How I Earned A Lot More on Projects by Changing My Pricing Strategy • Hacker News Board

Re: How I Earned A Lot More on Projects by Changing My Pricing Strategy

#11

Post by cmwelsh » Fri, Jul 19, 2013, 10:47 PM UTC

pallandt wrote: post #4

jackschultz wrote: post #3

> If I felt my agency couldn’t deliver the full solution, I saw that as an opportunity to partner with another service provider. I would pay them for the work, developing a lasting business partnership along the way. And in the process, I’d learn about their area of expertise to get better at both selling and delivering it to my clients. This seems a little off to me. Would you tell the client that you're outsourcing…

I would venture into guessing that the client wasn't told about this. If I was in a similar situation and I'd be told the company I'm paying to work on my project is outsourcing it, I'd think they're either a) they're too busy for me/I'm too small of a client for them, b) money is money so they're taking my project, but I shouldn't bet on spectacular results. Also, there'd be some broken trust involved. There would a…

It doesn't have to be nefarious. Sometimes there are certain aspects of a project that are outside your company's core competences. It's only ethical to pass the work to a qualified professional. Clients pay for results - it's a business transaction.

Re: How I Earned A Lot More on Projects by Changing My Pricing Strategy

#12

Post by [deleted] » Fri, Jul 19, 2013, 11:04 PM UTC

edanm wrote: post #10

tptacek wrote: post #7

Yes! Note that you can get halfway to the place McDerment (and Patrick McKenzie) were at simply by not charging by the hour . Simply moving your pricing increment from hours to days or (ideally) weeks changes the conversation you're having with your client. McDerment had to develop serious sales skills to pivot inbound requests for website paint jobs to strategic marketing engagements. But you don't need sales skills…

I'm completely on board with the "bill by the day, not the hour" idea. Having implemented it in our own consultancy, it's done wonders. But it hasn't gotten us to the stage you're talking about - we're definitely making headway in establishing ourselves as (Python) experts, but I don't think we're really at the stage where we can sell based solely on the customer's value - building software is simply too replaceable…

[deleted]

Re: How I Earned A Lot More on Projects by Changing My Pricing Strategy

#13

Post by tptacek » Fri, Jul 19, 2013, 11:07 PM UTC

edanm wrote: post #10

tptacek wrote: post #7

Yes! Note that you can get halfway to the place McDerment (and Patrick McKenzie) were at simply by not charging by the hour . Simply moving your pricing increment from hours to days or (ideally) weeks changes the conversation you're having with your client. McDerment had to develop serious sales skills to pivot inbound requests for website paint jobs to strategic marketing engagements. But you don't need sales skills…

I'm completely on board with the "bill by the day, not the hour" idea. Having implemented it in our own consultancy, it's done wonders. But it hasn't gotten us to the stage you're talking about - we're definitely making headway in establishing ourselves as (Python) experts, but I don't think we're really at the stage where we can sell based solely on the customer's value - building software is simply too replaceable…

Yep, that's exactly what I'm trying to say. Thanks!

Re: How I Earned A Lot More on Projects by Changing My Pricing Strategy

#14

Post by zackmorris » Fri, Jul 19, 2013, 11:11 PM UTC

Unfortunately I just got hit by 2 projects in a row that passed 3x overage. I quoted 2 weeks to finish, but they both ended up taking over 6. I'm probably not even making minimum wage for the last couple of months.

So if you are going to quote by the job, be sure to put in limits in case it goes over your time budget so you can renegotiate.

Also I would not recommend having a "friend rate". Your workload just goes up exponentially with a proportionate decrease in pay.

If anyone could play devil's advocate on the article, with solutions to warning signs, I would sure appreciate the insight! (Not that I disagree with the article, just, my track record is really tiring me out).

Re: How I Earned A Lot More on Projects by Changing My Pricing Strategy

#15

Post by dave_sullivan » Fri, Jul 19, 2013, 11:26 PM UTC

An alternate pricing strategy that's worked well for me: charge by the "sprint" (roughly 80 hours) and peg it to an hourly rate. Now hire developers to help you with implementing the brilliant strategies you help come up with and make a reliable spread on the cost of your junior developers. Key: don't hire people to do things you can't do yourself, hire them to do things so you don't have to do them yourself.

