[PLUG] Billing rates for short and long term Linux consulting

[Rich Shepard]

On Wed, 13 Feb 2013, Chris Schafer wrote:

> Curious to what people think the rates for long term and for short term
> are in town. Clearly there are ranges. Also curious about general rates
> for SMB consulting. In Maui desktop support by the hour was in the $125
> area and servers and networking was easily $140.

Chris,

   For the past decade or so I've worked for a flat rate whenever a project
has a defined end point; e.g., preparation of a permit application,
environmental impact assessment, hydrologic modeling for flooding
prediction, analyzing surface water chemistry data for changes over time.
Only when the project has an indefinite term (e.g., expert witness in
litigation) do I charge by time and effort. There are many benefits to you
and your clients of working for a fixed fee.

   Remember, if your client had the skills and experience to do the project
you'd not be hired. Therefore, he has no idea how much time and effort are
required to deliver a project with which you are both satisfied. You
probably have an idea how much effort is involved, but that total dollar
amount can scare your client. Agreeing on a fixed fee means he knows in
advance what his cost is and he accepts it. And you are comfortable with
that amount, too.

   By working for a fixed fee you align yourself with your client's
interests: getting the desired results as quickly as is consistent with the
high quality on which your reputation is based. In my industry --
environmental consulting -- too many providers drag out a project to keep
the cash flowing in. Whether this is really the case, clients think that it
is and they don't like it. Put yourself in their shoes. Working for a fixed
fee sets you apart from the competition.

   Too often when working on a time-and-expense basis we under-bill the client
because getting the job done right takes a lot of time, and we know the
client will be bothered by a invoice for a large amount of money. So we
short-change ourselves (literally) or we risk really ticking off the client
by asking for a lot of money. A fixed fee eliminates this problem, even if
we would be working for minimum wage (or less) if we actually tracked the
time.

   Working on a fixed fee means you know just how much revenue you have. You
do not need to spend time entering the hours you worked (and writing a
justification for each entry) and you can focus on producing a high quality
product.

   If the project is long term (by your definition), write a retainer
agreement. This gives you a known amount of revenue each month regardless of
how much time you put in. You can define the term of the retainer agreement
at a mutually-agreed time (say, three months) with quarterly renewals upon
mutual consent. This gives your client both a known cost and a way out after
each period, and it gives you a known revenue and the same out if you
determine that the client should be fired. Yes, I've fired clients in the
past and I'm working now on two projects with monthly retainers and I like
that very much (despite the long hours I put in.)

   There's more of course, but this should get you thinking.

HTH,

Rich