How much should I charge for fixed-price software contract?

  • Thread starter Robert Maas, see http://tinyurl.com/uh3t
  • Start date
R

Robert Maas, see http://tinyurl.com/uh3t

In recent years I've been unable to find anyone willing to pay me an
hourly rate for my fine work writing computer software. Apparently no
company is willing to hire anyone who has been out of work, for fear of
paying even minimum wage and getting somebody nobody else wanted and
now they know it's because they can't get any software working within a
reasonble time (hence for a reasonable amount of wages given hourly
pay). I have been offering to do trial work first, then get paid if
they like my work, but no company is willing to do even that because of
problems getting me covered under their liability insurance policy if
I'm not a legal employee yet I'm on their premises a lot. And of course
Stanford University (*SU*) was the only place that ever allowed me to
work remotely and keep track of my own hours worked, so working off
premises now is not an option. Telecommuting is a fantasy, an urban
legend.

*SU* (where I used to work before the Loma Prieta earthquake absorbed all
their university funding for damage repair, while their president
Donald Kennedy used governent research funds for his personal
pleasures such as yacht and summer home so we lost all our grants as
soon as the 1990-91 fiscal year grants expired, and a recession hit
about the same time so IBM and other companies which had been funding
us until then cut off their funding.)

A while back some people on the net suggested I work for a fixed-price
contract instead of an hourly wage. That way the company can tell me
what they need, and I can do all the work on my own time, and then when
I have something fully working I present it to them and they pay me
that fixed amount, and they don't have to worry I'll bill lots of hours
without getting the job done. But I never did that before, so I had no
idea how much to charge for any given program. I would like to get at
least Federal minimum wage, just as if I had an hourly job, but I have
no idea how many hours a project should cost hence no idea how much
would be a fair asking price.

During the 2005.Spring school term I took a course in distributed java.
One thing the instructor emphasized was writing up "Use Cases", and
agreeing to them with the customer, before starting any of the rest of
the design. After doing this (*UC*) for a few class homework
assignments, it occurred to me that given each Use Case specification,
I might be able to easily brainstorm with my customer (*RC*) and we
could agree to a specific list of methods needed to implement that
single Use Case in a nicely structured manner (*SP*), and I'd write up
that two-level list of use cases with methods of each. From my
experience with the homework assignments, I had an idea how long each
method took to write and unit-test (about one hour), so if I charge a
flat rate of ten dollars per method that would be fair. So putting this
all togethe, as soon as I write up the methods for each Use Case, I
could then immediately state my fixed price for each Use Case, and
hopefully the customer would be pleased at my resonable prices and
agree to the contract.

*UC* (just on my own, the instructor playing the role of "customer"
never had time to really look at my Use Case document much less
discuss it with me)

*RC* (a *real* customer, who actually *wanted* my software, and would
be paying money for it, so he/she would be willing to spend the
time necessary to make sure we were in agreement about what I'd
be implementing)

*SP* (no method that does more than one primary task, rather a bunch of
single-task methods and a bunch of task-controller methods that
merely call the various single-task methods without doing any
significant algorithm themselves)

I have found anyone anywhere around here who wants any software work
done, and all the job ads have required skills or experience I don't
have, making it a shot in the dark to send a resume to any of them, and
precluding getting any fixed-price contracts or even interviews about
such possibilities so-far.

Recently I've been working on a software project that is so large that
I couldn't keep track of it all without breaking it into modules in a
nice organized way. Each module implements all the software for
handling one kind of data, and typically provides what I call a "weak
enumeration" (*WE*), and related software (such as getting a whole list
of elements per some range specification i.e. sub-sequence, or doing
the whole process of constructing a new enumerator and getting one
element if any and discarding the enumeration within a single call,
etc.).

