Let's talk business (marketing our skills).

[aio]

OK Ladies & Gentlemen. Let's talk about the business side of our skills.

First question (mostly for Freelancer/consultant and sideliners), how do you charge your client? Do you have a standard formula? Me, I don't have. I have tried in the past (as a sideliner) various schemes like:

- since I am employed, I would normally estimate the project in terms of number of days to complete. Then I would use my daily rate in the company where I am working, as basis of my charges. The formula is :
My_Rate_Per_Day x Estimated_NumberOfDays_ToWorkOnIt x 4

I can't recall how I arrive at that formula but it seems I am contented.

- At times, I just bet on the cost not knowing really if I have charged too much or too little. I only "sensed" that I charged too much if the client asks a bargain. Or, I may have charged too little if the client immediately responded; "Ok, deal."

- Sometimes I would also check if how much others would charge.

- Sometimes also, I would just arbitrarily give them the cost and just make adjustments if the client ask for it.

I would like to hear from.

The reason I presented this topic is that, in the next few days, I would be a full time freelancer -- not an employed that earns extra, which I am as of this writing.

Thank you very much.

[Amn]

Hey aio wassap

Well, i have also tried some formulaes until one wise guy made it really eaiser for me by explaining some terribly plain things:

(below are both my and this guys ideas)

(his idea, which i find VERY TRUE and VERY PRACTICAL)
1. You charge by percentage - the more people want to give the better. Like in charity really. If you are without job altogether or customer is not what you consider a cashbag, even 10 bucks an hour is better than nothing to get the deal, right (note i MAY be hitting thin air with this statement, but i am not from US, so i have only a faint idea of how much is 10 bucks there exactly). On the other hand, most freelancers do their job right, and if Microsoft approaches you with a deal (not that they have shortage for workers or anything you may as well reconsider your 'usual' formula and take into account they amount of ca$h they have and the general attitude they have to it - they really dont care whether to pay you 10 bucks an hour or 100 if they want you. In decent situations of course - sometimes they choose the balance between price and quality, so asking for too much gold wont help there So i say be dynamic ! You control the market just as we all and just as it controls us - nothing new said here of course...

2. When charging by percentage doesnt work (government, deadline press, 'assumptions') your formula is what i have both used and come across during my freelancing. Only i charge per hour and not per day. And with minor additional decor it is:

average settled rate per hour *estimated amount of hours * bonus for creative energy used (sometimes they ask for some really funny stuff) + establishment.

Establishment and creative energy are mostly at zero. Establishemnet is really what i consider to be support, talks, meetings - time spent on what it shouldnt be spent on. Well it has to sometimes, but as one becomes one with customers (becoming sort of a team) sometimes they may misuse your openess and generousity. Establishment price is what saves me from having to think about money all the time when talking things with them and being a no-talker (like ' I am not saying anything because you dont pay me for that'). Because you know when you charge money, you HAVE to return something. And also being generous, kind, and wishful is a MUST there. Again, with old customers that i am established with, i never get anything in return for secondary services.

Creative energy idea usually comes to mind when for example we are asked to not only push the boundaries of our skills but perform some kind of wikkid task. For example in one of my projects we were asked to create an application that not only would run NATIVELY on Windows, but also on Palm Pilot (!). Even before we spent time trying to find a common API and perhaps invent one ourselves, we knew we should get payed for our 'stunts' Again, 90% of all projects even those that require me to go skyhigh and be totally hardcore never involve 'creative energy expenses' ! One doesn't want to be greedy you know, objective opinion always helps in these cases and meetings of the team (if any) are gathered first.

3. The least but not least important: feel how bad they want the service. What was considered to be a payed job 10 years ago is now a task of opening an appropriate application and spending 10 minutes there with the same results without involving a freelancer at all. Think about HTML editing for homepages .... A housmum can do that now. She may not need to do it sleek&cool but shell be happy! Being a turn-off by saying "lady, this is a totally critical and difficult job, which i happen to handle easily for you at the cost of XXX$"...Well you know what happens next So in short, we should know where we stand. Over years the very thing we sell ourselves for, may not be something people will pay for. And there is nothing to do except adjust yourself to the market.

Gee, always happy to give opinions...
I talk a lot of crap too so be careful

[damica]

I am really glad somebody thought to ask this question.
Here is my opinoin.

First, I think most programmers should extract the (EGO) out of their project and see it for what it worth. If it is worth doing then it is worth paying for. I have seen some many GREAT programs on the internet (FREE), all this does is make it harder for other programmers to charge for their product.

