It’s really hard to find good DBAs these days, so some of my friends have started doing part-time consulting after hours and on weekends. They often ask me how to set their rate, and there’s a lot of interesting questions around that.
Working Together – You and the client staff must both be online together, sharing screens, and talking through a problem. This is what clients usually want by default.
Solo – You get access to the client’s systems via VPN, and you can do the work on your own without having the client involved. Examples of this include improving a stored procedure in their development environment, configuring backups, or troubleshooting an error.
Disconnected – I like to call this Planes, Trains, and Automobiles, because this kind of work can be done without access to the client’s server or the client. It’s highly unusual to find work like this, but here’s an example: “Here’s a copy of our database schema. Rewrite this stored procedure from row-by-row processing to set-oriented processing.”
Time of your choice with 4-6 weeks notice of deliverables – The client tells you what they need done, with plenty of advance notice. This is really easy to fit in with your schedule and to work around vacations. This is the hardest work to find, and as a consultant, you should give high discounts for this type of rate.
Time of your choice with 1-3 weeks notice of deliverables – Less notice here, so there should be less of a discount. This is probably your default rate when you first get started with part-time consulting, working after hours when you still have a day job.
Time chosen entirely by the client with 1-3 weeks notice – Again, less discount here, and this might also be your default rate when you first get started with consulting and only have a couple/few clients.
Time chosen by the client, on demand – This should not be your default rate. In fact, there should be a (possibly huge) surcharge for this type of work because when the client calls, you have to drop what you’re doing. This means dropping work with another client, and possibly losing that other client for life. You’ve just told that other client, “Sorry, someone else is more important than you, and I have to go.” Clients never forget that kind of thing.
First responder – You get automated email alerts from the client’s system, and you have to be the first person to respond, often with a service level agreement dictating how fast you have to react. At this point, you’re really more of an employee than an outsider. You simply can’t have any other clients unless you’re willing to gamble that you’ll miss one of their SLAs. Sooner or later, several of your clients will have simultaneous outages – especially in today’s world of connected services.
No discussion allowed – By default, companies don’t usually want you talking to anyone about what you’re doing.
Private testimonials OK – You’re allowed to use them as a reference.
Public testimonials OK – At the end of the project, you’ll both work together to write up a reference that you can use on your web site along with the company’s name and logo. Big consulting and software companies go so far as to write up the reference themselves and hand it off to the client for editing and approval. Believe it or not, clients often like this approach because it means less work for them, so everybody wins.
Public presentations OK – You can use the company’s name, logo, infrastructure basics, and project basics as part of user group and conference presentations.
Communicating the Discounted Price
“My regular daily rate is $X, but as long as I get 1-3 weeks notice, I can do it disconnected, and I can use your name & logo as a public reference, I’ll do it for $Y.”
In that one sentence, I’ve communicated:
- I work by the day, not by the hour. (If you’re doing part-time work after hours from your day job, consider half-day units.)
- I have a regular rate, but this rate is negotiable based on other parameters.
- These other parameters are what we’re going to negotiate.
Clients will usually negotiate your prices – everybody wants a discount. If you don’t tell the client about the scheduling and cooperation parameters, they’re going to assume that price is the only variable, and they’ll just try to haggle you down on price. (“We really only budgeted $Z for this – will that work?”)
Learning More About Setting Your Rate
I can’t even begin to do justice to pricing options in a blog post, so for more details, here’s my two favorite resources:
The Secrets of Consulting (Paperback – Kindle) – this easy-to-read, storytelling-style book is chock full of good advice like the Principle of Least Regret. When I first got started, I set my prices low enough that I’d make sure the client said yes – but then I’d kick myself afterwards for doing work at such a low rate.
Getting to Yes (Paperback – Kindle) – this book teaches you that price isn’t the only negotiation option. You have to listen to what your client needs, understand what you personally need, and then make the best package to satisfy everybody. Some clients will just aggressively negotiate rates alone, and this book helps you use that to your own advantage to get other things you want (like publicity and scheduling).
Interesting that you bill by the day, not the hour? We never quote in less than 4 hour blocks, but our rates are all set in hours, even when it’s 6 month contracts and longer.
Any particular reason why? Is it more a culture thing? in South Africa, daily rates are rare, but I know in Australia they’re the norm
Hi Mark! Great question. I just don’t like scheduling multiple clients per day. Either we’re working together today, or we’re not. That helps me focus on projects longer.
[…] Focus on work that brings the most value to the client, which will pay off the most to you. Avoid crappy work. … Big fan of @JerryWeinberg’s book Secrets of Consulting – has a section on the Principle of Least Regret. [And] My post on setting your consulting rates, relevant when you’ve got a glut of work: http://ozarme.wpengine.com/2013/07/how-negotiate-consulting-rates/ […]
Thanks for answering the questions Brent. This is really nice and detailed. That said, we have been working very hard on noobaid.com and it seems like we can use some of your advice. What advice can you give us?
Elena – that’s not really an appropriate question to ask on this blog post, is it? Is it related to the post in any way, shape, or form?
(To give other readers context – Elena has been trying to recruit me.)