Re: Consulting Rates?

On 5 Sep 2003 06:59:58 GMT, SolarCat <[EMAIL PROTECTED]> wrote:

>
>After applying and interviewing for a Marketing Director position at a
>small high-tech company, I was told they've decided not to fund a
>full-time position now but may wish me to work with them as a
>consultant on specific projects. I'm open to such an arrangement, but
>having never consulted in this field I'd like some feedback on what
>rates might be considered standard and/or reasonable under the
>circumstances.
>
>For the sake of argument, let's say that the full-time position would
>have paid $80,000. That would be $40/hour based on a standard working
>year. Add the benefits that a self employed person must provide for
>him/herself plus the other costs of part-time self employment, and it
>seems to me that twice that, $80/hour, could easily be justified. On
>the other hand, I know that the company views this in part as a kind
>of internship in their industry, with which I am not familiar. And
>they're trying to save money with the consulting arrangement. I
>suppose another potential complication might be the idea of
>per-project fees rather than hourly.
>
>Add this all up and I'm uncertain what to ask for or agree to. Any
>thoughts would be appreciated. Thanks.

Your calculations and assumptions are correct: it's quite the norm for
contract rates to be about double the effective hourly rate of an
annual salary for the same position.

You say that  "the company views this in part as a kind
of internship in their industry, with which I am not familiar".  But
are you familiar with marketing?  You must be, or you wouldn't have
even applied for the job, right?

In my experience it's far less important to be familiar with the
specific industry than it is to be an expert in the skills required
for the job.

I freelanced for a long time as a technical writer, before retraining
and moving into multimedia development.  In both fields, the skills
and knowledge and expertise I bring are in MY fields, not in the
industries to which my clients happen to belong.

As a technical writer, I worked on such diverse things as engineering
project reports for a process control engineering firm, grant
applications for performing arts groups, annual reports for community
service non-profit agencies, computer software and hardware
installation, configuration, and end-user manuals, network security
policies and procedures, marketing materials and proposals for all
kinds of organizations, and an FDA submission for a medical device (a
DNA sequencer that used lasers, of all things).

As a multimedia developer, I've worked on web sites for municipalities
and economic development commissions, a massage therapist, small
businesses with online stores with a wide range of products and
services, an adult-content site for a personal coach (don't ask), and
others.  For multimedia CDs, I did educational ones (Shakespeare and
SafeBoating) that even included games, a retirement tribute
presentation, and a marketing presentation for a large indoor
stadium's private and corporate boxes.

Was I familiar with all of these industries?  Not on your life.  But I
am a good technical writer and multimedia developer, and THAT'S what
these clients hired me for.  The details of their industries or
specific projects I picked up in the course of executing the
contracts.

Besides, as you already noticed, this is going to be part-time
contract employment, right?  A normal full-time work year is
considered to have 2080 hours of paid time: (8 hours per day) x (5
days per week) x (52 weeks per year).  In my very best year, I think I
had about 1600 billable hours.  

Also, while the listed salary for a position might be $80,000 it costs
the company a whole lot more than that to actually have that person on
staff.  These extras are called burdens, and include things like
health benefits, unempolyment and social security costs, training,
overhead for desk and floor space and computers and support services
within the company, etc.  I did a stint as a marketing coordinator for
an engineering company -- we generally assumed that these burdens came
to between 25% and 30% of the effective hourly rate for full-time
employees.

You aren't going to be charging for those burdens.  As you noted,
thoses are some of the costs that contractors must assume themselves.
So that full-time person with the annual salary of $80,000 is probably
costing that company more like $100,000 to $104,000 right from the
start.

If you're bringing solid marketing experience to the table, that's
what you should be charging for.  If you're not an experienced
marketer yet, then yes, you probably should reduce your rates.  But I
doubt whether the company in question would hire a rookie marketer at
the same annual salary as an experienced one anyway.  So the principle
of doubling that original annual salary to arrive at an hourly rate is
still valid.

Win
--------------------
Win Day, Multimedia Developer
Words Plus
http://www.wordsplus.net
[EMAIL PROTECTED]