*WE* (instead of one method to say whether there is another element of
the collection available later, which requires look-ahead to make
that determination, the lookahead needing to actually calculate
the new element in a way that changes the state of an inner
enumeration, so the element must be cached or lost forever, and a
second method to actually retrieve the next element of the
collection, which was already cached during the lookahead,
there's just a single method which returns either the next
element if it finds any or an EOF value if it ran off the end
before finding any new element. By the way, what I'm doing in
many cases is having the outer enumeration be a "filter wrapper"
or just a reference wrapper (*RW*) around the inner enumeration,
and in some cases there are several levels of one enumeration
acting as a filter for the next lower enumeration, and shortly
when I'm nearly finished I'll have recursive loops in these
enumeration wrappers)

*RW* (Whereas a "filter enumeration" simply returns the same elements
that the inner enumeration returns, but filtering, i.e. passing
some but nullfiling others, a reference wrapper builds a whole
new kind of enumeration but requires some inner enumeration to
feed it data to process to make that outer enumeration. If you
like the word "continuation" instead of "enumeration" that's
fine. An enumeration is nothing more than a particular kind of
continuation, namely something that successively returns the
elements of some collection, virtual or real, whereas a general
continuation might return something else such as successively
more narrow ranges around a single approximately-computed value.
In my particular application, the dynamic nesting of reference
wrappers will be recursive! I.e. there will be reference loops,
where one large enumeration is defined to include a smaller
enumeration of the same class, possibly going around the
reference loop several times, and possibly branching in a tree
structure of references, until the leaves of that kind of
enumeration get small enough to use a more basic class of
enumeration instead, finally bottoming the recursion).

Now that I've broken the program (so-far) into separate files for each
class of data being processed and the one or more enumerations dealing
with that kind of data, I can step back for a moment and see what I
have so-far, sorted by size:

8 -rw------- 1 rem user 6591 Jul 8 18:27 2005-7-ranpri-gpsq.lisp
12 -rw------- 1 rem user 11310 Jul 8 18:31 2005-7-ranpri-gp.lisp
14 -rw------- 1 rem user 13319 Jul 7 18:10 2005-7-ranpri-mf2.lisp
16 -rw------- 1 rem user 14910 Jul 7 20:43 2005-7-mbbt.lisp
16 -rw------- 1 rem user 15653 Jul 8 18:35 2005-7-ranpri-mf1.lisp

(Those sizes include: code, per-method and per-enumeration
documentation, and unit-test rigs.)

I notice the modules range from 6591 to 15653 bytes, a factor of
2.3[7..8] (*II*), which is not very wide. After seeing this, it occurs
that I could offer a fixed price per class that I write, estimating
near the high end of 15k bytes, and if it turns out that the class
wasn't as hard as I estimated so the file didn't turn out as large as I
estimated, I could offer the customer two choices:
- Get a discount from the originally quoted price.
- Think of additional features to include in the class or in any other
class within the same billing cycle, covered under the original
price quote.

*II* (Hmm, as long as I keep talking about my proposals for Interval
Arithmetic, and my proposed notation to represent known digits
and range of unknown digits for output, I might as well use the
same notation whenever I post an approximate real-number value in
a newsgroup, and here (above) is my first such usage!)

So why am I posting this? Please anybody who has ever billed software
via fixed-price contracts, if you produced Java classes or Lisp modules
of approximately that size range I cited above, how much did you charge
for each such appx.-fixed-size class/module? I need your advice how
much I should state as my going price for fully working code with
unit-test and software documentation included. What's the going rate
for professional fixed-price software contracts of approximately the
size cited above.

P.S. If anybody has looked at the filenames listed above, and it
whetted your curiosity to know what big project I'm working on, just
ask and I'll tell. But if you read what I was posting about this topic
in sci.math a few weeks, you can probably guess, and I encourage to
post a followup making your guess public.
 
P

Phlip

Robert said:
In recent years I've been unable to find anyone willing to pay me...

We have been around this bush. What open source projects have you started
patching since I suggested it?
 
R

Roedy Green

I would like to get at
least Federal minimum wage, just as if I had an hourly job, but I have
no idea how many hours a project should cost hence no idea how much
would be a fair asking price.

There are websites where people offer contracts and bid on them.
check these out to get an idea the going rates.

--
Bush crime family lost/embezzled $3 trillion from Pentagon.
Complicit Bush-friendly media keeps mum. Rumsfeld confesses on video.
http://www.infowars.com/articles/us/mckinney_grills_rumsfeld.htm

Canadian Mind Products, Roedy Green.
See http://mindprod.com/iraq.html photos of Bush's war crimes
 
T

Tim X

Nobody nowhere on the planet is going to pay for software based on the
number of bytes in the source files! Software is not like potatos, you
don't get more money for providing more. Besides, most of the time,
the better you understand the problem domain and the higher your skill
and experience, the more you achieve with less.