When I sell, I'm still linking it to business value--I just make sure it's pegged to hours, which is my most direct cost (other than my time, which I make sure ends up being a very high number if calculated as an hourly rate + profit on developers) Clients know it's typically not me doing the actual implementation work, but because I've linked the overall solution to business value and presented it as an investment--which it is--it doesn't matter.

The problem I have with fixed bid projects is overages and who pays for them. In this business, they're quite common and quite often not the fault of an idiot programmer--but if you do fixed bid, you'll have to eat these costs sooner or later unless you are very good at estimating (I don't know anyone that is...)

Re: How I Earned A Lot More on Projects by Changing My Pricing Strategy

#16

Post by tieTYT » Fri, Jul 19, 2013, 11:39 PM UTC

tptacek wrote: post #7

Yes! Note that you can get halfway to the place McDerment (and Patrick McKenzie) were at simply by not charging by the hour . Simply moving your pricing increment from hours to days or (ideally) weeks changes the conversation you're having with your client. McDerment had to develop serious sales skills to pivot inbound requests for website paint jobs to strategic marketing engagements. But you don't need sales skills…

Why is hour Also, since an hourly rate is standard and job postings say how much they pay by the hour, isn't it common to be rejected when you ask for a daily/weekly rate?

Re: How I Earned A Lot More on Projects by Changing My Pricing Strategy

#17

Post by tieTYT » Fri, Jul 19, 2013, 11:43 PM UTC

zackmorris wrote: post #14

Unfortunately I just got hit by 2 projects in a row that passed 3x overage. I quoted 2 weeks to finish, but they both ended up taking over 6. I'm probably not even making minimum wage for the last couple of months. So if you are going to quote by the job, be sure to put in limits in case it goes over your time budget so you can renegotiate. Also I would not recommend having a "friend rate". Your workload just goes up…

I think you're missing the idea (but I could be wrong, I've never consulted): You're not supposed to promise when a project will be finished, you just set your rate per days/weeks. You estimate when it will be finished, but you don't promise.

Re: How I Earned A Lot More on Projects by Changing My Pricing Strategy

#18

Post by tptacek » Fri, Jul 19, 2013, 11:44 PM UTC

tieTYT wrote: post #16

tptacek wrote: post #7

Yes! Note that you can get halfway to the place McDerment (and Patrick McKenzie) were at simply by not charging by the hour . Simply moving your pricing increment from hours to days or (ideally) weeks changes the conversation you're having with your client. McDerment had to develop serious sales skills to pivot inbound requests for website paint jobs to strategic marketing engagements. But you don't need sales skills…

Why is hour Also, since an hourly rate is standard and job postings say how much they pay by the hour, isn't it common to be rejected when you ask for a daily/weekly rate?

Too many reasons to re-list. You can use the search bar on the bottom of the page to find me talking about this ad nauseam.

We've never been rejected for a client for not billing hourly.

Re: How I Earned A Lot More on Projects by Changing My Pricing Strategy

#19

Post by chatmasta » Fri, Jul 19, 2013, 11:53 PM UTC

What do you guys think of pay by milestone? Client and seller both agree to a milestone with a checklist that, when complete, signifies the milestone is complete. This provides clarity, transparency, and predictability. As a buyer, I prefer milestones.

Re: How I Earned A Lot More on Projects by Changing My Pricing Strategy

#20

Post by pallandt » Fri, Jul 19, 2013, 11:57 PM UTC

cmwelsh wrote: post #11

pallandt wrote: post #4

Earlier quoted context omitted.

I would venture into guessing that the client wasn't told about this. If I was in a similar situation and I'd be told the company I'm paying to work on my project is outsourcing it, I'd think they're either a) they're too busy for me/I'm too small of a client for them, b) money is money so they're taking my project, but I shouldn't bet on spectacular results. Also, there'd be some broken trust involved. There would a…

It doesn't have to be nefarious. Sometimes there are certain aspects of a project that are outside your company's core competences. It's only ethical to pass the work to a qualified professional. Clients pay for results - it's a business transaction.

This is also true and perfectly reasonable.