What should I charge to help assist a Network Crossover?
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Be very careful about time, treat it as the biggest expense and asset you have.
I can spend 8 hours on a job for $80 an hour = $640
Or I can spend 8 hours on a job for $130 an hour. = $1040The number of hours I can work will never increase. There are only so many hours in the day and you need to be properly rested to deliver a great service which justifies the price the client will pay. I cannot work every hour I have on site making the money, I need to be in the office doing the less than fun stuff as well OR I need to hire someone to do that. (I've suddenly doubled my annual over-heads. Yikes.)
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Think of the soft hours, the phone calls, the email answering, time that you effectively lose and cannot bill for. The paid work needs to account for this as well. The math can get a bit scary when you dig deep into it.
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And remember that a normal company (internal IT) pays for you to be there every day, whether they need you or not. You are paid a flat rate (more or less) and when you are training, having a bad day, sick day, holiday, vacation day, etc. you are still paid. When you are sitting around waiting for new work to come in, working slowly because you are tired or whatever you are still paid.
When you consult customers don't pay for vacation, holidays, training, sick days, etc. They expect you to be working at easily 400% the productivity rate of an internal IT professional (and in many cases 1,000% or more!!) so you have to account for that too. You have to build in all of that time or else, again, you are paying to work.
Companies that have staff doing the work work these numbers into the rates and it evens out over time. They figure out how it figures into an hourly rate.
There is a reason that you are close to half the rate that people are stating as a minimum. There is a ton of costs that you are eating here on behalf of the client. You are looking at them as a charity case - which is fine as long as you realize that that is what you are doing and that this isn't a job for pay but a job to help someone out. And you had better make sure that your client is aware that you are treating them as a charity case and not charging for your time because if they don't know that up front they will be pretty upset when you don't have unlimited funds to deal with issues with this work down the road.
Mismatched expectations are always bad, even when you are doing work "as a favour."
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@Breffni-Potter said:
Think of the soft hours, the phone calls, the email answering, time that you effectively lose and cannot bill for. The paid work needs to account for this as well. The math can get a bit scary when you dig deep into it.
This is why most MSPs that I see, the ones starting out without the business people involved and trying to run with just IT people who don't understand the business aspects, fail miserably. They think in terms of them doing work and forgetting the "company" and that that always exists whether they remembered to set one up or not.
Unless you are doing free work in exchange for a six pack, you are really consulting and no matter how simple you think your setup is, you have all the same overhead as everyone else.
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In the times that you are doing a favour or charity, Note the actual rates on the invoice, Then mark a substantial discount so that it is clear. When you are billing $100 for what should be a $500 job, you should make a note of how much of a saving they are getting, If they ask you to do yet "another" thing and query why the rate is so high the second time, you can point them to the favour you did. Though in some cases you might decide to donate the work completely for free, still send them the invoice with the payable total as $0. Just make a note of what you did and the list price of each time.
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@Breffni-Potter said:
Just did the currency conversion...
Did you do to USD or CDN? He's in Canada.
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@Breffni-Potter said:
In the times that you are doing a favour or charity, Note the actual rates on the invoice, Then mark a substantial discount so that it is clear. When you are billing $100 for what should be a $500 job, you should make a note of how much of a saving they are getting, If they ask you to do yet "another" thing and query why the rate is so high the second time, you can point them to the favour you did. Though in some cases you might decide to donate the work completely for free, still send them the invoice with the payable total as $0. Just make a note of what you did and the list price of each time.
This is very good advice.
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Also keep in mind that the people suggesting $125/hr might be okay are companies that have some of their staff in low cost US regions. This is one of the ways that some companies, especially larger ones, reduce cost in ways that you cannot. Look at @Hubtech or @ntg which both to you seem like big companies with lots of overhead but in reality they can cut costs dramatically compared to you. @hubtech is in southern Mississippi where the cost of labour, taxes, real estate and fuel are very low. They are able to run more cheaply than you because they offer their services from a very low cost market.
@ntg is bigger and has staff all over. For doing a project like there they have staff coming out of very low cost locations as well. Cutting overhead and making the cost of delivering services lower.
You, however, are stuck in Canada with higher taxes and higher technology costs, a lower rate currency (currently) and are in a big city (the ones with the lowest costs here are not city-based specifically for this reason) where the overhead is insanely high. The cost of you delivering one hour of consulting is drastically higher than for most of us. You have no "company" to offload the work when possible to a low cost location.
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@scottalanmiller said:
@Breffni-Potter said:
Just did the currency conversion...
Did you do to USD or CDN? He's in Canada.
WOW.
I'd need 160 dollars just for my starting rate.
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The lowest US rate was really around $125. In CAD that is $154.50/hr.
$80CAD is just $64.60USD per hour.
You are literally at half the hourly rate of GeekSquad unskilled, non-IT work.
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For this particular client, it is probably too late. No wonder they were happy with the price, they are getting you as an outsourcing firm to accept all of the risk and overhead of the work for less than they probably spend to have an employee to do the same work per hour. Companies pay a big premium to outsourcing firms because the firm takes on huge risk and is only paid while working whereas an employee has to be paid when there is work or not. But in this case, you are so cheap that they can't possibly turn you down.
Assume that this client is a lost cause, they will never be okay paying real rates, the rates needed to keep eating while doing this kind of work, after getting you for this price. Nearly everyone does this with the first client or two. Sadly, it's a burned bridge, but it is good learning. Most of any IT consulting is the business side. There are plenty of good IT people out there to do the technical work. It's the business setup, marketing, sales, billing, accounting, etc. that is hard to get and what makes all of the difference.
