[vox] Consulting Fee?

[Marc Elliot Hall]

On Mon, Feb 06, 2006 at 01:50:28PM -0800, Richard S. Crawford wrote:
> 
> My main question, though, is how to figure out how much I should charge?
> 

Nobody can legally *tell* you how much to charge if they are currently
engaged in the same business activity - that would be collusion, and
it's a no-no. 

However, competitors *can* share the factors they consider when setting
their rates, and even state those rates directly.

That being said, there are three general ways to go about determining
your rate: time-and-materials, flat-fee, or cost-plus.

	* Time-and-materials means you charge an hourly rate and bill 
	  your costs for hardware directly, with no profit margin added
	  to your costs.

	* Flat-fee means you determine what you think is a fair amount
	  to bill for the entire project, in advance, agree on that
	  number with the customer, and charge that and only that.

	* Cost-plus means that you price the hardware and software
	  (heh), add a profit margin that accounts for the time you will
	  be spending assembling and installing same, and charge that
	  amount. 

Which one you choose will depend on your individual circumstances and
the demands of the customer. Sometimes, variants are useful as well,
i.e., time-and-materials with an overall cap. 

Personally, I've used all three of these methods to come up with pricing
when installing hardware and software for customers. In general, I
prefer time-and-materials, as I can eke the highest margins out of that.
Most of my customers, however, seem to prefer flat-fee, as they are
assured that I won't break their budgets. 

When I bill time directly, I generally charge between $60-80 hourly,
though. My justification for that is:

	1. I've done this for a long time, and my hourly rate reflects
	   how quickly I can complete the job compared to a newbie.

	2. I have non-billable downtime that I must spend in research,
	   customer acquisition, and other business-related activities.

	3. Unlike an employee, whose benefits are employer-subsidized
	   (if not outright paid in full), and whose payroll taxes,
	   Social Security contributions, and other ancillary expenses
	   are covered by same, I have overhead costs that must be taken
	   into account.

Your mileage may vary. ;-)

-- 
Marc Elliot Hall
621 River Moss Drive
St. Peters, MO 63376
www.hallmarc.net