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Re: [vox] Consulting Fee?
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Re: [vox] Consulting Fee?

$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

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
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