I do charge for the programming that I perform and this is how I base my fee.

What is the problem that I am solving? (Meaning if I am going to solve a problem that would save a company millions of dollars then I am not going to charge $50.00.)

The next thing that I look at would be, is this a one time sale of my product are is there a potenial to mass market this same program.

We all have to make adjustments to the fee's that we charge, but we should STOP giving it away. Like I said at the beginning (IF IT IS WORTH DOING IT IS WORTH PAYING FOR) Just remove the EGO and I think then and only then will a fair price come about.

[Amn]

If some people on Internet want to give away programs for free, they should. I dont see a reason why they should consult other programmers who do charge money, before free distribution. It s their business, no matter what others think about it, even if it makes them poorer. Obviously, programs will be easier and easier to make in the future, and the costs will drop dramatically. This will in turn create another kind of market where mind and skills matter and not how much code can one write in an hour, and how many techonologies one is familiar with

Regards,

[aio]

Amn:
Establishment and creative energy are mostly at zero. Establishemnet is really what i consider to be support, talks, meetings - time spent on what it shouldnt be spent on. Well it has to sometimes, but as one becomes one with customers (becoming sort of a team) sometimes they may misuse your openess and generousity. Establishment price is what saves me from having to think about money all the time when talking things with them and being a no-talker (like ' I am not saying anything because you dont pay me for that'). Because you know when you charge money, you HAVE to return something. And also being generous, kind, and wishful is a MUST there. Again, with old customers that i am established with, i never get anything in return for secondary services.

Thanks Amn for this idea. I haven't considered. Just recently I ran into a problem of meetings. It turns out that the entire project is very simple and can be done in 2 weeks. But because the client was not decisive enough on the approach, it took us almost 2 months of meetings (at least once a week) before the project was commissioned. Considering that I have introduced myself as SA/Programmer, I was able to charge only on the actual systems design and programming. I felt I lost in that deal. Anyway, I just charged it to experience.

Damica:
The next thing that I look at would be, is this a one time sale of my product are is there a potenial to mass market this same program.

I concentrated on highly proprietary/customized systems so far. Products with potential mass market are prone to piracy, it seems.

[Hobbit K]

aio ...
First let me say Excellent Post. i think the more we developers ask about how to handle the business side of this the better. Personally, i own a small IT firm (that also does MANY other things). My skills in VB are very limited, but are continuing to grow. Therefore, I personally do very little of the coding myself, instead i hire freelancers to perform a certain portion or all of the project. When dealing with the freelancers, I simply offer them a certain amount of money and give them a due date. They are well informed of all the particulars of the project, and are told to contact me if the conseptual design cannot work, or that extra work is going to be necessary. At that point, we can re-negotiate their compensation.
As for the hours spent in meetings with clients, I charge them!!!!
A good program requires us to spend a large percentage of the time in conceptual and design mode. This is all time spent, and I refuse to work for free EVER!
In negotiations with perspective clients, i inform them that ANY time spent in meetings, discussing the project with their employees, learning their business model, rules and business plan(to project growth patterns and make their App. as extensible as possible) is money that in the end is well spent. Then offer them the option, do it right the first time, or do it over! Most cleints will see that proper planning(which will require a certain amount of educating myself on their business) is in the end cheaper, easier and the initial delivery of the project is much closer to what they envisioned. Set a price per hour, charge it, then when project is complete, if you realize you spent hours doing something that was not in the clients best interest, adjust your figures downward. You will enter the project with a good idea of how much profit you make, how many hours you can dedicate to it, and the client will know how much $$$ it is going to cost them.
Michael

[aio]

Thanks for the insights Hobbit.

I am beginning to learn each day. By multiplying the estimated number of days to complete based on my previous daily earning by 4, I though I already have covered almost everything. Lately I came across a project wherein the final design came out to be simple and easy to do. But it took 2 months of meetings to conceptualize and agree on the design.

Since I didn't consider the meetings in my cost, I felt I lost in that project. But it was a good learning point.

[Brad Jones]

As for the hours spent in meetings with clients, I charge them!!!!
A good program requires us to spend a large percentage of the time in conceptual and design mode. This is all time spent,

I agree to a point - but mostly.

In initial meetings where the discussion is about the services I can provide and the overall task that need to be done, then not charging is valid. This is, however, an initial meeting or two.

Once discussoins shifts into details of the project, then you are falling into the area of design and analysis. In general, I value analysis and design at a higher level than programming - and thus they are worth more on an hour rate basis than pure programming. As already indicated in this thread. Good design can cut down the amount of programming time.

Brad!