Consulting Fees

[Madelene Ferguson Allen]

I am totally re-doing our Alpha files for camp since I am retiring and will no longer be on hand to trouble shoot. I figure this project is above and beyond my basic responsibilities and salary. I am working through making index pages for each section with link buttons to everything and anything they may need, writing explainations etc.etc. i.e. trying to make it totally idiot proof and something that someone with no Alpha experience can use. What is the going rate for re-developing a program?
Madelene

[whanigsberg]

RE: Consulting Fees

Ferg,

Are we to assume that you currently work from the control panel and you now want to create a menu system so a user will be able to do what you've been doing without the possibility of getting in trouble?

If so, don't under price the job. You will have to test and be available for the inevitable problems.

I'm in Canada too; we can have a private exchange if you wish.

Bill

[jwolfe11]

RE: Consulting Fees

I've noticed that everyone on this forum avoids the direct question about fees. I guess it's a privacy issue or the fear of one day being in competition. The nice thing about Alpha any version is that there are not a large number of programmers well versed in the product.

With all that said, I'll start it off. I am no longer a full time programmer. To many bad deals drove me to get a real job. I still do side jobs and support old clients but it is on a limited basis. Here are a couple of my past deals:

1. Contracted to create an application for an insurance agency. I created in Alpha 4 Version 4 for $7,500. It took me about 250 hours which equals $30 per hour. This was a bad job on my part as I tried to get about $60 to $70 per hour for development work.

2. Media Management System - Here was the biggest mess of my programming life. Although the customer and I signed a contract, his expectations for exceeded my delivery. I assumed I was to deliver a basic order entry system. I quoted $6,500. I figured it would take me about 100 hours. Long story short, he expected a full blown managment system including an accounting module. I spent about 500 hours on this job and made about $10 per hour.

What I learned from about 7 years of doing various jobs, it is essential that you spell out in great detail what you will develop and when the application is considered complete and maintenance begins. A contract is a must and try not to do programming work for friends. I have seen hourly rates on database applications range from $35 to $150. It depends on what you include in the price. If I were doing this full time today I would be looking to stay in the $65 to $80 range if it's going to be worth while.


I have attached a sample software contract. This is simply a sample and you should always run any legal document past your lawyer. A document I didn't include is the functional description Appendix. This is where you would spell out in detail what you will be developing and what the customer requested. I also would require an initial by each line item for further clarification.

This is just my 2-cents worth.

[Peter.Greulich]

RE: Consulting Fees

Jeff,

Not to get on your case, but if your quoting hourly rates, why not bill hourly? I am VP of a Civil Engineering & Land Surveying firm, we bill 99% of all our work hourly. Whenever we do a lump sum we loose money. In my line of business there are too many variables that come in to play. Programming can be the same way. Believe me I would rather bill lump sum because you don't have to fight for your money. But hourly is the way to go if you don't want to loose your shirt - it would seem to me.

Just a thought.

Peter

[DaveM]

RE: Consulting Fees


I bill at 65 to 75 per hour. Any jobs I price out are laid out and signed for and conteract(s) written to match the layouts before I begin work. The layouts are copies of the screens(forms),reports and etc. signed by both parties and I keep the originals. The contracts spell out those forms, etc. and it states that any redos asked for in writing will be paid at 65-70 per hour and price will be signed off before beginning actual work.

Any client not willing to go along with this can go elsewhere.

I get more jobs than I want like this

Alpha has actually been my layout program for years.

Dave

[Madelene Ferguson Allen]

RE: Consulting Fees

Can't say how much I appreciate your thoughts and ideas. You are right when you say we tend not to talk dollars and cents .... ! Difficult when it is your own company .. but there are times I draw the line and say this is above and beyond the call of duty. I have always done the computer work "as part of the job" , so have no idea of the "true" value of my work.
Thanks everyone for sharing.
Cheers
Ferg

[CALocklin]

RE: Consulting Fees

Madelene,

Part of the reason a consultant charges more is the little necessities like invoicing customers, paying bills, updating programs and equipment, keeping up with technology, paying lawyers and accountants, meeting with lawyers and accountants, meeting with potential customers, writing for help on the message board, trying to drum up new business, etc. Since these things are not "part of the job", you can't bill anyone for them directly. However, they are a necessity in order to be able to do the job so these costs have to be added in to the hourly charges.

I've noticed that many people seem to understand why they are paying big $$ for a large company but can't understand why an individual consultant needs more than $25/hr. With the big company they know there is a building, secretaries, technicians, equipment, and all sorts of support personnel. Unfortunately, they don't seem to realize that the individual consultant has most of the same issues and needs to handle them alone.

