As to the main point of your message, I'm not sure that everyone feels a
need to justify their rates to clients. We've had plenty of potential
clients get that glazed look when we present our rates, but by the same
token, clients who've dealt with other shops think we're very reasonably
priced, so we don't really try to justify our rates to anyone. It's a
pretty simple market economy in which we operate. If our rates are too
high, then we don't stay busy. Too low and we're forced to outsource and
operate on smaller margins.
That said, I think you've got some of the larger/smaller things backwards.
If your rates are higher than the guy across town, then cost of living
can't be a justification of your higher price. If you're competing in a
wider market and you try telling a client that your rates reflect a higher
cost of living in your area, then you're just giving credence to the
(probably true) idea that greater value may be had from hiring someone
where the cost of living is lower (India say, or maybe Iowa ;-).
I think the smaller things you mention all come under the heading of
"quality" of the work you do. People understand the concept of quality
more than they understand the forces that drive your rates, even if they
don't grasp the details of what you do.
Jim
-----Original Message-----
From: Mark Warrick <[EMAIL PROTECTED]>
To: CF Community <[EMAIL PROTECTED]>
Date: Wednesday, July 05, 2000 6:33 PM
Subject: Hourly Rate Justifications
PLEASE DO NOT SHARE YOUR HOURLY RATE
The purpose of this discussion is to share information about how we
present ourselves as programmers and why we charge more or less than other
developers.
For example, a couple things that I think justify my hourly rate are:
-Regional cost of living/doing business. (using the international exchange
rates as an example)
-Availability of programmers.
-My experience level.
-I have an established business in good standing.
-I use a documented, accepted methodology to designing applications.
Some smaller things that clients might not understand:
-Error checking.
-Proper database design (sort of goes in the experience category)
-Efficient coding.
-Documentation
I'm working on a list and would like to know if anyone else would like to
add in their unique opinions about what justifies their hourly rate.
As an example, the difference between a Mercedes vs. a nice Honda goes WAY
beyond the car's technical mechanical qualities. Mercedes has a
reputation built on experience in the industry and quite frankly makes a
better car hands down. But on top of that, they offer amazing customer
service and I'm sure they figure all the extra service you get into the
price. Of course, I have no facts to support that statement, so someone
could easily shoot down my arguement. This is what I'm talking about!
The old "you get what you pay for" line doesn't work for someone who
doesn't understand what it is they are buying. I think that by sharing in
an open forum like this, we'll all learn and will better be able to
address that tough question that comes up every time we talk to a
potential client.
---mark
--------------------------------------------------------------
Mark Warrick
Phone: (714) 547-5386
Efax.com Fax: (801) 730-7289
Personal Email: [EMAIL PROTECTED]
Personal URL: http://www.warrick.net
Business Email: [EMAIL PROTECTED]
Business URL: http://www.fusioneers.com
ICQ: 346566
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