[vox] Consulting Fee?

[jim stockford]

$20 per hour at 40 hours per week 50 weeks per
year is $40K.
$50 figures similarly at $100K.

Practically nobody works 40 hours per week 50
weeks per year. Industry statistics estimate about
60% of each employee's week's hours are filled
with actual work.

    For contractors, there's the issue of downtime--
time spent looking for the next contract, time
spent doing one's taxes and setting up office
stuff and files, time researching and skill-building....
    A contractor who charges $20 per hour will be
lucky to make $20K for the year, thanks to the
downtime that accompanies the work.

    I'd love to know what people charge. I've seen
ridiculously low rates proposed on Craigslist. I
hope the general population is willing to pay
enough for a reasonable livelihood. What would
you pay someone else to help you?




On Feb 6, 2006, at 5:08 PM, Marc Elliot Hall wrote:

> 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
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