Most members say: Discount rates for diagnosis time

What did our consultant community have to say about charging clients for the time it takes to diagnose their problems? Most of them said it was good form to discount their hourly rates.

Consultants often find themselves in a situation where they are asked to spend hours diagnosing a problem, only to find out that the problem is either unfixable or completely different from the problem they were called in for in the first place. It seems this has happened to many of our members, and it sparked a lively discussion about whether or not consultants should charge for diagnosis time.

It all began recently, when TechRepublic reader Karl E. started a discussion in which he asked whether clients should be charged for time spent diagnosing their problems. Here was his dilemma:

Client A had lost all of his data on an NT workstation and had no backup. Client A decided to reinstall NT himself. When another problem arose he called consultant Karl E. to solve his problem.

"He did not tell me [that he had lost data and reinstalled NT] on the phone, just that he had a problem seeing the network on NT Server [even though he did not have NT server]. When I got there, he had a completely different problem than he described. It required a reinstall of NT, hence up to a day to get the network back to scratch."

Due to other client commitments, Karl E. did not have time to take the job. We asked our consultant community if Karl E. should charge Client A for the time he spent researching the problem.

A few readers posted comments saying consultants shouldn’t charge clients for unsolved problems, and others recommended charging them as you would any client. But the majority of readers said diagnosis time should be billed at a discounted rate—especially when the problem couldn’t be solved. Here are some of the comments we received from members from all three camps.

Don’t charge ‘em
Chaos1 said he works with a “no-fix, no fee” policy. “It is my belief that I am paid for solutions, not time,” he wrote. “If, or rather when, I provide a solution, only then does my time enter into the equation.”

Another reader, Eurith, wrote that she generally doesn’t charge the client if the unsolved problem takes less than four hours to diagnose. Eurith’s and Chaos1’s “no charge” policy, however, definitely placed them in the minority.
If you’d like to peruse the rest of the posts on this discussion, click here. If you’d like to ask your own question or find out what others think of a problem you’ve encountered, start your own discussion!
Charge ‘em
Many TechRepublic members wrote in to say that they would charge clients for any diagnosis time—just as any other business would.

Kenny W. Tripp, an A+ certified PC Tech for Computer Technology and Service in Florida, compared a consulting service to a car repair shop. He wrote, “Does anyone give you anything for free? If your car is running sluggishly and you bring it to the shop and the mechanic runs a diagnostic on the engine and finds out it only needs a tune-up—which you can do yourself—do you think the mechanic is going to say ‘Okay, no charge?’ Hell no, he isn't. You’re still going to pay for that diagnostic test even if the mechanic doesn't perform the work.

“So Karl E., I submit to you: Charge a fair price for your diagnostic time, unless of course, you’re filthy rich and fix PCs as a hobby.”

Petar V. Kovacevich, a managing partner for Project Management Partners, Inc. in Geneva, IL, said charging a client “clearly depends on the nature of the problem, the effort put forward, and the type of relationship we have or are trying to build with the client. But for the most part, yes, we do charge the client for our time.”

Roger Kresge, an IT consulting manager for Simon Lever & Company in Lancaster, PA, wrote, “We absolutely bill the client for our time. We are professionals providing professional service. Does your doctor charge you by the cure or for services rendered?”

Kurt Gollinger, CEO of K2 Technical Solutions, LLC, a three-person operation in Detroit, MI, advises consultants to charge a flat, hourly fee for any and all work performed.

“When we start subtracting a half hour here and don't charge for drive time there, we end up short-changing ourselves for doing our job,” he wrote. “Customers expect to pay, yet consultants still seem to ‘feel bad’ charging them, particularly in cases such as Karl's where the poor client didn't have a clue. If we remain consistent by always billing the same way, it won't matter whether the client destroys his systems by performing do-it-yourself fixing. I bill a flat fee and if it takes me one hour or ten hours, I bill for my time accordingly.”

Charge ‘em a discounted rate
The vast majority of responses to Karl E.’s query suggested that he negotiate a price with the client or offer a discounted rate.

Rodney C. Knight, owner and CEO of RND Consulting in Rock Springs, WY, wrote to say that he weighs the amount of time spent against the reason the problem can’t be resolved. Then he usually charges 50 percent of his regular hourly fee.

“My logic is if I am really doing my best and am not in over my head (if I was, I should not have taken the job) then the client is using time of mine that I can't bill out to others, but I give a break since I will either have to contact someone higher up or spend more on my education [to solve the problem].”

Bfreilich echoed Knight’s point in his e-mail to us: “I feel that I am entitled to my hourly rate as long as I am competent in that particular area,” he wrote. “If I am stumped, I turn off the taximeter until I have researched or resolved to my satisfaction the issue, then the meter is back on. They are paying for expertise, not for me to learn.”

Roger King,a scheme manager for Extended Life Computers in Halifax, Yorks, UK, offers an advisory service to new clients—and charges them for his time.

“I make a point of explaining fully to the client that I am a specialist in a particular field, at the same time, though, explaining that I am happy to offer advice on other matters and if need be, point them to an appropriate person. I have not had any problems thus far with this approach.”

Kenneth M. Bourg, an independent IT/CT and business consultant in Lafayette, LA, includes a disclaimer about solving problems in his standard contract, but believes that consultants should offer some sort of compensation to the client if things go awry.

“Regardless of the disclaimer, compromise of some sort is usually in order when things go off course,” he wrote. “Anything from a partial credit to ‘comp’ service time is a good idea. Try not to promise what can’t be delivered as a golden rule. Always charge enough in the job to allow for the contingency. When it happens, as it eventually will, everyone can still win.”
Does your contract contain specific verbiage about unsolvable problems? How do your clients know if they’re paying for your research time? E-mail us the portion of your contract or service agreement that specifically addresses this issue or post your comments below.

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