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Ask YC: What are the going rates for consulting gigs?

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Re: Ask YC: What are the going rates for consulting gigs?

#21

Post by edw519 »

rockstar9 wrote: post #5

Another question is: How do you even find consulting gigs?

Network, network, network, network, network! (Sorry, I cannot overemphasize this.) You are your own marketing department. All the time. No, you don't have to be one of those Amway pests, but don't be afraid to say what you do and to volunteer your opinion about something computer related. You're not doing it to get business; you're doing it because that's who you are. Even if nothing happens now, it could 6 months later. You never stop networking, no matter how busy you are now.

A few examples:

- Hung out with the same guy at Tuesday night Bible study for 3 years. One day he said, "I heard you tell someone you know something about computers. My company needs software for our factory. Do you know anything about that?" Turned into 50K over the next 6 months.

- Went to an industry dinner/speaker event. The stranger next to me asked what I did. I told him. He asked if I ever did . Before I could answer, my partner joked, "That's how we made our first million." The stranger said, "How'd you like to make your second million?" We talked all night and started work 2 days later. 20K in 2 months. All from a joke.

- A contractor friend got a great full time job. She asked me to "take over" her maintenance accounts (3 of them). Many thousands part time over the next 3 years.

- Had another friend who I met for lunch once a month for years. She always talked about her job. One day, she suddenly had to move out of state for personal reasons. I emailed her employer, telling what I did (which was exactly what they had her doing). Turned into 4 years of work.

- Met my aunt's next door neighbor while sitting on her porch. My aunt said, "Eddie's into computers." He said he had a friend who owned a pawn shop with a computer running Windows that "froze" every day at 3:00, their busiest hour. He was going nuts. (Licking my chops), I said I could look into it. A 6 month gig with all new cool software (not Windows).

- Went to a Monday Night Football party. A friend of a friend who owned a small distribution company said the bank wouldn't lend them any more money until they computerized their inventory. After 3 months of me (for $20K), they were able to borrow $300K. Pretty good deal for everyone.

- A friend was offered a 6 month gig in Detroit for $60/hour. He didn't want to move to Detroit. I took it. Got an efficiency for $400/month, drove my own car there, and dialed in to my other clients. 6 months later, moved home. Not a bad deal.

- Had another friend who owned a small software house. (Didn't know it until I knew him for over a year). He coded everything with linked lists because he didn't know anything about databases. I converted all his software to DBMS over a 6 month period. Again, everyone happy.

I could go on and on, but you kinda get the picture. And I haven't even touched on the web stuff.

The demand still far outweighs the supply for good software. If you know what you're doing (a big assumption), there's millions of people who need what you do. So get out there and talk to them!

Re: Ask YC: What are the going rates for consulting gigs?

#22

Post by suboptimal »

fortes wrote: post #10
gexla wrote: post #9

Sorry, you are not going to get away with it that easy. This is like going up to that hot girl you have been eyeballing and saying "I really want to go through the whole dating process because I really don't understand it, can we just skip all that and get straight to serious relationship?" This question is nearly impossible to answer and a very personal decision. Nobody here can tell you how much you are worth. For…

"Remember that you cannot get eight billable hours out of an eight hour day." This is an extremely important point. When I was freelancing, I was surprised by just how much non-billable overhead time I had (at least 5-10 hours a week when working with 3 clients). To reduce overhead, work with as few clients as possible. But you'll run into dead time that way, since jobs don't start on a dime. I know a guy who has fre…

"every year he tops out at about 60% of his time being billable"

Another general guideline is to estimate 1,000 hours of billable work (which makes it easy to calculate an hourly rate for some amount of desired annual earnings).

"Also, don't forget taxes."

Definitely don't forget the taxes, especially estimated payments. Consider that 40% of that money, once deposited, isn't yours and is untouchable, and you'll be better off.

Re: Ask YC: What are the going rates for consulting gigs?

#24

Post by projectileboy »

tonyvt2005 wrote: post #16
fortes wrote: post #10

Earlier quoted context omitted.

"Remember that you cannot get eight billable hours out of an eight hour day." This is an extremely important point. When I was freelancing, I was surprised by just how much non-billable overhead time I had (at least 5-10 hours a week when working with 3 clients). To reduce overhead, work with as few clients as possible. But you'll run into dead time that way, since jobs don't start on a dime. I know a guy who has fre…

Just curious since I haven't done freelancing yet... how do you determine what is billable vs. non-billable? If 60% of your time is billable then what constitutes the other 40%? I know part of it is looking for new work. What else?