If you are going to write software for a fixed price contract, the
only way to determine the right price is to have an accurate idea of
how long it will take you to do the work. The only way you can know
this is through a combination of knowledge/understanding regarding the
problem area and an accurate and honest estimate of your level of
productivity. It is also very important to have a clear and agreed
scope which not only includes specific deliverables, but also what is
not to be delivered and what the costs would be for changing the
scope.

To work out how much to charge for some software you write, you need
to know -

1. How many hours it will take you to complete the job. A useful trick
is to make your estimate and then multiply it by pi.
This often gives a more accurate figure once unexpected factors
come into play.

2. Determine how much you want to earn a year

3. Work out how many hours you can work a year. A useful formula is

(52 - holidays) * workdays_in_week * hours_in_workday = year_hours

Note that this is meant to be hours you can charge for, so you
cannot have 7 wordays in a week because there are lots of things
you need to do which you cannot charge for (chase down work,
marketing, taxes, general office admin etc). I've found that if
you are doing long term type contracts, you can generally work 3
days out of every 7, but if your doing short term contracts, you
need to do more admin and therefore can only work 2 days per
week. Its also important to put a real number on the hours you are
prepared to work in a day - don't put 16, put 8 or maybe 9. Note
that I'm assuming a 5 day working week with two day weekends.

4. Calculate your hourly rate by dividing your year_hours into your
targeted income for the year. Then multiple that rate by the number
of hours it will take to do the job and you have a figure you
should charge. Simple.
 
P

Pascal Bourguignon

A while back some people on the net suggested I work for a fixed-price
contract instead of an hourly wage. That way the company can tell me
what they need, and I can do all the work on my own time, and then when
I have something fully working I present it to them and they pay me
that fixed amount, and they don't have to worry I'll bill lots of hours
without getting the job done. But I never did that before, so I had no
idea how much to charge for any given program. I would like to get at
least Federal minimum wage, just as if I had an hourly job, but I have
no idea how many hours a project should cost hence no idea how much
would be a fair asking price.

This is rather easy.

If the target business process earns the corporation X dollar/year
without your software, but earns X+Y dollar/year with your software,
then you can sell them at a price that depends on the time to ROI they
will accept:

P/Y = TTROI

P = TTROI * Y

For example, if their business practice on investing is to expect a
TTROI of 0.25 year, and your software will allow them to earn 1 more
dollar/year/customer and they have 100,000 customers, that is, your
software will earn them 100,000 more dollar/year, then you can quote
it for P = 0.25*100,000 = $25,000.

Note the software might allow them either to increase their income,
or to decrease their costs; it doesn't matter, what counts is that it
increases their benefice.

Also it's possible that the software allow them only to increase the
number of customer even at the cost of a decreased earned
$/year/customer: it's better to have 100,000 customers/year earning $1
each, than only $10,000 customers/year earning $2 each. Your Y will
still be positive: $100,000 - $20,000 = $80,000.


It might be profitable to target businesses that accept longer TTROI,
or businesses with a greater number of customers (or with a greater
potential increase in customer number)
or software that give greater improvments in productivity ($/year/customer),
or both.
 
I

IchBin

Roedy said:
There are websites where people offer contracts and bid on them.
check these out to get an idea the going rates.
Example would be http://www.getafreelancer.com

--


Thanks in Advance...
IchBin, Pocono Lake, Pa, USA
__________________________________________________________________________

' If there is one, Knowledge is the "Fountain of Youth"'
-William E. Taylor, Regular Guy (1952-)
 
J

jonathon

Pascal said:
For example, if their business practice on investing is to expect a
TTROI of 0.25 year, and your software will allow them to earn 1 more
dollar/year/customer and they have 100,000 customers, that is, your
software will earn them 100,000 more dollar/year, then you can quote
it for P = 0.25*100,000 = $25,000.

So what would be the rationale for charging double for the same product
simply because they are willing to wait six months rather than three
for ROI?
 
C

Chris Sonnack

Robert said:
Telecommuting is a fantasy, an urban legend.

Hmmm...apparently I, and several folks I know, are living, or more
correctly: working, in a fantasy world.

Cool! (-:
 
P

Pascal Bourguignon

jonathon said:
So what would be the rationale for charging double for the same product
simply because they are willing to wait six months rather than three
for ROI?

