27 replies
by jamesrl
Not in contracting for some time, but here an idea some places I know have used successfully.
You get paid a retainer. In return for the retainer(can be paid in monthly installments or lump sum) they get X amount of hours from you a month, and they get first priority. You can charge them for any extraordinary time over and above the agreed upon time. You can flex and or bank time depending on how things go.
This only works for people who will need you on a fairly steady basis.
James
by serverjockey
by hal 9000
But from my experience if I set up a "Set Rate Per Month" it is only on networks that I've first made sure are very well made and not just a pile of junk cobbled together running on a bit of fencing wire and hope.
For jobs like this you most often will get more that you would otherwise and you have a sure income per month.
What you really have to watch in that type of work is that you do not get lumbered with a pile of trash that requires constant attention and in all honesty would be cheaper to replace than keep it running. If you like wasting your time it can be very profitable in labor but if your like me you already have enough to do without wasting your time attempting to keep some junk working that should have been retired years ago and even then was only fit as a "Home" computer that has been cobbled together as a network in a business environment because it was cheap in the first place.
If you want to take on that type of work then charge a much higher rate as you'll be earning the money anyway. But you have to look at each job as it comes along to see what is violable for your needs.
Col
by yk1
by serverjockey
by serverjockey
Obviously you've been there and done that! I can spot the "pile of trash" from a mile away and I am very honest with them up front that I don't waste time "patching" little problems - but go straight to the source and fix that! Actually, the one that prompted me to post this article I "inherited" from a local computer store that just wasn't taking care of their client. I've been there the entire week inventorying the entire network and compiling a list of problems that need to be addressed. Anyone know of a "master checklist" of things to look for and identify?
Thanks for your advice!
by mungindi
I operate under just the system you are considering, so i can tell you catagorically that it is a Good System.
I am sure that you will find like i have, that the jobs will even themselves out over a given time period.
At the end of the day, 'A bird in the hand, is worth Two in the bush'.
by gboyd
I bill my customers for both access ot me, ie email/cell phone response within a two hour timeframe, and a separate charge for instant messenger online response within minutes. One hour per day for each of the access types covers general hardware and software support kinds of questions. If I have to do research to answer a question, or perform diags through the net, time is billable by the hour. If you have a history with the customer, you can total the number of billable hours per year, divide by 12, to come up with a monthly average. Offer the customer prepaid time in increments or blocks of time per month of onsite time, with a minimum cost of 4 hrs each visit to a site to help absorb your travel and onsite time costs. If you are traveling to or from his site you are not making money anywhere else. If it is only an occasional visit required on an on-call basis, to a site within the metro area you cover, a block of, let's say 15 hours per month,8 to 5 m-f gives them 15 hours of your time, including travel anytime during daytime business hours, onsite or on the phone, or doing research for them, or working on a problem, piece of software, etc. If they want you on call outside of 8-5 m-f, then the hourly rate for the contract goes up , as does the on-call access rate, ie 1 hour per shift of availability per day. It all depends on you customer base, and how much of your billing comes from each. Adjust your service contract offerings accordingly. It will help even out your income, and provide the customer with more predictable costs over the year, that they can plan for in the budget process, with procedures put in place for the billings that occur outside the contracted for amounts. It will also help customer management to enforce discipline on their staff to more effectively use your services to minimize out-of-scope billing events. where possible, I have modularized my services, ie, a simple router checkout is x amount of time, modules are a different amount of time, similar to the flat rate charged by auto repair shops. If troubleshooting is required that goes beyond my self imposed limit of twice the normal time to accomplish the task due to intermittents, or other difficulties, the billing switches to hourly. For example, if I get a group of devices from a particular supplier giving me difficulties, I put the whole batch on the meter, rather than by the task. The customer will think twice about purchasing equipment from that vendor again. Of course, part of the deliverables to the customer, is a detailed report on the activity, and the reasons for the billing. Many times he is able to pass it on to the supplier of the equipment, and obtain a credit for my fees from the supplier.
Until I started doing this, my billings were extremely uneven, and sometimes seemed seasonal.
If you have any more questions, let me know.
by c.caffee
by serverjockey
I like the 3 to 12 month contract but do you mean that you offer a contract that lasts from anywhere between 3 to 12 months or do you mean you offer two contracts - one is a 3 month and the other is a 12 month?
Thanks for your advice!
by serverjockey
by kroof
by 4nik
by serverjockey
by serverjockey
Tom,
The issue of support contracts can be and generally is a complex one. Here are some of the things I have done.
1) Generally, my Client agrees to pay for a fixed number of hours per month; used or not; additional hours by hourly rate. I agree to return phone calls immediately, with guaranteed physical response time (usually 4 hours or next morning).
