>> 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.
Uh, that's called marketing. If your original post wasn't about
marketing, then I _really_ don't know what point you were trying to
address.
---------
I'm not saying that we haven't been questioned about our rates, but mostly
it's been from clients that haven't dealt with other shops. Our
experience has been that clients who raise eyebrows about our rates
generally haven't contracted these services before. We've never had a
"these guys are $20 per hour cheaper" conversation, although I could
imagine that happening. Once again, we haven't felt the need to get into
jusfying our rates with clients. Much as I like to think that we know
what we're doing, I know there are hungry new developers offering
comparable services for 2/3 the rate we charge. I'd never get into one of
those "Well he doesn't do this" arguments, because, you know what? He may
very well be better than us. He migth be just a bit hungrier for new
business. More power to him.
Forget the cost of doing business. Period. I recently dealt with a
construction contractor, that when delivering a very high quote said
something to the affect of "I've got three kids in college". Know what?
I don't give a damn. I guess I'll have to hire one of the other guys who
apparently don't have any kids in college. You pay higher rent than the
next guy? So what? Do you have to pay higher health insurance premiums,
or property taxes? Do you think a client needs to hear about any of that?
The only "cost of doing business" argument that's worth presenting is one
that goes "We only hire the best (and most expensive) developers in their
field." Whether it's true or not, it's something that a client can relate
to.
As for choosing a local vs. a remote developer, this choice seems to be
completely in the hands of the client. Whether they value face-to-face
interaction with a developer is up to them. In all honesty I could never
tell a remote client that we're better than the local guys and then tell a
local client that we offer large advantages over hiring an out of town
developer. In any case, this is mostly independant of the question of
rates.
I agree, quality of service usually can't be quantified when presenting it
as selling point to a client, except perhaps when discussing delivery
performance. So what? If you're not marketing the quality of your
sercvice, then what ARE you selling? Yes, I agree this is very much akin
to saying "you get what you pay for". Nonetheless, that's what marketing
is all about. Obvioudly, you're not dumb enough to pull a hackneyed
phrase like that out when dealing with a client, but in essence that's
what you tell them.
With your experience, no doubt you've got a few nice examples of your work
that they could look at. This is as good or better than any verbal sales
pitch of the value of your services. Point your client to a few working
examples of your expertise and let them see for themselves.
Jim
-----Original Message-----
From: Mark Warrick <[EMAIL PROTECTED]>
To: [EMAIL PROTECTED] <[EMAIL PROTECTED]>
Date: Wednesday, July 05, 2000 7:42 PM
Subject: RE: Hourly Rate Justifications
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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