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So how does that work? They hire you for a year, pay you 20K, and how many hours/week do they expect to get (is that in the contract)? I do consulting myself,

by rorrr2 13y ago

So how does that work? They hire you for a year, pay you 20K, and how many hours/week do they expect to get (is that in the contract)? I do consulting myself, and I've never heard of such a strange arrangement.

pdpi 13y ago
An ongoing support contract for x many man-days a month is pretty typical.
- rorrr2 13y ago
  Ok, so that's not $20K per year. That's $20K per certain number of man-days.
  - tptacek 13y ago
    You're getting a little bit of tunnel vision over deal structure here, which has nothing to do with the point the article is making.
  - lightbritefight 13y ago
    No, that's $20k per certain number of man-days a month, with those man-day/months ending after a year. If I agree to 8hr/month of support for a year, that doesn't mean if you don't contact me for a year I will give you 96 hr at the end of the year. This is incidental, anyway. There are many ways to structure a job to end after a time frame. 20k/year is just referring to a job that brings in 20k, that you know will be over in one year.
jiggy2011 13y ago
Often it will be for work that is estimated to be delivered in one year, which may be full time or not. Or the project might be delivered in under 1 year the contract includes support for a longer period.
- rorrr2 13y ago
  You just described a per project contract that's supposed to be delivered in under a year. There's nothing in your description that says you're supposed to work for the whole year. You can finish it in one day.
  - tptacek 13y ago
    Nobody said anything about delivery constraints. 20k/yr is a sales figure.
a-priori 13y ago
It may be $20k for one project in a year, or two $10k projects, or one $15k project and $5k in residuals (e.g. support). It really doesn't matter. Either way, they're a customer that you estimate will bring in about $20k of revenue to you over the course of the year. In a consultancy, your costs are pretty well fixed, modulo hiring/firing staff, and mostly consists of payroll. There are relatively few marginal expenses (some travel expenses, perhaps?), which means that adding new work increases your revenue but only marginally affects your costs. So a customer's value to the business is how much that customer adds to your revenue, because that's easy to measure individually and is almost the same thing as how much they add to your profit.
tptacek 13y ago
I think you're overthinking. To us, a 20k/yr client is someone we can forecast 20k worth of work with. You can forecast work from any client that does multiple projects with you. But it's also worrisome that you see a formalized 20k/yr client as an oddity, because that arrangement is basically a retainer, and consultants should know how to structure retainers.

by rorrr2 13y ago

pdpi 13y ago

An ongoing support contract for x many man-days a month is pretty typical.

rorrr2 13y ago
Ok, so that's not $20K per year. That's $20K per certain number of man-days.
- tptacek 13y ago
  You're getting a little bit of tunnel vision over deal structure here, which has nothing to do with the point the article is making.
- lightbritefight 13y ago
  No, that's $20k per certain number of man-days a month, with those man-day/months ending after a year. If I agree to 8hr/month of support for a year, that doesn't mean if you don't contact me for a year I will give you 96 hr at the end of the year. This is incidental, anyway. There are many ways to structure a job to end after a time frame. 20k/year is just referring to a job that brings in 20k, that you know will be over in one year.

jiggy2011 13y ago

Often it will be for work that is estimated to be delivered in one year, which may be full time or not. Or the project might be delivered in under 1 year the contract includes support for a longer period.

rorrr2 13y ago
You just described a per project contract that's supposed to be delivered in under a year. There's nothing in your description that says you're supposed to work for the whole year. You can finish it in one day.
- tptacek 13y ago
  Nobody said anything about delivery constraints. 20k/yr is a sales figure.

a-priori 13y ago

It may be $20k for one project in a year, or two $10k projects, or one $15k project and $5k in residuals (e.g. support). It really doesn't matter. Either way, they're a customer that you estimate will bring in about $20k of revenue to you over the course of the year. In a consultancy, your costs are pretty well fixed, modulo hiring/firing staff, and mostly consists of payroll. There are relatively few marginal expenses (some travel expenses, perhaps?), which means that adding new work increases your revenue but only marginally affects your costs. So a customer's value to the business is how much that customer adds to your revenue, because that's easy to measure individually and is almost the same thing as how much they add to your profit.

tptacek 13y ago

I think you're overthinking. To us, a 20k/yr client is someone we can forecast 20k worth of work with. You can forecast work from any client that does multiple projects with you. But it's also worrisome that you see a formalized 20k/yr client as an oddity, because that arrangement is basically a retainer, and consultants should know how to structure retainers.