2) Maintenance contract. For a fixed annual fee per machine (PC, printer, etc) I provide maintainance: cleanings, patches and SR upgrades (new version upgrades are aditional cost), disk disk maintenance.
3) Preemptive and onsite services, such as virus protection, firewalls, virus scanning, email servers, etc.
How much should the Client pay every month, for hours used or not? The exact selection of terms for each client is different, based on things like:
1) did the client suggest it to me? probably willing to pay more, understands he needs me as much as I need him.
2) did I have to push and push and push to make them see that a service contract was the best way - kind of like buying insurance, you have to have it, like it or not.
3) how harmful is down-time to the client? Some companies can't be without PC for more than 2 hours.
4) how nice have they been to me up until now - yup, very subjective.
5) Am I maintaining the high-quality equipment I installed, or taking over already installed equipment of unknown quality?
Good luck. Please come back and post again, let us know what you decide
by serverjockey
I like #1 but I've been doing this for free because that's what I thought I had to do in order to be better than other companies!! Might be tough to make a transition to selling it as a support contract.
I love #2 but am having a tough time putting a price on each pc - (i.e. difference between entry level box and high end workstation, deskjet printer and network laser printer).
Yes "one" of my clients suggested it to me only because they just got their butt kicked by a whopper virus and it cost them buckoo to have me fix it! I'd be crazy right now to settle for $500/month but until I got all this feedback I didn't think about still charging them for "additonal hours" beyond what the set number of hours the support contract was for! Now I know! Sometimes it's their equipment that is held together with duct-tape and sticky notes, sometimes it's my "high quality" hardware! Most businesses can not go without their pc's for 15 minutes never mind hours or a day or two!
Thanks for your advice!
by blarman
I work for a consulting firm, and we face these types of challenges all the time. We normally go for constant work contracts - usually a year at a time at a specified rate. The position I am in calls for both a contracted hourly rate assuming 40 hours per week, and provides for emergency pay when things break down during non-8-to-5 hours. This contract gets renewed/re-negotiated every year.
You'll really have to examine what types of hours you think the customer will need (and pay for). If it sounds like they'll only need your services for 6 months @ 30 hours per week, start with that in the contract, and include a contingency-pay (read overtime) section in case something unforseen happens and they need you to work more than that. Also include the provision that 2-4 weeks prior to the end of the contract, you(both of you) are responsible for negotiating for the next six months. If the work is done, push for a retainer contract for ongoing support, and look for another job. If the customer has found that they have more for you to do, you can negotiate the next six months or so.
The key is to make sure that both you and the customer have clear expectations. That way they can budget appropriately, and so can you. It is also the easiest way to start off a consulting relationship on a good note.
If the amount of work they want done won't keep you busy full time for 6 months, give them an expectation of the length of the job (in hours or days) at your hourly rate, and keep that goal in mind. Budget your time to find another contract to work on while fulfilling your responsibilities on this one, but find another job or you will very quickly find yourself out of work.
We have found that, while clients may not want to engage on these terms, we usually can't profitably handle the extra administrative overhead dealing with renewing contracts every 2-3 months. It also allows you to plan better for finding other work BEFORE the contract ends.
Good Luck.
by my mac is faster than your pc
How long have they been a client?
What is their usual monthly billings with you?
What is the nature of the service calls?
Have you brainstormed their network and determined their needs?
Have you discussed their needs with them?
Are they willing to pay for those discussed needs?
Have you calculated your business costs?
What does it cost you to get up in the morning?
Are you a solo practitioner or do you have subordinates, "associates" that will fill in for you?
Do you have a lawyer to draw up a contract that protects you?
Have you seen the competitions contract?
Do you have other clients you can offer a contract to?
Most clients once set up properly have very little need for us. Yes things break and yes there are virus outbreaks but the day to day is very mundane. Build in training for the client. Are they about to get a new color laser printer? Teach them how to use it properly and you will not get silly service calls. Document every IP, MAC address, OS and piece of hardware. It really will help with phone support.
----
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So is there or isn't there a link George?
by serverjockey
by serverjockey
by gauravbahal
For a contract that has 30hrs / week or some fixed hours per month, there should be some mechanism in place to log the times that are spent. Though not in contracting I have seen the times logged become a contentious issue between the client and the consultant.
I don't know how consultants manage this (would love to know) just raising a flag, in case this has been overlooked.
by 95ironhorse
We are predominately a per hour consulting company that works with lawyers in areas of technology both in their parctice and in the courtroom.
Occassionally, when we have to go into the courtroom with them to assist in automated litigation support we charge them an upfront retainer which is an amount based on "X" times our hourly rate. (this is a method they themselves are very familiar with) Once that amount has been used up, we then ask for an interim retainer for what we feel it takes to complete the task. (again a play from their play book).
This seems to work well for both sides and is only one example of the circumstances that we might require a retainer.
