Project Management

Should you charge more when you don't know what you're doing?


In the discussion following last week's post Seven reasons to turn down business, TechRepublic member burntfinger1 said:

If I don't have a particular skill set and the client wants me to "do the best you can," my price goes way up and I tell the client why. If I'm going to have to pay someone to fix up a mess I made I have to be able to afford it.

After I questioned this policy, he confirmed that the higher rate is by the hour, not by the job. His rationale, it seems, is to create price resistance against clients pushing work on him that is beyond his abilities -- and to cover his costs of subcontracting it out if they succeed in putting him in over his head.

There may be some merit to this from the client's perspective, too. If the work lies outside the consultant's experience, it could simply be more difficult or esoteric material, which would mean that its production creates a higher value than other more common tasks.

On the other hand, this could also represent a gap in the skill set of the consultant. In that case, the client isn't receiving the same value for the work performed as when the consultant is operating within his/her technical comfort zone.

I've always tried to base my rates on the value provided to the client. I've been known to reduce my rate when I'm learning a lot of new technologies, because some of that time represents value to me in the form of education.

As Earl Nightingale always used to say, the money you receive will be in direct proportion to the service you provide. I might insert the word "perceived" right before "service," but the principle still holds. Clients will continue to pay what they think your services are worth, and no more. So it seems counterintuitive to me that you would charge more for work that you can't perform as well. Unless, of course, the intent is to drive away that business.

How about you?

About

Chip Camden has been programming since 1978, and he's still not done. An independent consultant since 1991, Chip specializes in software development tools, languages, and migration to new technology. Besides writing for TechRepublic's IT Consultant b...

29 comments
rcosby
rcosby

As a MSP servicing mostly small with a few mid-sized business, I see this all the time. We have to be generalists by nature since we support law offices, doctors, and even some manufacturing facilities. Our customers know that we can't do everything and we don't try. We function more like general contractors. Anything that we can do "in-house" we do, but we don't hesitate to hire specialists as needed. Our customers simply want us to "deal with it". They wouldn't know where to start, how much it should cost, or who to call. That's we they pay us. We hire and pay the specialist and are their contact with the company. They usually discount their rates for us since they want our repeat business. Also, they get to deal with us instead of an unsure customer. It's a win for everyone.

Hillyman
Hillyman

I am new to freelance consulting and am still figuring some things out. Since work is scarce, I have been getting involved in projects that are outside my immediate scope of knowledge. When I am doing more learning than creating, I lower my rate. I am always thinking about how much value I provided to my clients, each day. Since I am getting into development more, I have to get used to the fact that creating value sometimes takes a little/lot longer than just a day or even a few hours. Like I said, I'm learning. I truly appreciate this forum because I am learning a lot. Not only that, but I feel a little more comfortable, even vindicated, knowing that other people struggle with some of the same issues I do. Thanks ya'll!

cliftz
cliftz

Don't think it's appropriate to charge a client for my ignorance. Sometimes though you go to school on the clients dime. I guess when I learn everything, then the appropriate charge can be assessed. :)

pzkfwg
pzkfwg

If I charge an hour rate, I simply charge all the time at the same rate. If I charge fix bid, I crank up a lot the estimation of time required to cover the risks.

Professor8
Professor8

OK, sometimes, if it's for a friend, I only charge for productive hours and not for the research time. If it's business, I try to let them know it's going to require a usually unknown amount of research and experimentation, suggest that they bring on a specialist, provide some materials or education or training, then I charge at the regular rate, giving them status reports and sometimes bits of what I've learned. Actually, I don't generally "charge a rate" since I hate being body shopped, but if the body shopping relationship is being coerced I start multiplying what I'd charge if I were a real employee. First, I have to double just to cover a fraction of the benefits a real employee would have, not to mention covering unpaid down-time, vacation, etc. If it's COBOL or Ill-Begotten Monstrosities or M$ or some other evil is involved, then the rate goes up by orders of magnitude... or I just turn then down flat. If it's something especially worthwhile and interesting I shave off a bit from rate or time charged.

techrepublic
techrepublic

Like a few others have posted, it depends. - Is it something you should know or want to learn? - Is it going to do any good for the future if you learn it? - What would it take in time and money to outsource that work? - How important is this customer to you? - Do you have time? - Do you want to do it? I've faced this situation many times in my website design. In most of my cases, the "How important is this customer to you?" is the main factor. That determines how important the rest of the factors are.

