[consulting] Should clients pay less if you work from home and they don't have to give you office space?
Eric Tucker
eric at semperex.com
Thu Feb 10 22:35:01 UTC 2011
There could be a belief on their part that your productivity is lower when at home. I do believe that in some cases I am more productive when in more direct contact with a client who can offer effective and constructive feedback and other information or collaboration. I would also say that in practice, beyond a certain point there is a diminishing return. Similarly, it is not uncommon to tier rates based on the qualifications of individuals performing the work ... which is of course done due to the perceived levels of productivity ... and thus the value of an hour of that individual's time.
Within my home city, I ordinarily charge the same rate for my time regardless of location.
If you're referring to as opposed to working from home instead of from the client's office, then one could make the case you are helping them if you they require less office space/expense as a result. This could be a bargaining point. However, see following paragraph:
Let's say if I rent my own office space on a fairly standard lease ... I'm normally going to pay the same amount monthly whether I use it 5 days a month or 20 days a month. So, time away from my office does not lower the cost of my office. Therefore, always including it in your rate calculations (whether or not this is explicitly shown to the customer) is a good idea. Similarly, if you use the client's office space and they dedicate space to you, then you would be costing them the same amount whether you go there 5 days or 20 days a month.
That said, you do also get into cases where the space could be shared ... but that's kind of hard to quantify edge case that I'd shy away from using as a negotiation point as there is no guarantee of its availability or non-availability ... it's not as tangible. Furthermore, if they have an abundance of free space, then I think charging or not charging for its part-time use for a individual contractor should be a non-issue for all parties.
I believe it would be fair and reasonable to charge a minimum number of hours for on-site work, or alternatively you should be allowed to charge trip time. I think it's cleaner to just enforce a minimum. When working on-site even in the same city, charging travel mileage or expenses in some cases (e.g. along the same guidelines as the IRS uses for tax/trip expenses) would not be unfair and is typical in several other industries.
There is a precedent in several industries to charge an "overhead" charge which is adjusted from time to time. On some larger jobs (tens of thousands of man-hours and up), I have seen this broken down to include office space as a line-item. For individual work or smaller teams, I think it's a bit silly to make overhead charges a separate line item on the bill -- just build it into the hourly rate.
Some contractors do charge different rates for on-site and off-site. Also, some contractors charge higher rates during weekends or after certain hours for emergency or overtime work. I believe that in my business there is a stronger case for the latter than the former.
All this said, the best way to compute an hourly rate is:
(1) the highest amount you can charge such that the following remain true
(2) it is viewed as fair by all parties
(3) in ongoing business relationships, do not price yourself too high such that a moderate drop in overall industry rates will cause you to lose business or such that your customers go elsewhere
(4) you should be able to pass along costs that are considered beyond the scope of what the rate includes
(5) try to keep the rates relatively consistent and constant (choose rates that are sustainable both for you and for your customers, and try not to change them by too much or too often ... the less you change them the more your customers will tend to trust you)
In a capitalist marketplace, pricing should have very little to do with cost. It is about what value you are providing to the customer relative to the marketplace and their ability or willingness to pay. Of course, if you chose to go by a different philosophy due to your beliefs particularly when working for non-profits or government, I am not going to criticize you for it.
Eric
----- Original Message -----
From: "David Hazel" <dave at hazelconsulting.com>
To: "A list for Drupal consultants and Drupal service/hosting providers" <consulting at drupal.org>
Sent: Thursday, February 10, 2011 3:29:13 PM GMT -06:00 US/Canada Central
Subject: Re: [consulting] Should clients pay less if you work from home and they don't have to give you office space?
Joel,
I really like the idea of the extra billed hour for on-site work (vs. calling it a trip charge).
Do you get any push back when you discuss it with clients.
I find that a certain number of face-to-face meetings, especially near the beginning/end of a project can be quite productive. Where do you draw the line between discourage on-site for the sake of being on-site, vs actually needing the face to fact time.
On a recent project at the clients request we included a set number of F2F meetings(3), but that was greatly reduced from their original request of 1 per week.
-Dave
On Thu, Feb 10, 2011 at 1:07 PM, Joel Farris < joel at transparatech.com > wrote:
Adam is right. An hour of work costs the same no matter where it's performed. If they're trying to save money by having you work from home rather than having to provide you an office space, then here's what you tell them:
"I've quoted you the rate per hour (and possibly a job rate too), and that hourly rate is the same no matter where I am in the world. Now, in the interests of saving yourselves money, remember that I bill one hour for every onsite client meeting, regardless of whether any work is done that day or not. So any day you want me to come in to your offices and work, it'll cost you $100 plus up to $800 for the day's work. If you can assign me tasks and I can do them all from home, it'll only cost you $800 for the day's work".
Time == money. Give me properly specced task tickets that I can do from my own office and you'll get billed less. Call me into your office three times a week for "face-to-face 'working meetings'", and it'll cost you $300 extra a week. See? :)
--
Joel Farris
TransparaTech, Inc
"There are no mysteries here."
619.717.2805
Skype & Twitter: joelfarris
On Feb 10, 2011, at 12:33 PM, Adam Mordecai wrote:
> The work is the work, which you can accomplish in both places regardless of location. That's a bizarre request on their part and I don't think its standard practice. Maybe they can pay you extra for the gas cost to drive to work? same principal, still silly.
>
> Adam Mordecai
> Partner - Advomatic, LLC
>
>
> On Feb 10, 2011, at 12:58 PM, Michael Prasuhn wrote:
>
>> I'm not sure how it would be less expensive for you to provide your own workplace? I would think the opposite would generally be true, since you have to furnish yourself with net connection, rent, phone, electricity, etc.
>>
>> -Mike
>> __________________
>> Michael Prasuhn
>> 503.512.0822 office
>> mike at mikeyp.net
>> http://mikeyp.net
>>
>> On Feb 10, 2011, at 11:52 AM, nan wich wrote:
>>
>>> An interesting question for all of you: I just got a gig for a month or so on a local government site. I don't remember if I mentioned that I worked from home a bit on my previous gig or not. But they did ask if I would reduce my rate a bit when I worked from home. That is, it would be a dual rate deal; $x in the office, $x-5 from home (for example).
>>>
>>> What would you think about this? Keep in mind, I would be getting paid with my own tax money.
>>>
>>> Nancy
>>>
>>>
>>> Injustice anywhere is a threat to justice everywhere. -- Dr. Martin L. King, Jr.
>>>
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