Planning to do business as a freelancer, consulting for software development and do not know what your rates should be? Here are some tips to help you out.
As with all forms of consulting, the fee for your services should ideally be commensurate with the value it adds to the client and the project at hand. Most often, this is not easily measurable. Even if it can be measured, beginners in the software consulting game may fear loss of opportunity if they do not price themselves good enough to attract and retain clientele.
Firstly, get a realistic perspective of your knowledge, skill sets and the value addition that you will be bringing to the client, project and overall business. Timeliness and punctuality are very important. Hence, take a realistic approach and add a buffer for estimating time for completion. Deliver on time, deliver qualitatively and particularly with software and technology related consulting deliver the latest, no client will be happy accepting out dated technology or obsolete software solutions.
Next, bifurcate your services; divide them into segments based on their value. Devise systems of charge for each segment. As a beginner, you may be required to do both run of the mill aspects of project development along with delivering the unique services for which your services are retained. You can consider calling the run of the mill services as ‘scheduled services' and state a fixed cost for it. All other high-end knowledge-derived consulting can be charged on an hourly basis.
Various systems of charge can be incorporated but let me suggest about three to four ways here. You can develop more as you do business. There are the scheduled or fixed cost consulting and hour-based fee charges that we already discussed. For medium to long-term assignments that do not take much of your time, consider charging a retainer fee. Remember to have a clear written understanding with the client as regards the scope of work and deliverables. Sometimes, clients insist on paying by the hourly basis and prefer to hire your services on a need basis. You can also consider a hybrid of any two of the three systems stated above - fixed cost for scheduled work; hourly rates for high value consulting. This gives the client a chance to fairly estimate costs towards your software consulting fees.
If you are working alone, make sure to not bill for more hours than it is physically possible; lawyers and law firms particularly are notorious in this area. Also, ensure that you specify whether costs of incidentals such as communication, broadband, additional equipment to be purchased for development, conveyance costs and so on will be charged exclusive of your professional fees. Provide a transparent and easy to read statement of hourly rates charged; this reinforces the client's trust in you and most often ensures timely payment. Lastly, remember to invoice on time and to collect on time. It is quite normal to collect retainer fees in advance.
The foregoing should give you a head start in understanding how much to charge for software consulting.