In practice this is almost always easy to determine. For any given day, you log the hours against a client that you did something for the client. "Something" doesn't always equal coding - it could be meetings, setting stuff up, responding to e-mails, etc. For any given hour you bill, just ask yourself "If a contractor charged me for this hour of activity, would it make me - as a customer - freak out?" If the answer is yes, don't bill.

Also, I will often not bill some hours for clients that have given me a lot of work over the years.

Re: Ask YC: What are the going rates for consulting gigs?

#27

Post by randallsquared »

subwindow wrote: post #8

Not to sound blunt, but you can charge whatever you feel you're worth. I've never had a client blink when I told them what my hourly rate was. They do a calculation in their head, but it is not "Is this too expensive?" but it is "Do I think this guy is worth it?" Chances are if you yourself feel that you're worth that amount, they will too. That said, DB consultants generally make a bit more because of the fragility…

To provide an anecdote the other way: I do small business software and webhosting in the southeastern US, and I have often had prospective clients seem taken aback when I mention my rates, which are nowhere near the rates being bandied about in this thread. If you choose to sell your services to small businesses, be prepared to fit into a reality where the client thinks $80 an hour is a terribly high amount for a 5-10 hour job, and is prepared to just not have the work done instead. Very little is actually required for most small businesses; some of them are still considering upgrading the old machine running Win98 that's been doing invoices for 10 years, and unless it breaks, it's "good enough".

Re: Ask YC: What are the going rates for consulting gigs?

#28

Post by bigtoga »

mechanical_fish wrote: post #17
ssharp wrote: post #14

You should consider reading some of Alan Weiss' consulting books. He really advocates project/value based fees instead of time based fees. Million Dollar Consulting: http://www.amazon.com/gp/redirect.html?ie=UTF8&location=... Getting Started In Consulting: http://www.amazon.com/gp/redirect.html?ie=UTF8&location=... Value Based Fees: http://www.amazon.com/gp/redirect.html?ie=UTF8&location=... I'd recommend these three…

He really advocates project/value based fees instead of time based fees. This guy is not a software consultant. So beware, beware, beware this advice, because that little detail matters a lot . It's easy to charge project based fees when you (a) are an expert negotiator and speaker and (b) your project is not built of either hardware or software. If the deliverable is a paper report, a Powerpoint presentation, or a n…

I've used both time-based and value-based and my answer is an unequivocal "It depends on the project." I'm a pretty creative person and I hate to box myself in by saying "Never do it this way", especially when some very smart people have advocated both/multiple ways. I suggest taking a risk-analysis approach towards estimating as well whereupon you figure out what the mean time to complete, best, and worst times. This can give you confidence (after you've done it awhile) in your guesstimates and that confidence allows you to move more into the value-based pricing. I definitely wouldn't suggest value-based pricing for someone who had not had loads of time-based pricing experience.

Re: Ask YC: What are the going rates for consulting gigs?

#29

Post by ssharp »

bigtoga wrote: post #28
mechanical_fish wrote: post #17

Earlier quoted context omitted.

He really advocates project/value based fees instead of time based fees. This guy is not a software consultant. So beware, beware, beware this advice, because that little detail matters a lot . It's easy to charge project based fees when you (a) are an expert negotiator and speaker and (b) your project is not built of either hardware or software. If the deliverable is a paper report, a Powerpoint presentation, or a n…

I've used both time-based and value-based and my answer is an unequivocal "It depends on the project." I'm a pretty creative person and I hate to box myself in by saying "Never do it this way", especially when some very smart people have advocated both/multiple ways. I suggest taking a risk-analysis approach towards estimating as well whereupon you figure out what the mean time to complete, best, and worst times. Thi…

I agree 100% with your last sentence.

Re: Ask YC: What are the going rates for consulting gigs?

#30

Post by petercooper »

gexla wrote: post #9

Sorry, you are not going to get away with it that easy. This is like going up to that hot girl you have been eyeballing and saying "I really want to go through the whole dating process because I really don't understand it, can we just skip all that and get straight to serious relationship?" This question is nearly impossible to answer and a very personal decision. Nobody here can tell you how much you are worth. For…

   Remember that you cannot get eight billable hours out of an eight hour day.
You can (and do) if you go on-site, and you can if you actually work eight hours for a single client in any capacity.

You can't bill for doing your office paperwork, promotion, eating lunch and such, but that's not part of an 8 hour "work" day (like your commute isn't part of your work day either).

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