Post: #1

Hi,

I'm currently preparing a proposal for a project and I'm a bit unsure about how much I should charge for it.

If any of you guys are working in the agency world in New York (or any other metropolitan city in the US), I would be very glad if I could have your opinion on it:

The proposal is for a project with an agency in New York. The agency got in touch with me because I have a background that is fitting for a new client project they are working on. If it works out, the agency would bring me on as a "strategist" for a project with a major US fortune 500 client. The agency is quite small though. I would have quite a lot of responsibility in the project - I would be one of the main people leading the project.

The project will take around 2 - 3 months.

I know the information is quite vague, but if any of you guys have experience in a similar field, I would be very interested to hear what you think would be a general fee range that would be appropriate.

Thanks!

Post: #2

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Post: #3

Consider using glass door to find consultant salaries at a similar firm and industry practice as you're in, pick the career level you think comparable, and back into the billable rate.

Be ready to justify based on your experience, travel, skill set, etc.

As 456 said, keep in mind that the middleman gets a nice cut on top of your price. A consulting firm will likely bill out a grunt for 3x their effective hourly wage, if not more. If the client is big, likely they have the budget to spare. If you price too low, they might actually think you're unqualified.

I don't have experience pricing, but as a team lead, strategy and subject matter expert?? Typical consulting would probably be low / mid triple digits. Hopefully someone with more experience can chime in.

Post: #4

In the civil related field large engineering companies charge my company about 90/h for techs or admins, 120/h for junior engineers, 150/h for experienced engineers, and 200/h for senior engineering reviewers and project managers. Billable hours breakdown is approximately 10% 20% 60% 10% respectively for the above positions.

Post: #5

(02-12-2015 09:35 PM)456 Wrote:  2-3 months of "full time attention" (if not actual full-time hours), of just about any professional field, should cost no less than 25k.

Just putting that out there -- think about it: if you represent yourself as a consultant to an agency, or a mini-agency, presumably you've got your hours (80-100 hours per month, loosely?), and perhaps an assistant's hours (40-50 per month?)... that's in the ballpack of 240 - 450 hours over 2-3 months. Would any self-respecting NYC consultancy charge less than $100/hour? That's 24k to 45k total, assuming you aren't in a $300/hr field! Keep in mind hourly rates are often "nominal" -- do the math to justify the monthly rate you need to keep the lights on, account for emergencies, and a margin for profit.

Also always think in terms of value you're providing -- clearly any agency spending $XXk/mo is planning to make $XXXk+ off of this!

(I'm being super generic here, but it's food for thought.)

Thanks a lot for your answer.

Yeah, I was thinking something similar.

Yes, if was to charge a dayrate, it would probably be something like 800$/ day - the agency can easily charge 2400$/ day to the corporate client. I know for a fact that when I did a workshop in Europe, the agency I was working with charged 2500 EUR for my day to the corporate client. On this specific project I made more than 800$/day - low/mid triple digits. It was only a handful of days though.

If it's a longer term project, the situation is a bit different, though.

If the project takes 2 - 3 months, I think I wouldn't charge in dayrates, but instead charge a project fee.

If you take a lower rate as a basis, for example 500$/day, then that comes out to 10'000$/month (20 work days per month). So for 2 months that's 20'000$ and for 3 months 30'000$.

Does that sound right to you?

Or would you add another 15% to it?

Post: #6

(02-13-2015 08:59 AM)christpuncher Wrote:  In the civil related field large engineering companies charge my company about 90/h for techs or admins, 120/h for junior engineers, 150/h for experienced engineers, and 200/h for senior engineering reviewers and project managers. Billable hours breakdown is approximately 10% 20% 60% 10% respectively for the above positions.

Hi christpuncher,

thanks a lot for the info.

Ok, but if a large engineering company charges 1200 per day for an experienced engineer (150/h) to your company, the question is how much the experienced engineer himself is getting if he's a contractor. He surely won't be getting the full 1200. Maybe 700?

Post: #7

I would estimate that junior staff in a consulting company would earn about 30% of their rate, intermediate staff about 40-50% and senior staff about 60%. A subcontractor to a consulting company with a client project would obviously bill more than this. By how much I'm not sure.

Post: #8

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Post: #9

(02-13-2015 12:04 PM)456 Wrote:  

(02-13-2015 09:05 AM)Ice Wrote:  If the project takes 2 - 3 months, I think I wouldn't charge in dayrates, but instead charge a project fee.

If you take a lower rate as a basis, for example 500$/day, then that comes out to 10'000$/month (20 work days per month). So for 2 months that's 20'000$ and for 3 months 30'000$.

Does that sound right to you?

