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For what it's worth 1, drop the hourly rate, all you do is price yourself out of work. As an example, a great programmer can do it in 1 hour, a medium programm

For what it's worth 1, drop the hourly rate, all you do is price yourself out of work. As an example, a great programmer can do it in 1 hour, a medium programmer can do it in 2 hours, an average one can do it in 3 hours etc. So the better you are, the less you actually get paid. Obviously you can raise your prices to compensate but then people will just go to a cheaper developer and probably end up paying more without realising it. So drop the hourly rate. 2, isolate yourself from the clients, coding is fun, clients are hell. Get a sales person in to do that stuff for you.

akulbe 9y ago
Dropping his hourly rate will likely get him more of the kinds of clients that he does not want. Your advice goes very much against the grain of what others who are very experienced in this field would say (which is to raise your rates). What is your basis for suggesting he lower his rates?
- ameister14 9y ago
  He's not saying lower the rates. He's saying charge by the project or by the week/month, not by the hour.
  - richardknop 9y ago
    I'd also suggest daily rate or weekly rate as alternatives. Seems like a better unit to bill consulting services in than hours or months. Easier to sell clients 20 days of your time or 4 weeks of your time imho. It is easier for companies to budget x days or x weeks of consulting services with fixed daily / weekly rate.
- Cozumel 9y ago
  I didn't say for him to lower his rates. I said for him to stop charging by the hour, charge by the project instead. An hourly rate is a fundamentally broken system.
  - richardknop 9y ago
    Charging fixed price per whole project might not be a good idea. Software projects usually never finish completely in a certain predefined deadline so it makes it very hard for you to plan and price your services. There will always be issues that will delay the project that you couldn't have predicted and priced in at the start, requirements will often change during the project, there can be new feature requests which will further push the deadline. Much better to instead sign a contract for fixed amount of time (6 months of consulting services for example). You will work on the project for the time defined by signed contract. A month before your contract ends sit down with the client and estimate the current state of the project and see if additional time will be needed in which case you can negotiate contract extension. This approach is much more agile actually so most clients would prefer it I'd imagine. Clients can keep extending your contract by 3 month chunks if they need to. If you finish everything early clients will easily find you some more work while they are paying for your consultancy services. If not you can have short notice period in the contract like 1-2 weeks so contract can be cut short.
tra1001 9y ago
I've tried fixed bid. However, whenever I do a fixed big project it takes longer than I expected and it ends up costing me. Obviously that means I'm under-estimating and/or not charging enough. Or perhaps it means the way I come up with the fixed cost is wrong. Generally, I break the project down into a list of tasks. Estimate liberally for each task, then multiply the final number of hours times 2 then multiply by my hourly rate. To your second point, as a small 1-2 person company, how could I afford a sales person? Are there sales people out there who would purely work on commission?
- richardknop 9y ago
  Try daily rate. Say you charge $800 per day. Minimum charge is one day. If you do work in 2 hours it doesn't matter because you'll charge full day as it's inefficient use of your time to split it into minuscule hourly chunks. And don't do small projects which take couple of days or weeks to finish. Try to get commitment from clients for at least 3-6 months of work. So get a written contract which defines your pay to be 22 * daily rate * number of months, billed weekly let's say. You'll have much less stress and waste less time looking for new clients. Basically I'm suggesting you become a contractor with a daily rate, work on projects which last around 6 months on average per project. You can then slowly transition from this to more niche or specialised consulting. And you'll have a decent Rolodex of clients and references after contracting for couple of years.

akulbe 9y ago

Dropping his hourly rate will likely get him more of the kinds of clients that he does not want. Your advice goes very much against the grain of what others who are very experienced in this field would say (which is to raise your rates). What is your basis for suggesting he lower his rates?

ameister14 9y ago
He's not saying lower the rates. He's saying charge by the project or by the week/month, not by the hour.
- richardknop 9y ago
  I'd also suggest daily rate or weekly rate as alternatives. Seems like a better unit to bill consulting services in than hours or months. Easier to sell clients 20 days of your time or 4 weeks of your time imho. It is easier for companies to budget x days or x weeks of consulting services with fixed daily / weekly rate.
Cozumel 9y ago
I didn't say for him to lower his rates. I said for him to stop charging by the hour, charge by the project instead. An hourly rate is a fundamentally broken system.
- richardknop 9y ago
  Charging fixed price per whole project might not be a good idea. Software projects usually never finish completely in a certain predefined deadline so it makes it very hard for you to plan and price your services. There will always be issues that will delay the project that you couldn't have predicted and priced in at the start, requirements will often change during the project, there can be new feature requests which will further push the deadline. Much better to instead sign a contract for fixed amount of time (6 months of consulting services for example). You will work on the project for the time defined by signed contract. A month before your contract ends sit down with the client and estimate the current state of the project and see if additional time will be needed in which case you can negotiate contract extension. This approach is much more agile actually so most clients would prefer it I'd imagine. Clients can keep extending your contract by 3 month chunks if they need to. If you finish everything early clients will easily find you some more work while they are paying for your consultancy services. If not you can have short notice period in the contract like 1-2 weeks so contract can be cut short.

tra1001 9y ago

I've tried fixed bid. However, whenever I do a fixed big project it takes longer than I expected and it ends up costing me. Obviously that means I'm under-estimating and/or not charging enough. Or perhaps it means the way I come up with the fixed cost is wrong. Generally, I break the project down into a list of tasks. Estimate liberally for each task, then multiply the final number of hours times 2 then multiply by my hourly rate. To your second point, as a small 1-2 person company, how could I afford a sales person? Are there sales people out there who would purely work on commission?

richardknop 9y ago
Try daily rate. Say you charge $800 per day. Minimum charge is one day. If you do work in 2 hours it doesn't matter because you'll charge full day as it's inefficient use of your time to split it into minuscule hourly chunks. And don't do small projects which take couple of days or weeks to finish. Try to get commitment from clients for at least 3-6 months of work. So get a written contract which defines your pay to be 22 * daily rate * number of months, billed weekly let's say. You'll have much less stress and waste less time looking for new clients. Basically I'm suggesting you become a contractor with a daily rate, work on projects which last around 6 months on average per project. You can then slowly transition from this to more niche or specialised consulting. And you'll have a decent Rolodex of clients and references after contracting for couple of years.