4 ms·

I've been thinking about an "inverse secretary problem" for choosing contract jobs: 1. I have a limited time in which to secure the next contract 2. Potential

by ukoki 8y ago

I've been thinking about an "inverse secretary problem" for choosing contract jobs: 1. I have a limited time in which to secure the next contract 2. Potential clients opportunities appear at a fixed rate (eg 1-2/week) 3. Each client has a different, unknown, maximum daily rate (MDR) they are willing pay. I can discover the MDR only by quoting a higher rate ("sorry the most we can go to is $XXX"). 4. If I quote a lower rate than the client's MDR, I have a new contract and the game stops. Given my goal is to find the client who will pay the highest daily rate before the deadline, what is the best strategy? My best guess at the moment is to start at a high rate, and gradually decrease it as the deadline approaches. But how can I use the information I gather about rejected client's MDRs to decide the best daily rate to quote future potential clients?

everdev 8y ago
I start with the lowest rate I'm willing to accept because much of earning money is about networking and your experience. As you gain experience and projects, increase your rate 10% on each new contract until you encounter consistent resistance. It's a more cautious approach and takes longer but it worked for me.
- behringer 8y ago
  You might be able to ask for 10x your current rate, and get more business because now you look and sound like you can do the project. You'll also have less work overall since you don't have to do 10 times as much work to make the same amount of money. It's why oracle can charge tens of thousands of dollars for software that might run 30 dollars a month from another company.
  - gamblor956 8y ago
    Oracle (and NetSuite) can charge tens of thousands for software because the software is worth thousands of dollars a month. Financial systems that form the backbone of your company are absolutely the one place you don't want to skimp out on your IT spend.
    - behringer 8y ago
      Spoiler alert, oracle software is world renowned for being completely shit.
      - gamblor956 8y ago
        Spoiler alert: Oracle can be configured to what you need it to do. It can run well, or very poorly, depending on the implementation, and it is extremely powerful from a financial planning, budgeting, and forecasting perspective once you learn the UI. Netsuite (technically now part of Oracle) is almost as powerful but much easier to use from an end-user perspective. Also: I'm talking about Oracle the enterprise financial management system. I don't know how the database systems get licensed. But I do think it's funny that most complaints from techies about Oracle are really related to the difficulty of learning Oracle's UI or licensing, when most websites, platforms, APIs, etc. these days have worse UI and licensing that's just as bad as Oracle's.
        behringer 8y ago
        Oracle's not the only game in town. https://www.google.com/search?client=firefox-b-1-d&q=oracle+horror+stories https://www.google.com/search?client=firefox-b-1-d&q=oracle+... And anyway it's just an example.
  - everdev 8y ago
    10x my current rate? A 10% increase makes sense, a 10x increase sounds impossible overnight.
    - loa-in-backup 8y ago
      It doesn't mean that it's true
soVeryTired 8y ago
> Given my goal is to find the client who will pay the highest daily rate before the deadline... Is that actually your goal though? Are you sure you wouldn't prefer a client who will offer repeat business at a decent but not maximal daily rate? How about a client who will offer a more interesting job, or one who will offer you the opportunity to learn something new? In so many of these optimisation problems, the real difficulty is specifying exactly what you want to optimise (never mind making sure that the specification is tractable). In general the solution you get from your algorithm will depend sensitively on your objective: if you're not completely sure about the objective, you shouldn't be sure about the solution.
- BerislavLopac 8y ago
  > Is that actually your goal though? When it comes to contracting, this is precisely the goal. Your questions refer to freelancing rather than contracting, which is quite different.
  - ineedasername 8y ago
    I'm not sure that's the case. I work somewhere that has seen a very high turnover in contractors, paid a decent amount above market averages. It's because project assignments are poorly defined, bureaucratically controlled, and by the time the initial term is up (usually 3 months) the contractor is fed up and has some other work already lined up.
    - ukoki 8y ago
      Agree! Changing clients is preferable as there are more opportunities for networking, and there is a novelty factor: Each slow-moving bureaucratically-controlled poorly-defined enterprise IT project is slow-moving, bureaucratically-controlled and poorly-defined in its own way.
  - rlpb 8y ago
    Apparently freelancing and contracting mean different things depending on both industry and where you live. Could you clarify what you mean please, rather than relying on definitions of rather loose terms?
ulucs 8y ago
Number 1 limits the model very harshly. If you absolutely need to secure a contract, you need to keep bidding your minimum price. Else, we can view this as a simple utility maximization problem where each high offer costs you one period of no work. If you knew distribution of MDR exactly, this would be a simple problem. So you can throw away your first two offers (by bidding infinity) to obtain estimators for the mean and standard error of the distribution. Although you should have an idea on the shape of the distribution as you realistically can not gather enough data to derive it. From there on, you have an estimated probability on whether your offer will be accepted or rejected. If it's accepted, you end up with the money. If not, you end up in the same place, but your utility will be discounted for one time period. To simplify the solution, you can disregard the effects of learning for now and solve the problem to include that later. Once you factor out the recursion from your utility function (which includes a discounted version of itself, in case of rejection), you should end up with a nice but complex calculus problem. Nonetheless, your optimal offer will depend on the estimators of mean and standard deviation. So each period, you should offer your "optimal number", update the mean/standard deviation with respect to the response and calculate the offer for the next period accordingly. ED: You can ping me if you need a contract microeconomist :p
seanwilson 8y ago
> Given my goal is to find the client who will pay the highest daily rate before the deadline, what is the best strategy? What about fixed price projects? You can potentially earn a much higher day rate. Clients aren't paying for your time in front of a computer, they're paying for your expertise.

