Tag Archives: contractor

Talking about rates amongst peers…

Rates… How much to charge? Who’s charging how much?  What for? etc. Very subjective topic, and not that straightforward to discuss.

I blogged about this topic last year, What’s in a rate? and Was the rate worth it? to discuss some intrinsic considerations that go into determining rates.

This is a brief summary of 90+ minutes of discussions…

Last Wednesday I facilitated an ISPI Montreal event, entitled “Everything you always wanted to know about rates, but were afraid to ask…“. It was a pretty good event, lots of questions and interaction between participants. We were particularly happy that we had a fair number of student from Concordia University’s Educational Technology program: gave them the opportunity to hear their future peers talk about this hot, business topic.

Part of the event was to present the results of a survey we ran to our local ISPI Montreal members, and compare the results to the same survey dating back to 2004: the conclusion?  Rates have not changed that much over a decade (see for yourself).  Most likely due to the fluctuation of the economy, which affects the job market and the expenditures for training. And we all know that tougher times brings down the axe on training which is always front and center for the chopping block.   😦

We basically asked the participants two questions, to trigger some discussion and reflection…

First: What factors influence the rate you charge when working directly with a client?

Participants broke off in small groups and went off to come up with their prioritized list of factors. We tried to mingle the students evenly so they benefit as mush as possible from their future peers.

The result? See for yourself… (sorry, I’m missing one)

Of course skills set, experience and knowledge came out, but not education per se, or more precisely, the need to have an education such as the one offered in Educational Technology.

What came out more was about the type of work and the context in which that work needs to be done: type of work, the market, the economy, the profile of the work, its length, specific technical skills, the budget available, the industry, etc.

Second: How do you explain/justify your rate?

This question we addressed as one group.

Right off the bat there was a reaction to the word “justify”. Didn’t expect it but wasn’t surprised. What was argued is the rate you present is the rate that should be. I guess it’s fine when either you offer a pretty clear value of what that rate buys, or there isn’t much competition, or you’re in demand – one would assume that if you are in demand then you are worth what you are charging.

But when you don’t have any of those conditions, it’s a different ballgame. Especially if you’re dealing with a client that is bottom-line driven. But you can always pass.

The discussion moved towards the concepts of value, uniqueness and expectations. In essence, it’s about being a business: being a consultant requires that you look at yourself as the “product” your business offers. As such, you need to need to consider these concepts and package a service offer that supports the rate you want.  Or, as one of the students said, the rate you “offer”.

But all in all, rates are just a unit for calculations, right? The bigger question is “how much one takes to do a job?” If one person charges $100/hr and takes 100 hrs to do a job, while another charges $75/hr and takes the same amount of time, with the same outcome in quality and alignment with expectations, why is the cost different? We often say that in theory, the higher the rate, the faster the job and the higher the quality, right? Or is it not so clear cut?

As I say in my previous posts, there are a lot of intrinsic aspects that add value to a person offering their services. The key, as it was discussed in the latter part of the evening, is the value offered and the value required. This leads to clearly stating and understanding expectations from both sides of the fence.

One point was brought up about using salary as a gauge to determine an equivalent rate. A friend of mine who’s working in a para-public organization explained to me the way they do it: you take the salary, for this example let’s say… $50k for a junior position, add 30% to cover benefits, and then account for how much time off you want, how much time you think you’ll need to run your business and LOOK FOR WORK, that gives you a daily rate of about $325 or an hourly rate of $41. These numbers came up with this little Excel sheet I made for you.  🙂

More live discussions should be had, on topics such as base Ratios for Design and Development, scoping & estimating, constraints & risks…

Makes sense?

PS: you can always take a look at my previous posts on these topics:

Was the rate worth it?

Value and Expectations of a Rate?

In my previous post, What’s in a Rate?, I tried to get into the various dimensions of the value you either offer or look for in people, to do a certain job. In addition to the “traditional” dimensions of education, skills and experience, I looked at professionalism and mindset. I also made a point that the expectations need to be CLEAR!!!   …on BOTH SIDES!!!! That is, at the time the rate is “negotiated”.

After chatting about this with a very good friend of mine, Gordana Stok (check out her very interesting blog at contentbridge.ca), she looked at the other side of the coin… the result of what was done for that rate:

What about the quality of the deliverable… Was it completed on-spec, on-time and on-budget? Did it achieve the end-goal? Was more done than expected? Was it easy, agreeable to work with this person, was he/she a team-player? Was he/she difficult to deal with? Did he/she create problems? Etc.

Basically, the question is Was it worth it? Was it a good “deal”? This of course needs to be looked at from both the seller and the buyer’s sides.

