Hi Jim,
Thanks for the input. I'm going to bounce some ideas off the points you brought up.
I find it hard to believe that you've never been questioned on your rates, but for the
sake of this discussion, let's just make the assumption that ALL clients will question
the rate. This is human nature and it is also one of the core concepts of capitalism
itself. People want choices and they want to be able to differentiate those choices
from other choices they could have made. If people didn't WANT justification for
their choices, then their choices would be solely based on price. And we all know
that isn't so.
On to your next point, the cost of doing business is affected by MANY more factors
than where a person is geographically stationed. But one segway of this discussion
focusses on the location of the developer, so I'll discuss it. My viewpoint on this
is that a developer within a reasonable driving distance to a client's physical
location would be far more VALUABLE than a developer in another county, state, our
country for that matter. Remember that people are social by nature and they enjoy
meeting with one another face-to-face. Also, when it comes to legal issues, you're
both dealing with the same courts vs. trying to enforce an agreement over state lines
or worse yet, international borders. Although the cost of doing business with someone
out of the area can be dramatically lower in some cases such as an Indian company,
there are other factors weighing against that option that you cannot put a price tag
on. It is those pros and cons that I want to hear about.
"QUALITY" is a relative term that cannot be measured. QUALITY is a perception.
Everyone claims to have the highest quality product. That just arguement flies about
as well as "You get what you pay for".
I'm not arguing or discussing marketing concepts here. Let's try to stay focussed on
specific things that differentiate us from other developers here; things that can be
measured and proven.
---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
--------------------------------------------------------------
> -----Original Message-----
> From: Jim McAtee [mailto:[EMAIL PROTECTED]]
> Sent: Wednesday, July 05, 2000 6:17 PM
> To: [EMAIL PROTECTED]
> Subject: Re: Hourly Rate Justifications
>
>
> 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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