I'm just getting started but it seems that it would be very easy for an individual consultant to spend nearly half the time on these "other" issues - at least initially. I doubt that it would ever be less than 25% unless you could get enough good customers established. With enough steady customers, less time is spent drumming up business and you no longer have to go through the early stages where 'learning the customer' and 'learning how the customer runs his business' (which is a necessity if you want to build a proper app.) can be very time consuming.

[Madelene Ferguson Allen]

RE: Consulting Fees

Interesting perspective ... and certainly vital things to take into consideration. I am doing this as a one time shot with my own business that I am selling, and just
"professionalizing" a system which we are already using - so your letter helps me put it into perspective.
Cheers
Ferg

[John Pintado]

RE: Consulting Fees

I enjoyed your comments but I take issue with one of them.

You said: "The nice thing about Alpha any version is that there are not a large number of programmers well versed in the product."

I believe that the lack of qualified developers scares people away from choosing Alpha Five as their business database. No business wants to be stuck with single or limited number of suppliers. I wondering if this issue ever came up when you were bidding on programming jobs. Did anyone ever say "What happens if you leave town, leave the business etc?"

One other comment--you experience shows the absolute necessity of having a contract that spells out in great detail what is to be delivered for the price agreed on.

[Stephen Williams]

RE: Consulting Fees

I have worked with a bunch of consultants in the landscape business, and will work with more. When you are self employed there is a lot of stuff to cover. When you start a business you immediately start THREE jobs. Owning, Managing and Doing. As owner you sink your assets (including your time) into creating a business and, like shareholders, you deserve a return on that investment. Next you manage the business generating leads, converting leads, managing finances, maintaining facilities. You need to see a return on this investment. Finally you produce the product, which has to carry sufficient fees to cover the above, plus show a return. $25 an hour sounds great to someone used to employee roles and who is only thinking of producing the product but is hopelessly out of touch with the rest of the work of being self employed. I find the management and ownership issues WAY harder then producing the product(most people do) and business newbies often simply give it away. Anyone charging $25 an hour is a charitable donor to their clients. As a landscaper I have to charge $30 an hour to have a simple laborer dig a ditch...

[jwolfe11]

RE: Consulting Fees

My own experience showed me that most people didn't care what it was written in. Now this was over 5 years ago and many things have changed since then. Owner awareness on platforms and support has definitely increased. I think the part I liked about the Alpha database products was in a competitive situation I could develop a more robust application in a shorter amount of time.

Now I am not the authority on any of this. I'm no longer in business for myself so that shows you how successful I was. I learned many of the leasons the hard way and when you're working for yourself, one bad experience can close you down.

[DaveM]

RE: Consulting Fees

John,

Very few of the companies that contact me care in the least how I do it or what I write it in as long as it does the job. I cannot remember the last one that asked me what language I would be using. I have told and wrote down on my contracts and bid forms what language I would use and even had the ones for alpha order their own copies.

Spelling out exacts on a contract is for both parties protection. I have had a client absolutely swear that I promised something I did not. I paid for that one. I made sure from then on that we both knew.

If a client says I promised, then I say show me the form with the specifics. If he is right, i comply else we amend the contract to include the change(at a higher price).

Good Luck
Dave

[by5751]

RE: Consulting Fees

You can always count on Alpha Forum for help and advice as presented from the many replies you received. According to your request you're planning on retiring and because you are redoing your current Alpha system and perhaps have the opportunity to develope that system on a contract(consultant) basis, you would like to know how much to charge for that work. What you should do is to develope a System Design Life Cycle (SDLC) consisting of the following Phases. Phase 1, Feasibility Study which includes initial contact with the customer, gathering preliminary information of what has to be done, analysis of the old system, etc. Phase 2, Design of the new Alpha system, forms, reports, etc. Phase 3, Programming development including testing, Phase 4, Implementation, including operating instructions and training, and finally Phase 5, Follow-up and Maintenance. In the old days(back in the 60's) we used to charge by the number of line codes. It used to be 50 cents a line in my day in Los Angeles. That was not the norm but it was a way to arrive at developemnt costs. When I attended IBM's Systems Analysis courses, the cost was based on the programming Phase. We would first determine the number of hours it would take to do Phase 3, the Program developement phase. To those hours we would apply an hourly cost. Remember you can do the same with Alpha. You need to include the indirect hours as well as the direct hours. Finally you need to add a percentage of what we call "risk" hours. These are hours spent over and above what you calculate as the total hours charged. Usually this would be about 10% of the total hours. Example, if total hours took 120 hours add 12 hours as a risk factor. Your hourly rate really depends on your area. Here in Las Vegas, Nevada, there is no way that I can charge $65 an hour. The general market does command that kind of rate. Once you arrive at the hourly rate for the programming effort, you can now present your proposal to your client/customer with the Project Cost. You can present the cost to the client/customer in percentage breakdown, for example, if the total Programming cost is $3960, take 15% of that cost and apply it to Phase 1 which is the Feasibility Study Phase. You determine the percentages to apply. Do the same more or less cost percentages with the rest of the Phases and you will come up with the final project cost. Simply add the cost of each Phase to the Programming cost. Don't forget the risk cost factor. This may mean the difference between making or losing money. There are a lot more details to the proper costing of a SDLC than I have written here but I think you have a general idea. The point is whether you are developing one or two Alpha applications or developing a full blown system. Hope this helps, if not, let me know.