DIFS
DIFS

I do not & will not raise my rate if it is something that (1)be an valuable asset for me to learn it that benefits me & customers in future jobs, (2)I only make my self more valuable in most people's perception as "higher price = highly knowledgeable/valuable & (3)My value & morals that are based on the fact that I should not take advantage of others at their point of weaknesss - they ask for your help in solving the issue. One should have a standard that the I.T industry lacks alot. Lets increase the integrity and morality for the whole industry of Consultants/System Integrators/technicians etc.

billbo01028
billbo01028

I reduce my number of billable hours to reflect that I needed to perform research outside of the scope of the project. Basically, I invoice for the full accounting of time I spent on the project, then discount for anything that required me to learn something new. This shows the client the value I am providing and the willingness to try to find a solution to their needs outside of my technical comfort zone

billsommerville
billsommerville

There has been time when I was assigned a tasked outside of my scope. When this happens, I have informed the client of such and told them that it will take extra time in the research and dedication towards the clients goal in this area. In most cases the client understands this, will except the extra time involved and only wants progress reports. My clients seems to understand that it is like customization. Customization cost more because it is outside of the norm and takes extras either in time, resources, or material if not all. This goes for just about all areas so in my case, the rate stays the same but there is extra time involved.

weising
weising

This really depends on what kind of clients I am facing. As a software development consultant, the clients I met falls into two main categories: 1. they only have a big picture about what they are going to do or some unclear goals to achieve with no detailed business rules, knowing very little about what software development is AND ALWAYS THINK THAT COMPUTERS CAN DO EVERYTHING FOR THEM. 2. they can do the coding themselves, they just want to make sure that they don't waste time on something stupid or "unproductive". And for the first case, I will definitely raise my rate sky high for two reasons: one is to push them to think so everyone in the project can have a clear scope and goal about what they will have; another one is in case that I have to do everything myself (including to discuss some important issues with the head who really pays me, this kind of situation happen very often in Taiwan, instead of asking their boss what really needs to be done, the employees prefer to guess ALL TIME TIME) And for the second category, I would be honest to the clients. In most cases, they trust that I can learn those new stuffs faster than their team does, so I won't raise my rate a bit. And in a very few cases, my clients even willing to pay me for just evaluating new technologies for them. If those new technologies are what I am interested in, I would surely lower my rate a bit.

Wolvenmoon
Wolvenmoon

I do something you didn't put in that poll-I actively refuse the job. I'm not an official employee of a company, though, I'm a student that does odd jobs. The last job I had to refuse was a few years ago.

royhayward
royhayward

This is rather subjective, but it works like this. I have a set of skills that are worth X amount of dollars. Within this there is a primary set of skills that I like to use, and a secondary set of skill I try to stay away from using. (they just don't interest me as much any more) There are also skills that I don't have. Some of these skills I don't have, I want to have, and some skills I don't have because I have no interest in them. Now if I am hired to work on the skills I have and like, then we have a deal and a goo rate. But if we are hiring for work that uses that skills I wish I could forget, I want to charge more than they are worth. (Yes, I want you to go somewhere else to a guy who likes to do that) Next we talk about the skills that I don't have. If we are hiring for work that uses skills I don't have but want, I might 'donate' free time to offset my learning curve. But if these are skills that I have no interest in, I don't give any breaks, and may charge more. So I do both, but I imagine this method will not work for everyone.