Who told anything about reason? It's psychology. You approach the
"decider" with this argument: "Hey, with my product, in six months
you'll be earning twice the dollars you earn now.". While you don't
have a competitor bidding a TTROI of three months, you don't need to
bid less. If you good at it (you approach the decider in the right
context with the right adornments), you can even bid a TTROI of one
year.
 
M

Michael Sullivan

jonathon said:
So what would be the rationale for charging double for the same product
simply because they are willing to wait six months rather than three
for ROI?

That they will pay for it. You don't need to have a rationale -- you
figure out what term ROI they will accept and then price your product
accordingly. If other people are out there who can and will do the same
job for a lot less, then you can't use that idea. But if you are the
only one who is calling on them (or whom they know) who can implement
the idea in question, then you should be able to get whatever the cost
savings merit from an investment standpoint.

There's a problem with Pascal's analysis though -- it doesn't allow for
uncertainty, and uncertainty is a very hard sell. You can do the math
to allow for it, but if the person you are talking to doesn't understand
things like Expected value, utility of money and other speculation (or
gambling) principles, they are going to tend to be much more risk averse
than they "should" be depending on the decision maker's personality.



Michael
 
M

Michael Sullivan

In recent years I've been unable to find anyone willing to pay me an
hourly rate for my fine work writing computer software. Apparently no
company is willing to hire anyone who has been out of work, for fear of
paying even minimum wage and getting somebody nobody else wanted and
now they know it's because they can't get any software working within a
reasonble time (hence for a reasonable amount of wages given hourly
pay).

Robert, I think you should pretend that everything you think you know
about work and what companies are willing to do is incorrect. Flush it
all out. Empty your mind. Then do some reading.

You have so many *huge* misconceptions, and you filter all your
experiences to match your map of the economic world as a brutally hard
place where no-one ever hires anyone for a living wage, and nothing you
can do will ever result in getting back the kind of career you had 15
years ago.

Programmers can't ask for minimum wage, because professional programmers
*don't* *get* *paid* *minimum* *wage*. If you walk into my company and
claim you are a software developer and expect me to pay $7 an hour for
your labor, and I don't know you, and I can't watch you do real
programming work in front of me -- I'm going to assume you are a
*crank*, and not a developer.

Competent developers in *any* language, even baby scripters make at
*least* $30K a year just about anywhere in the US or other rich
countries. Probably much more in the bay area. Competent *secretaries*
make at least $30K a year, as do competent graphic artists and any
number of other office workers. Do you think software development is
easier than that? Is what you are doing less valuable to your potential
customer than those jobs would be to an appropriate enterprise? Do you
think the pool of competent programmers is bigger relative to the
demand?

If you think your skills are worthless, why would anyone else think they
are worth anything?
So why am I posting this? Please anybody who has ever billed software
via fixed-price contracts, if you produced Java classes or Lisp modules
of approximately that size range I cited above, how much did you charge
for each such appx.-fixed-size class/module?

Are you kidding me? The price per byte of source code is exactly zero.
Nobody cares how much source you write. They care about what your
program *does*. They care about how much money or time it saves them,
or how much profit they will make on new business it allows them to get.
If you can't come up with a way to estimate those numbers and it is not
self-evident to the potential customer, then they will not pay you a
dime for any amount of code.

Secondly, if you are not charging an amount that will equate to at
*least* $30 per billable hour, nobody will take you seriously. There is
almost no profession or trade that doesn't bill at that rate or more.
Car mechanics, house painters, and small job handymen bill at least that
much. If you aren't asking for that much on a contract basis
(especially short term contracts), it will be assumed that you don't
have that much skill.


Michael
 
P

Phlip

Michael said:
You have so many *huge* misconceptions, and you filter all your
experiences to match your map of the economic world as a brutally hard
place where no-one ever hires anyone for a living wage, and nothing you
can do will ever result in getting back the kind of career you had 15
years ago.

Thank you. This is a "beliefs create reality" thing, not even a career
thing. Robert is advised to read both /What Color is my Parachute/, AND /The
Nature of Personal Reality/ by Jane Roberts.

Repeatedly asking this newsgroup for advice, then not following it, is bad
karma.
 
R

Robert Maas, see http://tinyurl.com/uh3t

From: (e-mail address removed) (Michael Sullivan)
Programmers can't ask for minimum wage, because professional
programmers *don't* *get* *paid* *minimum* *wage*.