Or would you add another 15% to it?

Paramount is that you don't endanger your bottom line, or deity-forbid, lose money on this (or end up with a much lower effective hourly rate).

It's nice to get away from hours / days and move into "weekly" billing, i.e. it's assumed "this is on my plate this week" and that you'll spend most hours on it, but it's not nitpicky like "36 vs 41 hours" or something.

If the client is comfortable with you billing weekly, that's gold.

If not, then you have to "suck it up" and do an all-in Project Rate. Here's where things get sticky: if you have to give One Big Price, then ALL of the risk of extra time needed is on YOU. That's fine, but you must then price in that risk.

So take your lower day rate of $500, which is $10k/mo. A 2-3 month project may take 2-3 months of actual workdays, but due to communication lags, unforeseen circumstances, etc., the actual elapsed calendar time could be 4-5 months. If this is on your plate for 4-5 months, it won't matter if it really took all 20 workdays per month: it's going to consume your energy anway.

You could play this as follows: 4-5 months worst case elapsed project time (not the same as actual worked time), $10k/mo nominal monthly rate... sell the whole project for $5
0k (perhaps you're willing to let them talk you down to $40k). Say (but don't promise) that you expect a 2-3 month timeline. They are paying for the value you create, not the "time you spend", so they likely won't think too hard about what that breaks down for you monthly/hourly. They don't know how big your team is (you've been carefully vague about that, right??).

Hopefully the project takes 2-3 months, and you've made your nut and profited some. Say it draws out to 4-5 months: you're still covered.

Hey 456,

thanks a lot for your answer. It makes definitely a lot of sense what you're saying.

I'm note sure if I will be able to bill weekly though - I think it's either based on day rates or an all-in project rate.

In terms of team: Yeah, I was vague about how big my team normally is, but the thing is, I don't think that they are expecting that I will be working on this project with "my team". It seems like I would be spending a large part of my time at the offices of the agency and work together with them. So I think I can't really calculate "my team" into to the fee.

But yeah, you're right, it's really a question of how long the project's effectively gonna take in terms of elapsed time. Because I won't be able to take on any other work as long as the project is not finalized. So that's something I definitely need to clarify.

I don't know though if I really would go as high as 50k, maybe something around 40k is more realistic. Also, it's quite a big reduction going down from 50k to 40k. I think normally one shouldn't reduce the quote more than 12% max. or else the initial quote starts to look rather arbitrary.

Post: #10

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Post: #11

(02-13-2015 03:41 PM)456 Wrote:  Good point about arbitrary:

If I let a price drop, I always take stuff out of the scope so that "it comes from SOMEwhere".

About being in their office: sure, do that at first, get shit handled. Start doing "I'll be working remotely today" and make sure you get a ton done. After a month or so, transition to only coming in for weekly meetings, if that. Be a good remote communicator so there are no legitimate complaints on their end.

The key is to divorce this from "employee-for-hire" style contracting in favor of truly consulting. Again I'm speaking generally because I don't know the exact nature of your work, but don't be afraid to push and set boundaries, and set clear expectations. "I'll be onsite plenty as the project's ramping up, then when it's time for the more heads down work, I'll be getting the majority of that done offsite. Will provide clear updates ___. Absolutely will come in if face-to-face time is required." Or the like.

The strategy behind getting offsite as much as possible is that you can use your "downtime" during the day reaching out to other potential clients, priming your consulting pipeline, trying out assistants, or jerking off. Whatever. You want to own your time and make your consulting as results-based as possible.

Hey yeah, that's a good strategy for being offsite as much as possible. Yeah I agree, it's better to not be in the office too much. Jerking off is important. JK. But yeah, generally I'm more productive when I work remotely. Also it's easier to do some other organizational stuff on the side.

The guys from the agency mentioned something about how this project could turn into a full time position, but even in that case it would be cool to not spend all my time in the office. So it's a good idea to already establish that when/if I do the project.

Post: #12

Right, and ideally you are getting second and third simultaneous clients by the end of this so you can negotiate their full-time offer from a default position of "I don't need it" -- which is amazing leverage and good negosh practice.

Post: #13

(02-14-2015 09:05 AM)456 Wrote:  Right, and ideally you are getting second and third simultaneous clients by the end of this so you can negotiate their full-time offer from a default position of "I don't need it" -- which is amazing leverage and good negosh practice.

Yeah hopefully - def gonna try to play it this way!

Post: #14

Ask them, "How much have you budgeted for this?" and work from there. The one who names the first price always loses.

Post: #15

(02-15-2015 10:47 AM)monster Wrote:  Ask them, "How much have you budgeted for this?" and work from there. The one who names the first price always loses.

