Negotiating pay - contract work

[stormbind]

Hi,

I have a meeting in 17 hours in which I am expected to close the deal, but I am very nervous about negotiating pay.

I don't want to turn the meeting sour by coming off as greedy, and I don't want to take advantage of them, but I don't want to shoot myself in the foot either!

This will be a CMS, SQL, and Marketing project expected to span only 2 weeks.

Please post negotiating advice, with emphasis on the matters of costs and payments. Thank you ever so much!

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[fredericofonseca]

what country, and if the states which state/city

Regards

Frederico Fonseca
SysSoft Integrated Ltd

http://www.syssoft-int.com

 

[chiph]

1. Do you know what they want done?
2. Is it within your abilities to do in a timely manner?
3. Do you know what the market rate is in your area for this sort of work?

If you know all this, it's just a matter of doing the math.

If you don't feel comfortable discussing the money thing in person, tell them that you'll look over what they want done, and get them a quote by lunchtime the next day. Ask them for their fax or email, and make sure you send them a quote, detailing the work to be done, the rate, and a range of hours that you think it will take to get it done.

"Frobnitz the Widget: 75 to 95 hours @ $£¥¤/hr"

Be sure to include a clause that if the scope of work exceeds what was discussed, rates get renegotiated. You don't want them piling on: "Oh, while you're here, could you also do ...." While it's nice to get repeat business, you need to first successfully complete what they hired you for.

Also include a clause about giving them weekly status reports (or more often, since this is such a short job). No one likes surprises, so communicating with the client on how things are going is important.

The thing to remember is, it's just business. Nothing personal to it at all. They want something done, and it will cost them x amount to get it done.

Chip H.


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[stormbind]

London, UK

A friendly TekTips member on ICQ told me to stick to my guns, because failing to do so will give the impression that I'm unsure of my abilities.

He also said to discuss time, not pay. When the firm suggests a fair amount, ask for +20%, and allow myself to be knocked down gracefully.

However, the numbers he had in mind were rather high. His daily rate is more than I normally earn in a week!

I want this contract: I desperarely want this one in my portfolio! I'm very scared of pricing myself out of the job. This is potentially the biggest project (in terms of work) that I have ever taken full responsibility for - but none of this is new to me so I'm not worried about the work

Guaranteed work: ASP, SQL, DHTML, CMS, CSS

Still under negotiation: Intranet & Marketing campaign. These matters are a little bit hazey and will be discussed in the meeting.

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[stormbind]

1. Do you know what they want done?

I have a rough idea but I'm not 100% sure about the size of the task, it will be made clear in the consultation tommorow.

2. Is it within your abilities to do in a timely manner?

Definately within my abilities. None of this is new to me, except the level of responsility. I think I'll be OK on time - I am prepared to take that risk.

3. Do you know what the market rate is in your area for this sort of work?

NOT A CLUE! I have never worked in this city before.

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[stormbind]

The meeting has been re-scheduled for Thursday

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[fredericofonseca]

Your rate will depend on whether you and/or the client is expecting contractor rates or consultant rates.

If contractor I would say that 40-60 an hour will be within expectations.

If consultant then 1100-1500 a day will be on target.


If you have a good relation with the customer then ask what are their expectations.

If not then as your friend mentioned look at the time it is going to take. Be absolutely sure that whatever time you quote is realistic, and stick to it.
If there is a strict deadline and you are unable to do so SAY it to the customer, and try to arrange for alternatives if possible.

As for accommodation in London I would expect to pay a minimum of 100 UKP a day, so take this in consideration. Eventually ask your customer if they have company accommodation they can supply you with. This can eventually save money to you and your customer.


Regards

Frederico Fonseca
SysSoft Integrated Ltd

http://www.syssoft-int.com

 

[stormbind]

£1100 to £1500 per day is a joke, right?

The biggest I have ever quoted, until now that is, has been £50/hr and those jobs never last long. So as you must surely appreciate, these £mega GBP quotes are exagerating my frown marks.

I can't tell the difference in a Consultant and a Contractor, except that the Consultant does less work and charges more. I would love to know what the industry definition of a Consultant is - seriously!