Your comment is irrelevant because I don't ask for money from anyone,
not minimum wage, not any amount whatsoever. It makes no sense to ask
money from somebody who has never indicated any willingness to pay me
whatsoever. If and when anybody expresses an interest in paying me to
do work for them, *then* the amount they offer or the amount I ask or
the amount we agree upon would become relevant. Right now what I need
most of all is simply interviews. I haven't even one employment
interview since 1994. (Somebody at a job faire who is standing in a
booth and has everyone who walks up show their resume and he spends 10
seconds looking at my resume to declare they don't have any openings
that I'd qualify for, doesn't count as an interview.) That last
interview was on Miranda street in Palo Alto just off Foothill
Expressway. I remember that street because that's my daughter's name
(named after a character in the StarTrek-TOS series). The next-to-last
interview was about four hours long, 45 minutes with each of five
interviewers, for a company on Middlefield near 237, in 1993.Dec. When
I got back home from that totally exhausting interview, my wife accused
me of being out with another woman the whole time, and refused to let
me call the company on the phone to have her talk to them to convince
her it was a job interview that took so long. That company strung me
along more than two months before they finally told me they hadn't
decided to hire me. The third-from-last job interview I can't remember
whether it was for RSA data security or the company in Concord or what.
That second-to-last-interview was so horribly exhausting it tended to
erase my memory of the sequence leading up to it.
If you walk into my company and claim you are a software developer
and expect me to pay $7 an hour for your labor, and I don't know you,
and I can't watch you do real programming work in front of me -- I'm
going to assume you are a *crank*, and not a developer.

And that whole diatribe of yours is a strawman, because I *never* walk
into any company *expecting* them to hire me, at any price, whatsoever.
I hope they'll hire me, but I would never *expect* you to hire me.

Also, I've offered to do trial work for free just to prove I can do
something useful very quickly, get it up and running in a few hours one
day, but nobody has been willing to let me demonstrate. So your remark
about "can't watch me do real programming..." is bullshit. Come here
right now (well not now at midnight, but tomorrow when it's legal
visiting hours in this subsidized housing complex) and I'll work for
you right in front of your eyes, and then I still won't *expect* you to
proceed to hire me, but I *will* expect to post to the net that I did
what I said I could do. So I've made the offer to contest your
bullshit. The ball is in your court. Put up or shut up. I can
demonstrate either Lisp (CMUCL) or Java (J2SE 1.3.1), your choice.
Competent *secretaries* make at least $30K a year,

Competant *employed* secretaries only. Unemployed secretaries don't
make $30K/yr or anything even close.
Do you think software development is easier than that?

For me, yes. I have no idea how to do, or I'm incapable of doing, the
kinds of tasks that secretaries usually do: schedule meetings, deal
with office politics, schedule airline flights, type 125 WPM (I can
type about 60 WPM, after deducting 5*errors, during a short test, but
then I'm exhausted for an hour or so), understanding strange foreign
accents over the phone, hearing five people talk at the same time
without spacing out, understanding somebody in high-background-noise
environment, switch back and forth between multiple tasks every 2-3
minutes without getting confused, read or type or think at the same
time as listening to somebody talk to me, make coffee, remember names
and faces of new people I've just seen for the first time.

Designing and implementing computer software to solve specific problems
that are well-defined, in a quiet environment with nobody interrupting
me or talking in the same room, is a lot easier for me than what a
secretary does.
Do you think the pool of competent programmers is bigger relative to
the demand?

If you're referring to people capable of designing and implementing new
software, yes, there are hardly any jobs available, but lots of
unemployed people begging for such jobs.

If you mean people with exactly the skill sets required according to
typical job ads, no, there's probably not one person in the world with
all those skills simultaneously in one person.
If you think your skills are worthless ...

From a false premise like that, anything you say next is worthless.
(If you don't believe that "a implies b" has the same truth-table as
"not-a or b", you have some urgent homework to do.)
They care about what your program *does*.

