[Lula-biz] OT: Consulting Rate

[Louis B. Dubin]

I agree that the amount of money seems quite high and the average MCSE or
CNE or Linux engineer will not be able to demand that amount. Perhaps our
case is different so let me clear it up a little.
When we started our comapany in 1994, Novell was the only game in town when
it cme to networking and most CNE's were fairly competent but the term
"Paper CNE" was just coming into being. Teaching Schools were able to make
money hand over fist and all classes were filled. To get a CNE you spent
$6,000 and if you were lucky, your teacher had some experience in the real
world.
Our CEO joseph was very unusual, at 14 he went to high school in the day
time from 8-3 Novell school in evenings 5 nights a week and in 6 months he
became the youngest Novell engineer in the world. Now that was not the
extent of his computer knowledge, he started with a Commodore VIC 20 at six
and learned basic, C and some assembly by the age of nine. He and his
friends knew more about how computers worked then most people.
As a beginning Novel engineer he decided that he would take care of the
entire client, that is design, implement and support their network, handle
their database and mdoem problems and seemed to be able to answer almost
everyquestion that small and large firms could ask. When they met with him
they realized that 99% of the IT people they had spoken with did not have
his expertise and they were willing to pay for it. At 15 he taught Novell at
West LA college for an IT company and at 16 taught the MCSE track for
Novaquest where he was paid $900/day. He gave security lectures to the
NPA( Network Professional association a novel group in LA starting at 15 and
became vice president of the NPA at 17.

The reason he gets his 150-200 per hour he is the person they call when an
IT staff can't do it, he will find an answer. Networking just filled in an
area of expertise that he did not know well and by continually studying and
working with the newest technologies, staying on the cutting edege, he makes
his knowledge worth the money that companies pay him.
Linux is what is happening today. We are moving many of our clients to Linux
which once again makes our knowledge worth the price.
He has worked with slackware from way back when and now his company is using
gento for solutions that save his clients lots of money while putting a fair
share in his pockets.

Nowadays there are many more competent people in the IT field and a lot of
people may charge less  and get the job done well. We have kept our prices
per hour at the higher end. When clients these days interview companies and
they talk with Joseph, many say we are higher priced but they tell us that
they want the expertise we seem to have and they are willing to pay a little
more for it.

A note.. We have always told our students to try to keep their prices per
hour high. You have spent money and time to get a degree and to make the
degree valuable you have to present it as such tothe client. I personally
feel its beeter to charge a client as a newbie $150/ hour and give them a
discount on the number of hours than bastardize the amount tha you are
worth. You can still set a amount that you want to make and tell the client
you will capp a job at a certin number of hours and keep the standards high
for when you really want to charge that price later.

Lou

-----Original Message-----
From: lula-biz-bounces at lula.org [mailto:lula-biz-bounces at lula.org]On
Behalf Of Christopher Smith
Sent: Tuesday, July 22, 2003 2:02 PM
To: lula-biz at lula.org
Subject: [Lula-biz] OT: Consulting Rate


I'm sorry, but particularly if you are just starting out in consulting,
you are not going to get $150/hr for some Access work and some
networking administration. There is a good chance people will just flat
out turn you down if you quote that rate, unless they really need you
specifically. I've done consulting over the course of many years, and
the highest I've ever charged acting independently was $120/hr (of
course under the umbrella of a large company I've charged several times
that ;-). If I'd asked for $150/hr starting out, I would have literally
been laughed out of the room.

I'll agree that places like law firms will let you get away with
exorbitant rates, because they pass costs through to their client.
However, law firms frequently have requirements that they don't realize
an individual starting out is unlikely to meet (for starters, you had
better have professional liability insurance), and while if you are
lucky it won't be a problem, if you are unlucky you are dead.

As for the question of "what happens if you get in to trouble" and
"shaving some hours off the bill". Usually when you are going at an
hourly rate, the client will ask you for an estimate as to how long it's
going to take to fix the problem. This is where it's helpful to be
conservative with your estimate. I frequently do this and tell my
clients that it is a conservative estimate (think of it as the "Scotty"
approach to making estimates). Then, if I get it done in less hours they
are happy. If I get in to real trouble, the first thing I do is go back
to the client and let them know what is going on, if for no other reason
than it's likely going to take longer to get the job done, but also
because if I do need to bring in help, I have a responsibility to let
them know that I'm doing that.

The difference between quoting a high rate and making a conservative
estimate on the hours it's going to take to get something done is that
the latter takes in to account that if you have difficulty, no only will
it take more effort and expense to fix the problem, but more *time*. In
many cases actually, padding for time has allowed me to circumvent a
problem I encountered (say a database update is taking longer than
anticipated) without having to do any extra work. This usually leaves
everyone happy.

As per Louis' point about $70/hr being unrealistic, I think it really
depends on the job and the consultant. The last consulting gig I did
(about 4 months ago), I charged $100/hr no problem. However, it was some
very specialized work, and I have a lot of experience and background to
bring to the table. I'd agree that $70/hr seems a tad on the high side
to me for what I presume is "basic" Access & network admin work,
particularly if you're an inexperienced independent consultant just
starting out. However, it's within the realm of possibility enough that
I think it'd be okay to open with that and then let them bat you down to
$60 or perhaps even below that. Keep in mind that this could be job that
a newbie MCSE could do, and those guys are lucky if they get $40/hr.

--
Christopher Smith <x at xman.org>
_______________________________________________
Lula-biz mailing list
Lula-biz at lula.org
http://www.lula.org/mailman/listinfo/lula-biz

_______________________________________________
Lula-biz mailing list
Lula-biz at lula.org
http://www.lula.org/mailman/listinfo/lula-biz