CG IT
CG IT

I inform the customer that they should contract with someone else who knows what they are doing. If they insist that I do the work, I lower my rate, but also include the cost of the specialist [but I don't mark that up].

mjd420nova
mjd420nova

Too many times I've gone to a customers site to service a piece of equipment I'm not familiar with. I don't raise my rates but do charge for every minute I'm on site. Some of that time may be digging through wiring diagrams or checking the service manual for light blink codes and such but they are always specific to that site and seldom useful on any ones other equipment as most are specialized installations for that site only.

Sterling chip Camden
Sterling chip Camden

... with technology changing as rapidly as it is, you can never know everything well.

too_old
too_old

I have not read all the threads. What I have found that works for me is: 1. A new skill set I want to learn. I am usually doing something I can to already learn. A client who needs those skills, well I discuss this with them. They need to know my level of experitise as well as my own intiative to gain the skillset to make a good business decision. Compromises often are the result with contractual agreements to 'nail down' the deliverables. Some jobs will be lost but overall people seem to value honesty and one gets repeat business. 2. Something I do not want to do. Quickly tell them I am not able to do that and hopefully I will have someone I can refer them to. Bottom line, I get very frustrated when someone I have hired to do a job is not honest with me about cost, time, and their ability. I do not like it! Why should anybody else?

Professor8
Professor8

I like the way you broke it down.

BBPellet
BBPellet

See when it comes to client asking of me more than my skill set, I jack my rates sky high, this way when I subcontact the portion I'm not familar with, I can over the subcontractor's rates (which a rarely discounted for me as they know it is a subcontact job), plus I DO mark up the costs so that I can recover cost in time, that I lost in the process to find a subcontractor that meets the clients requirements. Kinda along the lines of a staffing firm. As I see it, if the client want it done, and done well, they will pay for it. As the old saying goes you get what you pay for....so you want the best..you pay for the best. And in most cases, the client rarely objects to Quality over Cost.

JustinF
JustinF

I'd be inclined to lower my rate but charge for research time spent away from site if I was asked to work on a technology or major application I hadn't encountered before.

herlizness
herlizness

the answer is, "it depends" ... if I'm asked to perform work that I don't know how to do and there is ample available talent to do that work, I will probably "chew the time" and not bill for learning what, in effect, I was already expected to know (from a market perspective). The exception would be where I don't particularly want to learn the new skill and tell the client directly that I will require some ramp-up time and have to charge for it ... if they agree, all is well in my book. In cases where a technology is new and there is NOT ample talent available I think the client should pay for the ramp-up, period ... I'd also be happy to offer an alternative with less ramp-up and lower cost. Time costs money. It's the only thing we have to sell. If we don't bill that time I guarantee clients will present an ever-increasing list of demands, sometimes on a whim. Does anyone seriously think their corporate clients don't charge THEIR customers for R&D or training, either directly or indirectly?

Locrian_Lyric
Locrian_Lyric

If the skill I don't have is a 'dead end', oh yeah, I'm going to charge more because not only am I going to have to use something that has no value past this project, but I am going to have to find other ways of keeping my skillset current and marketable. If the skill I don't have is in a field that I want to get into, then I may even lower my rate, as I'll recover it later on the next project.

royhayward
royhayward

I would hate to be accused of hijacking someone else's idea. But considering that he and I have had other perspectives in common I guess I shouldn't be surprised.

Sterling chip Camden
Sterling chip Camden

The value you derive depends on future applicability --that makes sense. It also makes sense from the customer's point of view that getting someone to work on technology that's out of the mainstream costs more, because it's more esoteric.

Sterling chip Camden
Sterling chip Camden

It would take a WHOLE LOTTA MOOLAH to make me go back to COBOL, that's for sure.

MikeGall
MikeGall

If you want someone to code cobol on your VAX well ... pay up. This makes huge sense if it is a long term project, and I'd seriously consider if I'd do the project at all. Reason: next client or employer asks do you have any experience with (pick a newer technology), and you have to say actually I was writting flat file code for a VAX/VMS system for the last two years, so no. Your knowledge is depreciating over the time that you aren't using current technologies so you have to recoup some of that cost (because you might have to go out and take some courses, or do some low billable work for a bit to get back up to date.

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