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Am I charging to Low for my I.T. Consulting Services....

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Am I charging to Low for my I.T. Consulting Services....

barrybartlett
Hello, I would like to get some constructive feedback on Whether or not I am charging too low for my I.T. Consulting Services. I charge a rate of $75.00 per hour per consultant with a 4 hour minumum per call. Is this too low? We can pretty much support any type of environment like Exchange 2003, Windows Server, Win XP OS, LINUX, etc. I have been told by a very important role model in my life (and fellow consultant) that these low rates do kind of "pollute" the Consulting industry and create allot of "stupid competition" and in the end can cause even the smaller type businesses to NOT trust other IT Consultants.

Problem is if I do go higher, I probably won't be able to keep allot of my current clients and it will be harder to get those larger corporate type businesses out there since I am such a smaller company.

Thanks for your feedback guys...

Barry,
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    JamesRL

    I'd be hesitant Barry to change your rates based on what one consultant says, no matter who he is. The market is made up of a much larger pool of players, both providers and consumers.

    First off, you have to look at your costs, your revenue and your profitability. Obviously if you are making good profit (better than a GIC for return on your investment) thats a good sign.

    It also depends what pool you want to play in. If we look at financial consultants, as an example, you can see the big 5 charge far higher fees than an independant CMA/CGA, but they are expected to do more and use more resources at their firm to do that.

    There will always be some people who charge less than you, and some who charge more. Whether or not they provide value that is equal to their pricing is debatable.

    If you want to increase your income without modifying your rate, consider retainers. If they pay you a flat fee of $x,000 then they get X hours for free and first priority.

    Only you can gage whether your fees are too low or too high, and feedback from your customers will tell you alot.

    James

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    Nice Techie

    Barry,

    When I do consulting on the side, it is normally for small businesses that are owned by friends, or a friend of a friend. I charge 25 dollars an hour to do the work that they would normally get charged 175 to 250 depending on the company they went with. I disagree with your friend who says that your low cost could cause major consulting companies to lose out on business. It is a fact of life that large businesses want to deal with good reputation consulting services. You, as a small business owner, won't fit into this category, so you don't need to worry about flooding the market. As long as your business profits stay in the black, keep helping those businesses along in their quest for IT capabilities.

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    Axsh

    I agree with Barry, He made a very valid point. I also think that if you raise your rate, one day a very special customer is going to have to say no to your service. If you want to keep your current customers happy then you should make sure they are getting exactly what they asked for.

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    barrybartlett

    Hi everyone, thanks for your feedback. I do appriciate your expert advice here. I think you are all right on this one and I will continue to stick with my current rate. Maybe when my business get bigger and I expand to get that great reputation in this field, I could then raise the prises a little.

    thanks Again.

    Barry

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    martin

    Hi Barry

    I live and work in the South West of England and i say you are right to stick with what you are charging. I can see 2 key points you have made.

    1. You where happy with the rate prior to someone making a statement.
    2. Your customers are both happy with your rates and most importantly your services.

    Some may say they will always follow you even if you put them up. I think this is a 50/50 assumption and a concern/situation you may not wish to put yourself into.

    In England it is very difficult to sell as a consultant. All my local PC companys charge ?25 ph. I charge ?45. They say they do it all and sometimes do. because they are cheaper they get all the business. The only work i get is when the network screws up and they have not got the certification or experience like you and i to fix it. One short example was a local company had a server burn out. They got a local (specialist) to put in a new server (desktop PC in reality) after 4 weeks they could not get the network or exchange working. I was called in through a fellow friend and it took me 2 hours to find all the problems.

    The point i am trying to make is the client assumed i was the same as the installers and charged at the same rate i.e. some client dont know the difference. Not untill its to late.

    Martin Wright
    martin@itmedicsw.co.uk

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    0 Votes
    OnTheRopes

    would you advise me to post my email address in a public forum?

  • +
    0 Votes
    JamesRL

    I'd be hesitant Barry to change your rates based on what one consultant says, no matter who he is. The market is made up of a much larger pool of players, both providers and consumers.

    First off, you have to look at your costs, your revenue and your profitability. Obviously if you are making good profit (better than a GIC for return on your investment) thats a good sign.

    It also depends what pool you want to play in. If we look at financial consultants, as an example, you can see the big 5 charge far higher fees than an independant CMA/CGA, but they are expected to do more and use more resources at their firm to do that.

    There will always be some people who charge less than you, and some who charge more. Whether or not they provide value that is equal to their pricing is debatable.

    If you want to increase your income without modifying your rate, consider retainers. If they pay you a flat fee of $x,000 then they get X hours for free and first priority.

    Only you can gage whether your fees are too low or too high, and feedback from your customers will tell you alot.

    James

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    0 Votes
    Nice Techie

    Barry,

    When I do consulting on the side, it is normally for small businesses that are owned by friends, or a friend of a friend. I charge 25 dollars an hour to do the work that they would normally get charged 175 to 250 depending on the company they went with. I disagree with your friend who says that your low cost could cause major consulting companies to lose out on business. It is a fact of life that large businesses want to deal with good reputation consulting services. You, as a small business owner, won't fit into this category, so you don't need to worry about flooding the market. As long as your business profits stay in the black, keep helping those businesses along in their quest for IT capabilities.

    +
    0 Votes
    Axsh

    I agree with Barry, He made a very valid point. I also think that if you raise your rate, one day a very special customer is going to have to say no to your service. If you want to keep your current customers happy then you should make sure they are getting exactly what they asked for.

    +
    0 Votes
    barrybartlett

    Hi everyone, thanks for your feedback. I do appriciate your expert advice here. I think you are all right on this one and I will continue to stick with my current rate. Maybe when my business get bigger and I expand to get that great reputation in this field, I could then raise the prises a little.

    thanks Again.

    Barry

    +
    0 Votes
    martin

    Hi Barry

    I live and work in the South West of England and i say you are right to stick with what you are charging. I can see 2 key points you have made.

    1. You where happy with the rate prior to someone making a statement.
    2. Your customers are both happy with your rates and most importantly your services.

    Some may say they will always follow you even if you put them up. I think this is a 50/50 assumption and a concern/situation you may not wish to put yourself into.

    In England it is very difficult to sell as a consultant. All my local PC companys charge ?25 ph. I charge ?45. They say they do it all and sometimes do. because they are cheaper they get all the business. The only work i get is when the network screws up and they have not got the certification or experience like you and i to fix it. One short example was a local company had a server burn out. They got a local (specialist) to put in a new server (desktop PC in reality) after 4 weeks they could not get the network or exchange working. I was called in through a fellow friend and it took me 2 hours to find all the problems.

    The point i am trying to make is the client assumed i was the same as the installers and charged at the same rate i.e. some client dont know the difference. Not untill its to late.

    Martin Wright
    martin@itmedicsw.co.uk

    +
    0 Votes
    OnTheRopes

    would you advise me to post my email address in a public forum?