No they don't. They *should* care that I have produced lots of good
working software and I can make more even now, but nobody ever cares
what I can do. Not one person (other than myself) has expressed any
interest in any software I've written in the past 15 years. I've been
begging people to look at my software I've already done, but they say
they don't have the time or interest. The closest I ever came to
somebody showing an interest was when I drove around to *all* the
employment agencies/recruiters in Mountain View trying to show them my
CGI/CMUCL demo, and only one would look at, a guy at Volt, and he said
he liked it, but he recruit only for MicroSoft and they haven't been
hiring since the recession started in early 2001 and show no prospect
of hiring any time soon. When I called back another year he said they
still weren't hiring, haven't been hiring the whole time from 2001.Jan
to last time I asked. But after I left his office, as far as I know he
never again looked at my program, so I don't count him as showing
interest in it, and he didn't want to see any other of my software
whatsoever.
They care about how much money or time it saves them, or how much
profit they will make on new business it allows them to get. If you
can't come up with a way to estimate those numbers and it is not
self-evident to the potential customer, then they will not pay you a
dime for any amount of code.

I have not the foggiest idea how much money some company will make in
the upcoming years. Even their Chief Financial Officer can't say that,
although at least he is privy to inside information that would give him
a Sahara-snowball's chance of making a halfway decent guess. Me, I have
*no* inside information, I'm not privy to their confidential business
plan or internal projects etc. so how do you expect me to do better
than their CFO at predicting their upcoming profit with and without my
new software?
if you are not charging an amount that will equate to at *least* $30
per billable hour, nobody will take you seriously.

What, you expect me to send a bill to somebody who has never given me
any reason whatsoever to expect them to ever hire me or pay me
anything?? Wake up, idiot! I can't charge somebody until and unless
that person agrees to hire me.

Should I start charging you $60/hr for the time it takes me to rebut
your stupid newsgroup postings?? Can I quote your remarks as evidence
that you offered to enter into a binding contract with me for more than
$30/hr for my services, and now you owe me for my time, at my stated
rate of $60/hr which is the going rate for consultants who have 22+
years experience as I do, whereupon if you don't pay I can send your
account to a collection agency and expect to collect on it?

P.S. I'm still pissed that RSA Data Security didn't hire me even though
I was fully qualified for the opening they had. That's the one job
where I got interviewed and they were impressed with me and I really was
fully qualified and I should have gotten the job.
 
T

Tim X

Pascal Bourguignon said:
Who told anything about reason? It's psychology. You approach the
"decider" with this argument: "Hey, with my product, in six months
you'll be earning twice the dollars you earn now.". While you don't
have a competitor bidding a TTROI of three months, you don't need to
bid less. If you good at it (you approach the decider in the right
context with the right adornments), you can even bid a TTROI of one
year.
A lot of people overlook the psychology aspect when first starting
out. I lost a few initial contracts because I was too cheap and
prospective clients thought I was either an amateur or didn't do a
good job. When I increased by rate, I began to get more jobs. At the
time, I felt uncomfortable asking for what seemed to be far in excess
to what the work was worth - then I realised if the market would
handle it, why not get what I could - especially if doing so gave me
more choice.

Tim
 
T

Tim X

Chris Sonnack said:
Hmmm...apparently I, and several folks I know, are living, or more
correctly: working, in a fantasy world.

Cool! (-:
Me too. I telecommuted for over 6 years. Then the company was bought
and I was made to work in the office - 3 months later, they asked if
I'd like to telecommute again. I like to think it was because I was
more productive working from home, but it could have been my
personality or body odor!

Actually, when I ceased telecommuting, I actually realised I'd missed
workinig with others and I doubt I'd do it again - unless I was
semi-retired and doing it part-time.

Tim
 
C

Coby Beck

Chris Sonnack said:
Hmmm...apparently I, and several folks I know, are living, or more
correctly: working, in a fantasy world.

I prefer the term "virtual reality" ;)

I sometimes worry how well I will handle having to have my butt in the
office every day again (after almost 4 years with only a few months here and
there not telecommuting) if/when I change jobs next...
 
C

Chris Sonnack

Michael said:
Are you kidding me? The price per byte of source code is exactly zero.
Nobody cares how much source you write. They care about what your
program *does*.

It's like the old joke about the ocean-going vessel that broke down
at sea. The ship's engineer--no slouch--just couldn't identify the
problem, so they had to call for help.

Guy arrives on a helo, spends some time walking around the ship, takes
out a large wooden mallet and bangs on one particular pipe a few times.

Ship starts working, and the guy gives the Captain a bill for $10K.

"Ten thousand dollars," exclaims the Captain! But all you did was
pound on a pipe.