Bruno

[dlfeldman]

RE: Consulting Fees

Cal (and everyone),

You might find the following of interest. I am primarily a small business consultant that can handle the odd database job, but I use what follows in seminars I give to help determine how many hours people need to work and how they can calculate a reasonable hourly rate. Enjoy.

Best to copy to WORD and reformat using a fixed pitch font (Courier) to better see the chart, too.
*********************************************
How Many Hours Can You Work In A Year?

To set an hourly rate for your services, you need to know or guess two numbers: (1) your desired gross income before expenses and taxes, (2) how many hours you can expect to bill (work) in a year.

Item 1 is entirely up to you. Every self-employed person, and every manager of a business that bills for time, however, encounters item 2.

We all know that many freelancers have to work nights and weekends to meet deadlines and to handle the volume of work it takes to earn a living. And we have all heard of law firms which require associates to work 60 or 80 hours setting your rates and fees, you should base your calculations on the assumption that you will manage your self﷓employment like a reasonable business. This means you assume that regular business hours are all you have available. These hours are for both your client work and your own work of managing your business.

Finally, before we get into the calculations, we'll also assume that you'll treat yourself like the high level executive you are. You're the head of your own business. So you're going to assure yourself sufficient time off ... to keep yourself energized for doing the best you can for your clients and yourself.

Gross hours per year 2,080 hours
(40 hrs/wk x 52 wks/yr)
(260 total workdays)
Less days off
Vacation (2-3 weeks)
(10-15 days) 80 - 120 hours

Holidays (10-13 days) 80 - 104 hours
(New Year's Day, Martin Luther King,
Washington's Birthday, Memorial Day,
Independence Day, Labor Day, Columbus
Day, Veterans Day, Thanksgiving,
Christmas, Rosh Hashanah, Yom Kippur,
day after Thanksgiving, whatever...)

Sick leave (1 - 2 weeks) (5-10 days) 40-80 hours

Subtotal, days off: 5 - 7 1/2 weeks
25 - 38 days 200-304 hours

Net available workdays: 222 - 235 1,776-1,880 hours

Less
Marketing & professional development
(20% to 25% of your available time) 352 - 472 hours
(equal to 44-59 days)

Administrative tasks & reading

(1/2 hour per day) 112 hours
(equal to 8 days per year)
(less than 6% of your time)

Downtime (no work available)
(10% to 20%) (you hope!) 176 - 376 hours

Lost/wasted time (1/4 hour per day)
(you wish!) 56 hours

Subtotal,
subtractions from available
work time 696 - 1,016

* * * * * * * * *
Total billable hours per year 760 - 1,184 hours
* * * * * * * * *

If we assume (however incorrectly) that the low figure is too pessimistic, then let's split the difference between our high and low estimates and we get 972, which we may as well as round off to 1,000 hours as a somewhat ambitious but attainable target. This is a good number on which to calculate your hourly rate.

Many service businesses (ad agencies in particular) use figures ranging from 1,200 to 1,600 billable hours per year per employee (especially for artists and copywriters).

But there's a big difference between them and you: those employees have teams of account managers and sales people bringing in work to keep them busy, and they have no responsibility for running the business.

As a freelancer, you'll be dealing every day with the problem of getting the work and doing the work. One way to maximize your billable hours is to make constructive use of your down﷓time. You'll note that my calculations make separate allowances for vacation, marketing, administration and down﷓time. Try instead to be flexible enough to schedule vacations when you have no work, or aggressive enough to use unplanned down﷓time for marketing. The result will be much more productive use of your time. You'll have more hours available to work and more work for your available hours.

If you begin with a realistic expectation of how many weeks, days or hours you can actually devote to client work, you'll have not only a better chance of pricing your services competitively ... but you'll have a more useful measure of your success.
*********************************************

David

[Madelene Ferguson Allen]

RE: Consulting Fees

Bruno,
Thank you so much for taking the time to break down the stages with thought and precision. What you and the others have said has given me an excellent platform (no pun intended) on to which to get started and build my estimates.

Now ... onward!!! Let's see now ... which button is that?

Cheers
Ferg