Re: Consulting Rates?

"Subba Rao" <[EMAIL PROTECTED]> wrote in message
news:[EMAIL PROTECTED]
>
> For all the excellent insights that were provided for this question, I
> have a question relating to the hourly rates. SolarCat's area of
> specialization was in marketing.  Since I would like to do my own
> consulting work, which happens to be in Information Technology area,
> would the rule of thumb (ex - 2.5 x hourly rate or yearly salary/100)
> formula apply for this area of speciality?  IT is kind of flooded with
> talent.  From what I hear employers are pointing at other coutries for
> cheaper labor.  In such environment, is there any other alternative to do
> the pricing or stick to the formula provided in this thread?

Don't try to compete head-on with for work that can be outsourced to the Far
East. Come up with a strategy. What can you provide to your customers that
they can't get from India for $5/hour?

The 2.5 multiplier is just a rule of thumb, nothing more. You have to figure
out how much money you are going to have to make in order to run a
profitable business, and if you are going to fall into the hourly billing
*trap*, then you have to determine how many hours you will be able to bill
each month and do the math. Chances are the math will reveal a number that
is 2x to 2.5x what you would make an hour doing said work at a full time
job.

What you really need to do is provide value to your customers, and then
charge them something less than the amount of value you provide. It is
important that you make it clear to them just how valuable the things you do
for them are and how good a deal they are getting by hiring you to provide
that value. Then do the work and get paid. THAT is the trick. That is what
you have to do to start and run a successful business.

Read my earlier post again. It is not easy to start off as an independent
consultant, in any field but especially IT, selling fixed-rate projects that
involve the payment of bonuses, royalties, or stock in the company. However,
over the long term you will need to align yourself with such a strategy or
you will forever be working by the hour.

Good Luck!

Mike