by ukoki 8y ago

everdev 8y ago

I start with the lowest rate I'm willing to accept because much of earning money is about networking and your experience. As you gain experience and projects, increase your rate 10% on each new contract until you encounter consistent resistance. It's a more cautious approach and takes longer but it worked for me.

behringer 8y ago
You might be able to ask for 10x your current rate, and get more business because now you look and sound like you can do the project. You'll also have less work overall since you don't have to do 10 times as much work to make the same amount of money. It's why oracle can charge tens of thousands of dollars for software that might run 30 dollars a month from another company.
- gamblor956 8y ago
  Oracle (and NetSuite) can charge tens of thousands for software because the software is worth thousands of dollars a month. Financial systems that form the backbone of your company are absolutely the one place you don't want to skimp out on your IT spend.
  - behringer 8y ago
    Spoiler alert, oracle software is world renowned for being completely shit.
    - gamblor956 8y ago
      Spoiler alert: Oracle can be configured to what you need it to do. It can run well, or very poorly, depending on the implementation, and it is extremely powerful from a financial planning, budgeting, and forecasting perspective once you learn the UI. Netsuite (technically now part of Oracle) is almost as powerful but much easier to use from an end-user perspective. Also: I'm talking about Oracle the enterprise financial management system. I don't know how the database systems get licensed. But I do think it's funny that most complaints from techies about Oracle are really related to the difficulty of learning Oracle's UI or licensing, when most websites, platforms, APIs, etc. these days have worse UI and licensing that's just as bad as Oracle's.
      - behringer 8y ago
        Oracle's not the only game in town. https://www.google.com/search?client=firefox-b-1-d&q=oracle+horror+stories https://www.google.com/search?client=firefox-b-1-d&q=oracle+... And anyway it's just an example.
- everdev 8y ago
  10x my current rate? A 10% increase makes sense, a 10x increase sounds impossible overnight.
  - loa-in-backup 8y ago
    It doesn't mean that it's true

soVeryTired 8y ago

> Given my goal is to find the client who will pay the highest daily rate before the deadline... Is that actually your goal though? Are you sure you wouldn't prefer a client who will offer repeat business at a decent but not maximal daily rate? How about a client who will offer a more interesting job, or one who will offer you the opportunity to learn something new? In so many of these optimisation problems, the real difficulty is specifying exactly what you want to optimise (never mind making sure that the specification is tractable). In general the solution you get from your algorithm will depend sensitively on your objective: if you're not completely sure about the objective, you shouldn't be sure about the solution.

BerislavLopac 8y ago
> Is that actually your goal though? When it comes to contracting, this is precisely the goal. Your questions refer to freelancing rather than contracting, which is quite different.
- ineedasername 8y ago
  I'm not sure that's the case. I work somewhere that has seen a very high turnover in contractors, paid a decent amount above market averages. It's because project assignments are poorly defined, bureaucratically controlled, and by the time the initial term is up (usually 3 months) the contractor is fed up and has some other work already lined up.
  - ukoki 8y ago
    Agree! Changing clients is preferable as there are more opportunities for networking, and there is a novelty factor: Each slow-moving bureaucratically-controlled poorly-defined enterprise IT project is slow-moving, bureaucratically-controlled and poorly-defined in its own way.
- rlpb 8y ago
  Apparently freelancing and contracting mean different things depending on both industry and where you live. Could you clarify what you mean please, rather than relying on definitions of rather loose terms?

ulucs 8y ago

Number 1 limits the model very harshly. If you absolutely need to secure a contract, you need to keep bidding your minimum price. Else, we can view this as a simple utility maximization problem where each high offer costs you one period of no work. If you knew distribution of MDR exactly, this would be a simple problem. So you can throw away your first two offers (by bidding infinity) to obtain estimators for the mean and standard error of the distribution. Although you should have an idea on the shape of the distribution as you realistically can not gather enough data to derive it. From there on, you have an estimated probability on whether your offer will be accepted or rejected. If it's accepted, you end up with the money. If not, you end up in the same place, but your utility will be discounted for one time period. To simplify the solution, you can disregard the effects of learning for now and solve the problem to include that later. Once you factor out the recursion from your utility function (which includes a discounted version of itself, in case of rejection), you should end up with a nice but complex calculus problem. Nonetheless, your optimal offer will depend on the estimators of mean and standard deviation. So each period, you should offer your "optimal number", update the mean/standard deviation with respect to the response and calculate the offer for the next period accordingly. ED: You can ping me if you need a contract microeconomist :p

seanwilson 8y ago

> Given my goal is to find the client who will pay the highest daily rate before the deadline, what is the best strategy? What about fixed price projects? You can potentially earn a much higher day rate. Clients aren't paying for your time in front of a computer, they're paying for your expertise.