Moving into the Networking side of consulting.

[eenochs]

Been doing web design for a couple years and had pretty good success. Recently I just finished a successful job setting up a network for a retail store. Now the project is finished, client is happy, and wants to setup support. I'm not sure what do to. I charged the client T/M for the initial project since the scope of work was unclear and unorganized. Now that i'm done and he wants support I don't know which avenue to go. Do I stay with the T/M or go with a support package. Like the client purchases 15 hours for six months at a reduced price?

Can someone help me out?

Thanks in advance

 

[mmorancbt]

Either works - Answers which are less than helpful. ;-)

You can offer your client a choice:

Option 1: T&M at your prevailing rate, 2 hour minimum onsite call, 1 hour minimum remote...

Option 2: Monthly retainer of x hours (10?) at a slightly reduced rate: 10%-25%, 2 hours can roll into the following month.

With option 2, offer that you do a weekly checkup on event logs (30 minutes to 1 hour and provide a very simple status report - ie: summary of any findings, suggested fixes or changes).

Again, with option 2, the key to your reduction is a minimum term/minimum commitment. Minimum term (6 months), minimum commitment (10 hours).

The idea is that if they agree to a longer term, you can plan your income much easier, so the greater reduction is in order.

There is no hard, fast rule on this – some consultants provide no discount and the commitment buys rapid (sub-4 hour availability). I am happy to provide a discount for long-term, ongoing work.

As far as a contractual agreement with teeth – I don’t have one. Either look around or have an attorney draw one up if it is a concern. I am a "naive" handshake kind of guy. I do have a signed proposal/quote for the work, but the legalese is non-existent. I just write up the terms of the agreement and have a conversation about it.

Two reasons for this: 1) I am getting money up front, so we are committed for at least that month. 2) The amount of time, effort, and money required to pursue legal action on even 20 hours of collections is not worth it. I would rather develop the type of business relationships that preclude that as a need.

I’ve consulted since 1995 and its never been an issue.

Have I had clients non-pay? Sure. In those instances, it is either a misunderstanding of some type – in which, for long term work, I can usually get a client to split the difference, or it is a bad client, in which case, it is my fault for bad judgment and I walk away.

I have had 2 clients in the “bad” category over the past 11-12 years. The first argued every invoice and I eventually had my contractor walk off the job. We never went back and I “lost” $6,000 in billable time. The other had us start a project, I didn’t get the standard 50% up front, we worked for a month and when I billed them they said they had decided to go another direction. Probably cost me $8,000.

In the latter case, about 2 years later, they contacted me with an emergency – on the project they didn’t pay us for. I explained that they still owed me $8,000 and I would only work on a pre-pay basis – requiring $10,000 to start. They $10,000 was to catch up on their prior bill and the $2,000 was to analyze the current problem and propose a solution.

I ended up speaking to the owner, who had fired the guy we had worked with prior. He ended up paying the amount and we did another $70,000 in work for that company over the next 2 years.

Needless to say, two lessons learned. One, stick to your payment terms – for everyone. Two, a reasonable conversation is never a bad tact- don’t lose your cool.

We never name called or threatened. Both clients received the standard phone call from me..

“While I believe that my company can provide you with the best solution possible, the current situation makes it economically unfeasible for me to do so. Thank you for the opportunity but it is best for us to end the working relationships immediately.”

I hope you find this helpful and good luck!


Matthew Moran (career blog and podcast below)
Career Advice with Attitude for the IT Pro

http://blogs.ittoolbox.com/pm/career

http://techcareerconsult.blogspot.com

 

[eenochs]

Thank you Matt that was very helpful.

If I go delve deeper into my situation can you tell me this is the best avenue.

My consulting business is very small. I have a good full time job and most of the work I do on the side I enjoy. Plus helping a small business that otherwise couldn't get the job done is rewarding. For the above client I described I charged $50 T/M. Now I know most of you are thinking that is very low but I had a hard time determining cost and wasn't sure what to charge. Plus when it comes to the work its easy to discuss, to me the payment portion is hard. But I'm learning to that. My next job I will move my fee up to around 60 a hour for T/M. I would like to do all jobs T/M unless I'm really sure what the projet is and can determine costs. In your experience is T/M always better or do your clients like to know what they will be charged.

As far as moving forward with the support. I would like to offer up continued support on a needed basis at the $50 T/M rate. Option 2 would be the support package do every 6 months (minimum)with 10 hour minimum purchase at a reduced rate of 10 dollars. I like the roll over idea alot. and the check up log.

Again thanks Matt for the help

 

[mmorancbt]

No worries: FYI: I'm writing two e-books for Pearson (Cisco Press/Prentice Hall/Addison Wesley, etc.) Both are on consulting - one from a sales & marketing standpoint, the other from a project development (analysis) standpoint.

Alas, probably not done for many months (6-12).

Fixed bids are, at times, necessary - although I stick mostly to T&M. On fixed bids I am very up front with my clients. I let them know that I price the proposal at full rate and 80% of worst case scenario.

Example: If I believe I can do the project in 10 hours but I believe problems could make it take 20, I bid the proposal at my highest rate X 18 hours. If I complete it in 10, good for me and the client still get a fixed price.

Also, when doing fixed bids, you need to write assumptions into the proposal. Anything you haven't installed is configured correctly and documented, any existing equipment is setup properly and working properly, client is available in a timely manner to answer questions, etc.

Any thing you need to work on - to correct areas covered in the assumptions is billed at your prevailing rate.

That's all for now. If you visit my blog at IT Toolbox, I have many, many entries on consulting:

Go to the archives, select category archives, and choose "The Consulting Life" and also "Economy of One".

http://blogs.ittoolbox.com/pm/career/

Later.

Matthew Moran (career blog and podcast below)
Career Advice with Attitude for the IT Pro

http://blogs.ittoolbox.com/pm/career

http://techcareerconsult.blogspot.com

 

[mmorancbt]

Another thing to consider/look at.

Alan Weiss writes many books on Value-based Fees in consulting. They are worth taking a look at.

Matthew Moran (career blog and podcast below)
Career Advice with Attitude for the IT Pro

http://blogs.ittoolbox.com/pm/career

http://techcareerconsult.blogspot.com

 

[ecobb]

Also, when doing fixed bids, you need to write assumptions into the proposal. Anything you haven't installed is configured correctly and documented, any existing equipment is setup properly and working properly, client is available in a timely manner to answer questions, etc.

Fantastic piece of advice, this is an excellent point that often most people don't consider. I know I overlooked it when I was first starting out.

Hope This Helps!

ECAR
ECAR Technologies

http://www.ecartech.com

"My work is a game, a very serious game." - M.C. Escher