Know-How Exchange : Other

I can't believe anyone is still using hourly rates for anything. Hourly rates represent an appalling conflict of interest, because it's always going to be in the clients best interest for the hours to be less and in the service providers interest for the hours to be more. There's no solution to that tension.

Far better is the idea of fixed price for fixed scope projects. That way, it doesn't matter how long it takes, the job gets done with no billing surprises.

Any doubts, please read Alan Weiss on Value based fees.
https://www.alanweiss.com/store/books/value-based-fees/
https://www.alanweiss.com/styles/pdf/The%20Case%20for%20Value%20Based%20Fee...

Does this help you solve your problem of attempting to calculate what the company would have to pay to get the work done by your in-house group done "outside"? Maybe not, but perhaps the comparison needs to be done on more that just a financial basis.

There must be many advantages to having the resources in-house, as long as the in-house team has the appropriate blend of skills and experience, so why don't you make the analysis a bit more of a holistic appraisal?

Is your boss trying to determine if there's any need for a marketing staff in-house or are they trying to determine if they should hire vs. outsource additional tasks? The internal vs. external debate can be subtle, since staff generally are benefitted and consultants have no long-term allegiance to your mission.

I operated as a one man "marketing agency" which billed by the hour for over a dozen years. I agree with the above comments that, in most situations, billing by the hour is not the best approach.

However, in a few limited cases, a long-term part-time professional relationship combined with an independent contractor relationship could be your best solution.

The old rules about "independent contractor relationships" were based on a twenty point test which are basically related to span of control. Is control important to you? Are you looking for an ongoing long-term relationship of trust? Do you want to be able to specify which person does the work? Do you want the people who do the work to work within your system and procedures, e.g. accessing and updating your computer systems? Do you want to be able to hire and fire? Do you want to be able to specify meeting times? Do you want to assurance of ongoing availability? Do you want to increase your organizational capability by internalizing procedures and methods, rather than depending on a string of contractors who each used their own internal procedures and methods? Are you concerned about educating and empowering people who might be working for your competitors in the future?

Times have changed, and the twenty point test is no longer the law of the land. But the issues related to span of control remain.

I would need to know a lot more about your organization and situation before making a recommendation. It would be unwise for you to post such information on an open forum such as this. If you would like, I would be happy to talk with you by phone, to try to learn a little bit more about your situation, and possibly to make some suggestions. If you click on my username, you can find my email address.

Good luck, and take care.