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[aquias]

Alright,

My own, personal definitions of both and why there's such a big rate difference...

Contractor - There for a set time to complete a specifically laid out project. Anything outside of that scope is call for a new contract and new rates.

Consultant - There for a specific project but may be asked to take on new projects and make ammendments/additions to the project without requoting the price...

The only real difference is, is that the consultant may be asked to do additional work beyond the original scope of the project and isn't truly slated for a time period. There is, of course, expectations of when things will be completed but no firm dates are presented to terminate the relationship.

Just a further example.

I've seen consultants come in to write one piece of software and they end up writing six.

We had a contractor in to re-work a portion of the network. He did his work and on his last few days there we started having massive issues with some of our remote sites. He wouldn't even answer a question without a new contract.

 

[stormbind]

Traditionally, I am the last-minute subcontractor who ends up writing six programs (for a consultant) and doesn't get paid

I have six years experience, and these last two days have been nothing short of a revelation: My jaw keeps gaping!

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[fredericofonseca]

No that is not a joke.

Some consultants are getting that, and some contractors that I know are presently doing 1000 a day, 7 hours day (banking industry).

Personally as a contractor the maximum I charged was 70/h (UKP) + expenses, but as a consultant I did charge a lot more. Didn't get many though as companies like EDS and Accenture get all the goodies.

Main difference between consultancy and contractor is duration of contract. Consultant can be anything from 1 day to 2/3 month, but contractor tends to be longer. Not a hard rule though.

A few years ago (3/4 maybe) I saw a position advertised in London for 100 per hour, 3 or 6 month contract!!. I think it was one of those dotcom thingies, but it would be good while it lasted regardless of how long!!



Regards

Frederico Fonseca
SysSoft Integrated Ltd

http://www.syssoft-int.com

 

[mmorancbt]

A consultant is typically in a strategic planning position (although they can perform the work as well, I often do) as opposed to a contractor who typically has a defined work day, a defined series of tasks, and a defined process. Contractors are typically viewed as extension employees who usually receive a higher hourly rate in return for 1099 status and no company benefits.

True consulting work is infinitely more challenging and you are compensated for it. The idea that consultant's do less work is a humorous Dilbertized caricature but is not really accurate.

However, some consulting houses have charged consulting rates for contract work – leaving confusion and a bad taste in people’s mouths. Also, fledgling technologist – with little technology experience and even less business savvy, have been hired by consulting firms and billed out at $1,000-$1,500/day (U.S.) further damaging the perception within the industry.

When I had a small consulting firm, all my consultant’s were required to read Dangerous Company by Madigan and O’Shea. It wasn’t about technology consulting but chronicled the well publicized failures in management consulting – particularly in the ‘80s.

Same problem as technology in the late ‘90s. Every wanted talent and they paid very handsomely for it. Unfortunately, calling someone an expert or guru was a little bit premature. Consulting houses threw bodies at projects, not talent. Rather than tell the client they didn’t have any more experts and lose the business to another shop, they gave someone a title and billed for it.

Unfortunately, it still happens in both management consulting and strategic technology consulting.

I met with a company that wanted me to review several proposals they had for network upgrades. One had two $40,000 servers – “Enterprise Servers” The reason these were quoted is because, in meetings, the company executives had said they wanted reliable equipment in their “enterprise.”

The consultant selling the hardware/software/integration thought, “If they are an enterprise, they need enterprise servers.”

They were primarily file & print servers for 90 people.

I’m not against “Enterprise servers” and in talking to the “consultant” he told me he had gone through an 8 week consulting course when he started with the company. The bulk of that was identifying buzzwords to determine what to sell. Hmm??

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Oh yeah, there was a question to answer. First contract, take $40-50 US (I don’t know the equivalent) and let them know that the rate is really based on “minimum term/minimum commitment” – which is a fancy way of saying a duration of at least x weeks/months and a hours per day no less than y.

That way, if you are low, you’ve given a reason – the anticipation of more work.

I guess the meeting already happened but it is food for thought.

Matthew Moran
Read my career blog at:

http://www.cbtoolkit.com

Musings:

http://matthewmoran.blogspot.com

Todo esta bien.. Todo esta divertido (it's all good, it's all fun)