"Ah," replies the guy, "it's knowing where to pound."
 
S

Scott Ellsworth

From: (e-mail address removed) (Michael Sullivan)
Programmers can't ask for minimum wage, because professional
programmers *don't* *get* *paid* *minimum* *wage*.

Your comment is irrelevant because I don't ask for money from anyone,
not minimum wage, not any amount whatsoever. It makes no sense to ask
money from somebody who has never indicated any willingness to pay me
whatsoever.[/QUOTE]

Having read your initial post, and this one, I have what may sound like
a hostile suggestion. I really do not mean it to be, but I have not
found a comforting way to say this.

Your attitude, from the outside, _appears_ to be one that will offend
many potential employeers. I am not saying it is, just that it sure
sounds somewhat combative and angry. Employers want to see eagerness to
do the work, combined with an awareness of how what you do will make
them more money, or will let them accomplish their goals.

You are implicitly asking them for money, even if you are not holding
out your hand the moment you walk in the door. Part of your task is to
convince them that you are someone they want to give money to, in return
for what you offer them. That you are someone that they want to spend
time with, really. For me, a big part of that is showing such a
potential client that they will make more money, more sales, more
science, whatever, by having me help them, and that the time they spend
will be pleasant, rather than combative.

I am consultant. I solve problems for people, so they can get more
done. If someone calls, I may well go out on spec, with no written
contract. I may spend a day or two talking to them, building a
proposal, and other good stuff like that. Even though I do not quote a
rate, or a point at which I will stop, they know that this work is
supported by the eventual contract we hope to sign. Thus, if we do not
seem, in my opinion, to be making progress, I may stop talking to them.
Not in anger, just because I eventually have to do work that earns money.

Consulting groups like ours charge between $100 and $150 an hour,
depending on the exact skill set of the person at the client. To earn
that, a consultant has to earn them roughly $4000-$7500 a week, and we
always keep that number in the back of our minds. We earn them that,
because we have done this before, and we know what works for the markets
we are familiar with. We may spend a month on the beach getting a new
technology to the point where we can charge those rates, perhaps in the
context of an open source project.

If you do not have a good track record, you still need to be charging
enough to justify their time. If the person you interact with earns $50
an hour, then one marathon meeting can cost the company more than your
weekly salary or bill. I would not go below $15 an hour, and something
in the $30-$50 sounds a lot closer to what I would expect for a
reasonably experienced and competent software guy.

The true rate, of course, really depends on what you can do for a
potential employer. As an salaried employee, you should only half to
two thirds of that hourly rate goes to you - the rest goes to benefits,
overhead, and the like. Look at how much the work you propose to do
would be worth to them, then charge accordingly. You do not get all the
money you save them, but you should get a reasonable fraction, and
should be able to explain why that is a reasonable fraction.

If you do not know what your skills are worth, find an open source or a
volunteer non profit, and do some work for them. Then watch really
carefully for chances to get more done, or to save money by providing a
decent service. This is how you know what that dollar figure is.

I am not trying to be flippant, nor am I trying to be mean. The above
touchy-feely stuff is the best way I know to explain how you justify a
potential wage to someone, and even if you want to do the work for free,
you still should know what that work is worth.

Scott
 
C

Chris Sonnack

Robert said:
Should I start charging you $60/hr for the time it takes me to rebut
your stupid newsgroup postings??

Only if we can re-charge you back $120/hr for your whining Eeyore.
 
D

David Golden

Robert said:
Your comment is irrelevant because I don't ask for money from anyone,
not minimum wage, not any amount whatsoever. It makes no sense

Do you think normal humans are sensible, logical?
(or at least naively logical like a programmer expects a computer to be
by default - often there is some sort of twisted logical system
governed by discernable rules that the terran scum <sorry> humans, are
acting within or marketing wouldn't work.)

There's your problem. A theory of computer-mind you might have for
dealing with computers won't work well with most humans without
significant rewriting.

You might want to read through the http://www.consumerpsychologist.com
pages.

e.g. from http://www.consumerpsychologist.com/price_response.htm
"""
Note that consumers often have few indicators of quality, so price may
be perceived as one of the better available cues.
"""

If you set your initial price too low you risk being perceived as low
quality. Prior to a sale, and even if your labour is the product for
sale, those perceptions really matter!
 

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