Was too little paid for the services rendered?
Was too little paid for the services rendered?
Was too much paid for the services rendered?
Was too much paid for the services rendered?

Obviously, we all aim for perfect balance, like my first illustration at the top: perfect balance between services rendered and the price that was paid for it. Though nothing is perfect, you can balance it out by making sure that (1) ALL expectations are clearly defined at the START, and (2) reviewed at the END.

Sadly the reality is that ALL expectations are not clearly or completely defined, or the review is not done properly, if at all. It may likely be discussed internally in the organization of the buyer, but is it conveyed to him or her? Most often then not… no. Either nothing is said, or very little: “Good job” or “There were a few things we should discuss, but we’ll chat about them when we start the next project…”

When it’s time to review, first ask the following questions to both sides:

  • Was the job clear?
  • Were the expectations clear?
  • What was the result?
  • Was it under delivered or over delivered?

Once answers are aligned, you can ask:

  • Was the rate too low?
  • Or was it too high?

Clarity benefits everyone, and contributes to building great working relationships.

Make sense?

What’s in a Rate?

value vs rate scale

Over my professional life, I’ve been on both sides of the fence: charge a rate for my services, or pay a rate for someone else’s services.

So like everyone else, I’ve had to decide what I was worth (sometimes even on the spot, which is NOT recommended…), and also decide what someone else was worth. It ain’t easy because it is very subjective. To make it easier, some people look at industry rates, to… standardize. But that is not necessarily good: by definition “industry” refers to somewhat large scale sampling, with attributes evened out or simplified. Yes, there is a need for that. BUT, there is also a need for considering each single decision/context/contract/hire: what is the value I am offering/looking for?

Because ultimately we are talking about people who are going to get paid for specific work, and because it [too] often creates tension/noise once we get into it, I recently have been trying to think a bit more about it, to hopefully make it easier, and fairer, somehow. And I hope I will generate some discussion and… make the world a better place, one person at a time.   😉

Side note: some organization have decide to open the books, at least internally, to let everyone know how much everyone is getting… (see Happy Manifesto, p. 68 “Make salaries open”): the result?  Very positive! (…supposedly).

So… here are my thoughts, and back to my initial question: what’s in a rate?

Yes, there are the standard attributes: education, skills set and experience. But is that it? Certainly not. What about specialties? What about other skills not necessarily [directly] required, but could very much be beneficial for the job? What about professionalism? Mindset (agility, creativity…)?

Should we not consider more than standard attributes?
Should we not consider more than standard attributes?

Yes, there are plenty of things to consider, not to mention the so-called “millennials”, which, I’ve been told, are changing the world!  Don’t get me wrong: I love working with everyone, and especially those that want things to move fast, including millennials.

Side note: yes, I know. Millennials are different. I was too when I showed up on the marketplace. Every generation is different… from the previous one. The millennials are probably somewhat different than previous new generations, because of the technologies, [and how they were raised]… Here’s a good piece on the topic: why everyone is wrong about working with millennials.

Back to the rate question: Wouldn’t it be great if we had a machine, or app, that scans the service offerer’s thumb [or retina], then the service requester’s, computes a bit, and then and bang!, displays the fairest rate???

Sure. But… it ain’t gonna happen any time soon.

Let’s go back to the rate’s dimensions I mentioned before, and break them down a bit:

  • Education
  • Skills set – Specifically those requested + others that may be beneficial
  • Experience
  • Professionalism
    • Quality of output (including attention to detail!)
    • Reliability
    • Engagement
    • Honesty (say when you can’t do something… capable of asking for help)
  • Mindset
    • Agility (don’t get stuck, open to learn new things – even on their own dime…)
    • Creativity (openness, stepping back, investigate, etc.)
    • Drive (the positive one, not negative of course)
      • Team-oriented, for the benefit of all
      • Personal, to surpass one self
    • Potential?

Let’s be clear: I am NOT saying everyone should have ALL of that!  I’m just saying there is more to consider than the basics.

To illustrate the variance that exists amongst people, consider the following illustration, which shows different people, differently “equipped’ who could potentially do the same job, at the [fairly] same quality, thus the same value ($$$):

Could different people, differently "equipped", do the same job, at the same level of quality?
Could different people, differently “equipped”, do the same job, at the same level of quality?

So if the above is true, how can we fairly evaluate these people???

Could this constitute a new resource criteria grid? Is it too “soft”? Could it be graded (not to say rated)?

Finally, whatever the criteria is… an important key aspect to keep in mind: the expectations need to be CLEAR!!!   …on BOTH SIDES!!!!    🙂

More to think about…