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You can offer a client any terms you desire to and they can accept any terms that are profitable for their business, but offering terms which clients are used t
by patio11 12y ago
You can offer a client any terms you desire to and they can accept any terms that are profitable for their business, but offering terms which clients are used to with little fill-in-the-blanks for the consequential line items makes it much easier to get your proposal accepted.
What gets better about your life under this proposal? Presumably it isn't "tell my photographer friends that I now have their billing model" since you're substantially wealthier than them, or at least you should be. (If not, charge more. Actually, just charge more, no matter what your rates are relative to photographers.)
Is it that you get recurring revenue from one-off consulting engagements? Great news: you can get this. Start putting the following two terms into your proposals: an acceptance period (after which, by default, you don't owe the client ongoing work) and a retainer for maintenance/improvements. The retainer is simply use-it-or-lose-it committed availability at a modest (10~20%) discount to your normal rates.
Example: If you do a 3 week project at $8k per week, you bill $24k for the upfront work. You also, simultaneously with the original proposal, pitch the client on a maintenance-and-improvements retainer: two days a month of guaranteed availability, $3k a month. You will find that most clients don't ask you to do any work in most months. They'll still often be quite happy to pay, since it's an insurance policy against external events (e.g. Heartbleed / a vulnerability in Rails / "our sysadmin broke things and can't get it working again") or, more commonly, changes to the system being required to support new business requirements.
One does not typically have mechanisms which make the retainer more expensive over time, because these are hard to negotiate, but one can certainly have the retainer sunset after a while (6 months or 12 months, say) and renegotiate it then. "This project ended up being really key to the business!" is a good thing to have when negotiating the new rate. No client anywhere will enjoy a hefty increase but, well, client relations are client relations.
P.S. Stop building websites and start fixing business problems. You're a very short walk from "build a website" to "build a system which provides leads to the business" and some businesses will absolutely pay for leads on a per-lead basis if you really, really want to try your hand at variable compensation.
- theunixbeard 12y agoConsulting rates are something that gets talked a lot about on Hacker News, but this is one of the first times I've seen a detailed retainer agreement laid out. Thanks Patrick! I recently had the opportunity to pitch a retainer agreement to a client after a successful project, I'd be curious to hear what you think of it: "I also offer a retainer service --- pay 2/3 of my rate upfront to prebook a certain number of hours per week/month, thereby guaranteeing my availability over that period. For each hour actually redeemed, the remaining 1/3 is then paid." - From a 'Next Steps Email' to the Client Spoiler --- the client opted to turn down this retainer agreement and instead sign an additional contract for more ongoing work. As an aspiring consultant, one disconnect I've noticed between the advice patio11, tptacek gives and my reality is that they are charging 8K per week for specialized conversion optimization/security work while I am only charging 100 per hour* for garden variety Rails development. At the rate I am charging, clients can afford to hire me long-term vs. the short, specialized agreements that the advice-givers previously took on in their consulting days... * In the process of moving to a daily rate! I have heeded the advice. As a bonus, here are some of my favorite comments from these two about consulting: - https://news.ycombinator.com/user?id=tptacek https://news.ycombinator.com/user?id=tptacek (Note Cliff Note #2) - https://news.ycombinator.com/item?id=3420303 https://news.ycombinator.com/item?id=3420303 - https://news.ycombinator.com/item?id=3420203 https://news.ycombinator.com/item?id=3420203 (Main Thread) - https://news.ycombinator.com/item?id=4101355 https://news.ycombinator.com/item?id=4101355 (Top comment) - https://news.ycombinator.com/item?id=6103350 https://news.ycombinator.com/item?id=6103350 (Top comment) - https://news.ycombinator.com/item?id=6073015 https://news.ycombinator.com/item?id=6073015 (Top comment) - https://news.ycombinator.com/item?id=8704303 https://news.ycombinator.com/item?id=8704303 (Ctfl-F for tptacek or daily) - https://news.ycombinator.com/item?id=3914611 https://news.ycombinator.com/item?id=3914611 (Top Comment)
- japhyr 12y ago> two days a month of guaranteed availability, $3k a month How do you manage this wih multiply clients? Heartbleed comes out, and all of your clients want two days of exclusive work fixing their issues. Is it first contact, first served?
- tptacek 12y agoTypically, the terms of a retainer include committed response times and notice requirements from customers. The shorter, truer, but less useful answer is that by the time you have so many retainers that collisions occur, you've also begun hiring other consultants to work for your practice on a W2 basis.