4 ms·

I've used 50% as a conservative estimate for all my back-of-the-napkin calculations for years and it has served me well, especially in consulting projects. Sure

by chime 16y ago

I've used 50% as a conservative estimate for all my back-of-the-napkin calculations for years and it has served me well, especially in consulting projects. Sure I can lower that by showing expenses etc. but in the general sense, if I charge $100/hour, what I'm really doing is enabling myself to spend $50/hour in the future. The true benefit of this is that I don't have to feel worried about over/under charging my clients.

bretthoerner 16y ago
> The true benefit of this is that I don't have to feel worried about over/under charging my clients. Why not? If you could (should) be charging $120 then that'd be $60 of future spending.
- chime 16y ago
  I charge $100 because I really feel the effort is worth $50 to me and the client won't pay more than $100. Think of it this way: The lower bound is set by how much I feel the effort is worth after taxes. The upper bound is set by how much I think/know the client will pay. If half of the upper bound is less than my lower bound, I don't do it. This way I don't under-charge. By over-charge, I meant to say that even though I feel my effort is truly worth $50 after taxes, I don't have to worry about charging $100, because I'm not really over-charging the client since half of $100 is going to taxes. Without taking 50% taxes into account (which is what a lot of people do), asking $100 for something I truly feel is worth only $50 feels like overcharging. Over-charging new clients is never a personal issue because they can always say no and walk away. But over-charging existing clients can cause you to lose a steady stream of income, especially after you've invested time and effort to establish a relationship and understanding of their needs.
lsc 16y ago
eh, it always seemed to me that consulting was really only a win if you were consulting to support another business... e.g. if I can earn $100/hr and turn around and plow that money into my hosting business the same year, that seems huge in terms of net-worth growth. Yeah, I still gotta pay the piper when the money comes out, but meanwhile I can use it to grow more money. (and really, once I'm rich, I like to think that losing a bunch to the tax man will hurt less.) The problem with this approach is, of course, that if you screw up your accounting and get audited, you can come away with some silly high tax bills that can't be discharged by bankruptcy.

by chime 16y ago

bretthoerner 16y ago

> The true benefit of this is that I don't have to feel worried about over/under charging my clients. Why not? If you could (should) be charging $120 then that'd be $60 of future spending.

chime 16y ago
I charge $100 because I really feel the effort is worth $50 to me and the client won't pay more than $100. Think of it this way: The lower bound is set by how much I feel the effort is worth after taxes. The upper bound is set by how much I think/know the client will pay. If half of the upper bound is less than my lower bound, I don't do it. This way I don't under-charge. By over-charge, I meant to say that even though I feel my effort is truly worth $50 after taxes, I don't have to worry about charging $100, because I'm not really over-charging the client since half of $100 is going to taxes. Without taking 50% taxes into account (which is what a lot of people do), asking $100 for something I truly feel is worth only $50 feels like overcharging. Over-charging new clients is never a personal issue because they can always say no and walk away. But over-charging existing clients can cause you to lose a steady stream of income, especially after you've invested time and effort to establish a relationship and understanding of their needs.

lsc 16y ago

eh, it always seemed to me that consulting was really only a win if you were consulting to support another business... e.g. if I can earn $100/hr and turn around and plow that money into my hosting business the same year, that seems huge in terms of net-worth growth. Yeah, I still gotta pay the piper when the money comes out, but meanwhile I can use it to grow more money. (and really, once I'm rich, I like to think that losing a bunch to the tax man will hurt less.) The problem with this approach is, of course, that if you screw up your accounting and get audited, you can come away with some silly high tax bills that can't be discharged by bankruptcy.