and anecdotes) and ones who have actually sold. I can skim a book and immediately tell if the author has really sold (independent) consulting services. Selling consulting services is perhaps the toughest sale there is - that's why 90% of consultants don't last more than two years.

An important factor to look at is the prospect of a long term relationship. Many of the activities you described will be an ongoing need. Will you be training someone internally and hand-off the functions or will your services be required on an ongoing basis? Also along those lines - could this evolve into a normal job and do you want it to?

As a consultant 50% of your time should be spent on marketing and you must factor that into your pricing. If you have an ongoing relationship, then you need to market less and you can provide a discount accordingly.

Usually for a well defined close-ended project, I believe in a fixed cost for the deliverables with pre-agreed mechanisms to price change orders. However, this is open-ended project and a per hour price is required.

While you can't charge too much, do not sell yourself short either. Sure some income is better than none, but there can be long term implications. It's difficult to move yourself to a fair rate if the client first starts paying you something lower. One way to deal with that is to quote a higher rate and offer a one-time discount to provide an opportunity to judge the quality of your services. The discount may also provide you with a mechanism to help close the deal. Maybe something along the lines of the discount is good until X-date.

The first question to ask is what do you believe the services are worth? SteveByrneMarketing's suggestion to double your full-time employment hourly rate is a good start. You must also take into account going rates in your area and be realistic about your skills and your experience. It also helps to gauge the competition, if any. Sometimes the client is open with that kind of information.

Decrease it if
- you think there you are dealing with a client with unfair expectations or who is financially challenged. (You should also think hard about taking on this kind of client)
- heavy competition is driving down the price
- you want to offer a discount

Increase it if
- okay, I can't think of a reason to increase it, but do it if you think you can.

There are a couple of success based alternatives if you are open to the risk. They send a powerful message to the client about your confidence in your own abilities. It also puts the client in a no-lose situation.

The first alternative is only possible if you can develop clear performance metrics. This way you can receive some or all of your compensation based on the success of your project. This may also be a way to earn more than you could based on an hourly rate.

The second is extremely risky and is only possible with an honest and financially secure client with realistic expectations and only if there is a real opportunity for the client to increase sales. Let the client set the price after-the-fact. The client gets to judge the results for himself. An honest and realistic client would be too embarrassed to short change you and if you are very successful, the compensation could be higher than you may have originally requested. As I said, this is extremely risky and should only be tried if the stars are in perfect alignment or if you are incredibly desperate.