That explains why all the recruiters on LinkedIn are trying to low-ball me so much. The actual rate they charge is double!
Usually more than double.
How I learned to charge my customers
31–40 of 85 posts
Re: How I learned to charge my customers
#32Hey everyone, author here. My experience is that customers will always want more features than they initially ask for. That's why I make sure to tell them my hourly rate, then give them an estimate. For example, I can say $5000 for a 1 month project. Here I'll break down the average time I will work a week as a courtesy. This helps me justify charging them again when we are at month 3 and the project is not done. I l…
Not really on-topic, but I have to say that I really enjoy the audio narration :)
It's well recorded and the music is not too loud either.
Re: How I learned to charge my customers
#33Very interesting that the author doesn't address outcome-based pricing. The rule of thumb I use is 10% of total value - if it's less than I want to make, I decline. It doesn't make sense for them to pay me, so it doesn't make sense for me to work. "Urgency" strikes me so much less compelling of a pricing conversation, but I guess it works.
So if you help someone build a $3M empire the fee would leave them with $2.7M ? Not bad. Seems to be a more astute way to charge for services rendered because the client will actually have revenue to pay you, and the cost/benefit is fairly clear from the get-go. Do you typically both [client and creator] agree on how much value the work will bring in, and is it based on time? (This much in the first year, etc)
I too am interested in seeing how that negotiation plays out.
Though it is still just potential value. There has to be some sort of payment for the early stages if you’re not planning on taking the same risks along with your client.
I have never worked on building any project like that so I’ve no idea but I guess the maintenance and future work could be tied to a percentage of the revenue generated for the company.
Re: How I learned to charge my customers
#34Hey everyone, author here. My experience is that customers will always want more features than they initially ask for. That's why I make sure to tell them my hourly rate, then give them an estimate. For example, I can say $5000 for a 1 month project. Here I'll break down the average time I will work a week as a courtesy. This helps me justify charging them again when we are at month 3 and the project is not done. I l…
Not really on-topic, but I have to say that I really enjoy the audio narration :) It's well recorded and the music is not too loud either.
Glad you enjoyed it :)
Re: How I learned to charge my customers
#35Earlier quoted context omitted.
By understanding their business really really well. For example, if I know that an automation that I can create for a client is going to take me 100 hours to setup and save them £20,000 per month I can either: Charge 100 x £100 per hour - so a one off income of £10,000. Seems like I'm earning good money right?? OR I can charge them £100,000. They'll make that back in just five months. A BARGAIN. Most businesses would…
The catch for me is looking for businesses interested in this kind of arrangement. How do you approach that?
I could write a book on it because there's a lot to it but I'll try to summarise.
Success = Connections x (Niche knowledge + Skills)
For connections:
Given the current state of the world networking is hard but not impossible. However you go about it, you need to build trust with people rather than hard sell them which doesn't work in 2020 (unless what you are selling is a commodity). Note that I said people, you're selling to people - not businesses.
You can shortcut this by leveraging existing contacts, ideally in a niche that you already have knowledge in because you worked in it.
For niche knowledge + skills:
With your connections at first you might need to find ways to cheaply provide value. Build up trust. Grow relationships. Get referred.
You'll make your life easier by specialising in a niche. So for example mine is financial services. A niche in a niche is even better. Again, for example mine is asset management, which sits within financial services.
So now you have your niche in a niche and detailed knowledge of that niche. You know what problems they have (the knowledge), and you can add your skills to solve their problems.
It's not easy, it takes years - but it's possible. Once you have all the elements of the above formula, you can switch your pricing from by the hour to by value.
Re: How I learned to charge my customers
#36Hey everyone, author here. My experience is that customers will always want more features than they initially ask for. That's why I make sure to tell them my hourly rate, then give them an estimate. For example, I can say $5000 for a 1 month project. Here I'll break down the average time I will work a week as a courtesy. This helps me justify charging them again when we are at month 3 and the project is not done. I l…
Not really on-topic, but I have to say that I really enjoy the audio narration :) It's well recorded and the music is not too loud either.
I couldn’t manage to make the player work on iOS. Sad day after seeing your comment.
Re: How I learned to charge my customers
#37When I was doing consulting for small websites, data work and programming through craigslist, much like the original article. I charged $35/h with a minimum one hour charge. This was 6 or 7 years ago and at the time, I wasn't really thinking about making it full time work.
I did a lot of research before hand on average rates for the type of work I was doing and my experience level, checked out other ads things like that.
I chose my rate because it was higher than the spammy looking cheap ads but was on the lower end for consulting rates.
I got a decent amount of work. I had one customer specifically tell me he chose me after finding out my rate because I charged more than the people with the cheap ads that had done poor quality work.
I never had anyone quibble about the rates. Luckily, my customers were mostly business owners and stuff.
I got some tine tracking software that also helped keep work stuff seperate from hone stuff. If I clocked in, I was working, I kept a list of tasks. In the end though, nobody really asked to see or check, they just wanted the bill.
Don't be afraid to charge a rate you feel is reasonable for your work ans don't feel bad when you hand over that invoice.
Re: How I learned to charge my customers
#38Earlier quoted context omitted.
Not really on-topic, but I have to say that I really enjoy the audio narration :) It's well recorded and the music is not too loud either.
I couldn’t manage to make the player work on iOS. Sad day after seeing your comment.
Thank you for letting me know, and here I thought testing on chrome and firefox on Windows was enough. I'll update it as soon as possible.
Re: How I learned to charge my customers
#39Earlier quoted context omitted.
If you are hiring someone who does not know how to tell how long it will take them.
Since I pay for results that’s their problem. At least financially. Dealing with delays is easier if they don’t come with crazy extra costs. Imagine paying someone an extra $10,000 because they missed the deadline. That’s how hourly works.
If you've hired someone who doesn't know how to predict how long the project will take and they suddenly stop development midway through, it is probably also your problem.
> Imagine paying someone an extra $10,000 because they missed the deadline. That’s how hourly works.
Yes it is.
You should probably ensure you only hire people who have experience predicting the costs of the projects you hire them for.
Re: How I learned to charge my customers
#40Earlier quoted context omitted.
How do you estimate that and sell someone on it?
By understanding their business really really well. For example, if I know that an automation that I can create for a client is going to take me 100 hours to setup and save them £20,000 per month I can either: Charge 100 x £100 per hour - so a one off income of £10,000. Seems like I'm earning good money right?? OR I can charge them £100,000. They'll make that back in just five months. A BARGAIN. Most businesses would…
Sounds great until the client realises they can hire someone else who does charge by the hour, saving them a massive 100k - 10k = 90k compared to your proposition.