Our equipment partner offers a variety of monthly plans from $100 to $400 per month. At the lower end you get 1 or 2 visits per month and a reduced hourly rate. At the upper end you get unlimited visits and no hourly rate.
Hope this helps. Please visit us at www.it-lex.net
Jerry Baxley
by jharrison
Some customers are high-maintenance and require lots of attention. To those customers I give a reduced hourly rate. Other customers are savvy enough to handle the day-to-day issues, but need me when something "breaks". I'm a one-man organization, and find that customers really appreciate seeing the same friendly face when something is wrong. I offer two rates: contract and non-contract. Contract rates are lower per hour than non-contract, and they have longer to pay the invoice, plus they get priority over non-contract customers. They pay up front for the contract based on the number of PC's and servers. I never thought about including printers in that number, but I like it. I want a customer that will use me often, and most companies I think feel some level of reassurance with the service agreement. They feel that they are bound to someone that is responsive, and their rate is fixed for at least a year. I explain to them that their upfront fee guarantees them a fixed hourly rate for the term of the contract (one year) and monthly visits to check backups and apply service packs. They don't get a set amount of hours up front per month. Non-contract customers pay a higher rate, and they pay when the work is completed. They are the type of customer that doesn't need you often, but still wants to deal with someone they are familiar with, even if only moderately.
I'm not sure that my way is the best way, and I'm really starting to re-examine things after reading some of the other posts here. I've been doing this for 3 years on my own, and it works well with no complaints. It's better to have some non-contract customers, because you get a higher hourly rate, but businesses like the flexibility that my service agreement gives them when it comes time to pay. It's a win/win for me and them...
by fat chink
I have had contracts with many clients over the years. Some have 'standard' contracts which do include x hrs/month for a set $, and anything over that is per hour at a small discounted rate. Others have custom contracts.
It can be a loosing proposition, but as long as the majority of months are on your winning side, then a month or two of 'loss' may be acceptable.
The thing to do is to specify exactly what services are covered. If you include only application software maintenance/upgrades, then when they get hit with worms/virii or adware/spyware (due to user negligence), then it's all billable, and at full rate!
Remember, you are writing a contract. Make sure it specifically covers your rear. You can include Addendums which stipulate void conditions such as users installing software leading to infection by virus/worm/adware/spyware/etc.
Tom,
Thank you for posting a very interesting question. I think you have been getting some good advice.
Somewhere in the thread you said:
"I've been there the entire week inventorying the entire network and compiling a list of problems that need to be addressed. Anyone know of a "master checklist" of things to look for and identify?"
As it happens, TechRepublic published a downloadable checklist that will help your assessment:
https://www.techrepublic.com.com/5138-6337-730196.html
A little while ago TechRepublic member briantruitt asked a question similar to the one you are asking in the Tech QA forum. He closed the question after accepting an answer:
https://www.techrepublic.com.com/5208-6287-0.html?forumID=40&threadID=142346&start=0
Negotiating any contract takes persistence, skill, fortitude and a clear understanding of what you can offer your clients. Last year, Ken Tupman wrote an article for TechRepublic that discussed contract negotiations for IT consultants: "How to navigate the changing trends in contract negotiations"
https://www.techrepublic.com.com/5100-6331-5054547.html
Even if the negotiation goes well, it may come a time when you will want to re-negotiate a service contract. Lisa Gill compiled some member advice on how to figure out when the time to open talks has been reached: "Evaluate agreements with clients to grow your business"
https://www.techrepublic.com.com/5100-6331-5034912.html?tag=series
Of course, you can find a whole collection of resources and expert advice to develop new business leads, maximize client and vendor relationships, improve workflow processes, and manage projects in the TechRepublic IT Consultant's Tool Kit.
https://techrepublic-secure.com.com/5106-6242-26-12146.html?part=tr&subj=12146
What other "gotchas" and caveats should Tom be aware of as he decides how to structure his contract?
by rmorain
What you are looking at is what our company has been doing for years. We run 3 different options. All of our options are billed in 15 min increments.
Standard is flat hourly rate plus travel charge
Preferred is prepaying blocks of time in 10 hour increments to use as needed with expiration of 1 year with no activity. They get a cheaper rate on hourly & travel charge.
Plus is 3, 6 or 12 month contract billed monthly. The more hours purchased per month the cheaper the rate, travel charges are waived. If they get a 6 month contract for 12 hours a month, then we go to their site or do research for them on our site for instance 4 Mondays a month for 3 hrs each visit or 2 Mondays a month for 6 hrs each visit. This is scheduled & if something arises between that time that is a priority then they get priority over standard customers. By the way, this is the most popular choice with our clients. As they can decide how important the problem is. If they go over the contract amount they then pay a higher rate for all hours above it.
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