That is not necessarily true. I know this school of thought that says that the other person should always say the price first. But it can also be a disadvantage, because the person who says a number first creates a frame for negotiation. I had a situation where a client had calculated a rather high budget for a project and said the number first - that was luck for me, because I would have gone in with a lower number. But generally I think people when asked about budget, will state a number at the lower end of the spectrum. Sometimes clients just want to see what they can get away with. And then you will have an uphill battle when trying to negotiate a higher price.

Post: #16

Yeah -- it's also the mark of a professional to know what your services are worth. There's a time and place for both styles of negotiation.

Post: #17

I work for a large consulting firm as an entry level. The client gets billed per hour but I'm paid on a salary basis. Assuming 40 hour work weeks (which I often go over) it works out to me getting about $40 per hour of the $100+ per hour that is charged to the client.

All this really depends on experience level, industry, and the specifics of the job. Client needs to pay more money if the consultants travel to the site location, as 10% of the budget of the projects I've worked on have typically been for travel. I'm currently lowest rung on the latter at my company so obviously senior consultants and execs make more.

Post: #18

(02-15-2015 01:01 PM)Ice Wrote:  

(02-15-2015 10:47 AM)monster Wrote:  Ask them, "How much have you budgeted for this?" and work from there. The one who names the first price always loses.

That is not necessarily true. I know this school of thought that says that the other person should always say the price first. But it can also be a disadvantage, because the person who says a number first creates a frame for negotiation. I had a situation where a client had calculated a rather high budget for a project and said the number first - that was luck for me, because I would have gone in with a lower number. But generally I think people when asked about budget, will state a number at the lower end of the spectrum. Sometimes clients just want to see what they can get away with. And then you will have an uphill battle when trying to negotiate a higher price.

No, I don't think so. Know the price you want & be able to justify why. But let the other name their price. If it's higher than your price then you won, if it's lower then your price & your justification to the client can't create a win-win situation where both you and client are happy then you weren't going to get the business anyway.

Post: #19

(02-15-2015 08:32 PM)monster Wrote:  

(02-15-2015 01:01 PM)Ice Wrote:  

(02-15-2015 10:47 AM)monster Wrote:  Ask them, "How much have you budgeted for this?" and work from there. The one who names the first price always loses.

That is not necessarily true. I know this school of thought that says that the other person should always say the price first. But it can also be a disadvantage, because the person who says a number first creates a frame for negotiation. I had a situation where a client had calculated a rather high budget for a project and said the number first - that was luck for me, because I would have gone in with a lower number. But generally I think people when asked about budget, will state a number at the lower end of the spectrum. Sometimes clients just want to see what they can get away with. And then you will have an uphill battle when trying to negotiate a higher price.

No, I don't think so. Know the price you want & be able to justify why. But let the other name their price. If it's higher than your price then you won, if it's lower then your price & your justification to the client can't create a win-win situation where both you and client are happy then you weren't going to get the business anyway.

Yeah it's not necessarily bad to let the other person say a quote first, but I just think that one is more likely to make concessions if the other person creates a frame for negotiation. Let's say, for example, their budget is $1500, but you would normally charge $3000 for the work, sure you can be adamant and say the best you can do is $2700. But if you ask someone for their budget the implication is that you will try to work with what they can offer. So what you can do is strip down your services and provide something rather basic for $1700. But even in that case you will probably still work quite a lot below your normal day rate, because you still want to provide value to the client and make sure that they are happy with the results - at least that's my personal opinion.

But the advantage of this approach is that you are very likely to get the job. And yeah sure, there's always the chance that they say their budget is $4000.

If you're the first person to say $3000, there are basically three possibilities:

1.) They bail, because it's just too expensive for them
2.) They knew that their offer is quite low and expected you to say a number that is quite a lot higher. In that case you might settle on a fee of maybe $2500.
3.) They just say "ok that's fine".

So I think in the second option the danger of losing the job is higher, but when negotiation the fee I think it's more likely to get a higher fee out of it. But of course there's also the danger of going in too low and leaving money on the table.

So I think the second option is better when you don't necessarily need the job and are going in with an offer that is a bit more on the higher end of the spectrum. Also, I think the second option makes you look more professional.

Post: #20

OK, well it sounds as if you already got it all figured out, so I'm not really sure the point of the thread lol

Post: #21

(02-16-2015 01:41 PM)monster Wrote:  OK, well it sounds as if you already got it all figured out, so I'm not really sure the point of the thread lol

Well I was asking for opinions regarding how much I should charge for the project I mentioned above. I wasn't sure about what fee is appropriate.