This is a thoughtful and well-written piece, and is accurate as it goes, but it misses that the subtext of all that not-quite-applicable advice is “seriously stop doing staff-aug contracting and start doing consulting projects so you can add a zero to your effective rate and no that’s really not hyperbole”. I’m really glad the last section is about how he moved this direction and that it’s working out for him.
And to add a data point, for senior-level staff-aug in Chicago the rate is $150-$225/h, but most clients probably want a team rather than an individual. I’m sure someone with a reputation for solving problems in an expensive niche could exceed that solo, but that quickly lookis more like project-based consulting than an hourly warm body.
I price like a project- as if I would hire a separate contractor (staff-aug no less) to do each job, including the project management, and bump up the prices for my cut. I then just do it all myself and keep the money. I have a use-it-or-lose-it bank of support hours, and if I find any new problems along the way I can sell my time to that as well.
I don’t even show up to a meeting by myself, but instead bring a friend/temp as a secretary (And maybe another as one of the engineering members of my team). The cost is minuscule, but the effect is massive: They don’t see me as an individual but as a company, and that’s a good thing because people like companies.
I agree it’s good to see a little better glimpse into “how to stop contracting and learn to love consulting”, but I don’t want to do staff training either, so maybe it’s important to just say it like it is: That there’s lots of ways to do consulting, and the reason there isn’t a detailed how-to guide is just most of it is about reacting; that there’s very little one can say that applies generally to all consultants (or even most).
Who signs the NDAs for all the ficticious employees?
Employees shouldn’t sign NDAs individually. A director, or someone otherwise charged with the responsibility of binding the company should sign them.
Also: They aren’t fictitious. I provide roles for pay, and whilst I will often do all of them myself, I will subcontract roles that I don’t want to do (or can’t do).
Hey Peter! I’d be curious to understand better what you mean. One of my main intentions with the post, although I didn’t do a very good job of saying this, was to kind of say, “If you’re confused as to why most freelancing advice seems not to apply to you, it’s not because you’re stupid or because something’s wrong, it’s because of these certain realities of the way most freelance programming work is arranged.” I tried to also point to a solution to the problem, although I can only be helpful in a limited way because I myself don’t have it totally figured out yet.
You start off and totally nail the most popular good advice given to freelance developers, and under “Consulting vs. contracting” you give a good explanation of how the two differ. In the rest of the article you do a great job of talking to contractors and saying “Yes, from where you’re standing, this advice does seem useless”.
But you don’t lead into it or end it by mentioning that consulting is not hard to move into from contracting, that it really is better for their wallet (and sanity), that the advice is not actually out-of-touch with the realities of freelancing. The “charge more” section was especially frustrating because you do a great job of explaining with real numbers how it feels to hit the ceiling on rates, but the conclusion is “if I want to escape market rates for programming, I have to offer a service other than programming”. While that can be one way past the ceiling, it is far from the only way, but this isn’t clear because it’s all still in the first-person story mode. I hate seeing anything that looks like “yeah, you just can’t charge more unless you stop coding” because it has led to really limited, crab-bucket communities of freelancers who are missing out on value they could deliver and receive.
So overall I like the piece: it’s got verisimilitude details from your personal story, it thoroughly explores common advice, it’s well-organized and written. But I felt like it missed the point of all that common advice. It sort of reinforces the idea to programming contractors that the advice isn’t useful/attainable, that it somehow missed the reality of their experience, that it could be great for them.
(Also, I count myself lucky to have seen your invitation request in the queue so you could join the conversation here. Welcome!)
While that can be one way past the ceiling, it is far from the only way
What other ways do you know of? I’m genuinely very curious about this. The 3 ways I’ve found, like I mentioned in the post, are 1) do very specialized work that’s not readily available anywhere else, 2) charge a “rush rate” for an emergency, 3) charge by the project and offer a service other than programming.
One thing that makes it hard for me is that I haven’t been able to find many examples of programmers escaping market rates. In fact, I’m actually among the most successful freelancers I know, which kind of sucks because I don’t consider myself particularly successful (yet). So most of the time I’m blazing my own trail as opposed to copying successful tactics from people who are ahead of where I am now.
When I picture the Econ 101 graph of supply and demand setting prices, your first way is about limited supply and your second is about increased demand. So I agree those two are the fundamental ways to see a higher price for programming work.
But I strongly disagree with your third way. Charging by the project is great, and you don’t have to get away from programming to do it. Define projects oriented that have a high expectation or delivering a lot of business value, then charge a percentage of that. An ass in a seat pushing tickets along looks like you’re as much of a fungible resource as the chair you’re sitting on. Don’t work like you’re an office chair. Work like you’re a systems thinker who can identify areas where you have the most leverage, make sure they know the value that’s on the table for them, and charge like your work is an investment.
To get low-level: stop offering hours and taking direction. If someone wants their site hosted, that’s not 90 hours of AWS config, that’s a project with a one-button deployment pipeline, a targeted uptime, an early-warning monitoring system, a disaster recovery plan, a retainer for emergency security fixes, the right amount of performance to meet their measured needs. Same work, serious presentation. Don’t stop being a programmer, just start being a businessman.
Agree with everything except the “stop being a programmer” part. Indeed: A programmer who does business is more powerful than a businessman who can program.
We never changed who we are; we are hacking at companies the way we once hacked at computers.
B2B sales is ultimately a justification game: Is the procurement-guy going to look stupid for hiring you? Does he think he will? Will hiring you affect his career?
Too many people think about B2B-sales in-terms of their own money; their mortgage, their salary, etc. This is a mistake. A business doesn’t care about those things. It is the procurement guy’s job to solve a business problem with company money, and I like money.
I don’t charge by the project even though I price like a project: I have rate-cards for roles, and whilst I subcontract some things I don’t want to do, I have a lot of automation on my end that allows me to adequately fill these roles myself. Because I present as a company, I have more credibility, which enables me to charge for the “manager” role as well, as well as a business-overhead (that decision alone generates a return of about 3x what my “software engineering” day rate is).
My customer believes they’re buying outsource/nearshore services. Good for them.
I sell a “use-it-or-lose-it” hours bank for support. I do not charge a “rush rate” ever; to get me to “rush”, my customer needs to pay in advance, and they need to pay regularly (i.e. the time expires). This generates some recurring revenue, since my code doesn’t actually break that often. The customer doesn’t care because they need an SLA for contractual reasons anyway; they’re not worried about value since it’s not their money.
I charge for advice. I charge for meetings. I don’t show my customer what their product looks like, I show them what my other customers bought. I never build a POC for free. Ever.
Sometimes, I’ll take a revshare on projects. I call them royalties, but it’s the same thing; It’s recurring revenue. The customer likes negotiating for the ability to sell my work later, but I treat it as a referral that they pay me for. Win-win.
The more money that flows through me, the more dollars I can take a cut of. Anything that I need, I try to buy it. I don’t charge for expenses, but I lease the equipment I buy back to the customer.
The reason you feel like you’re blazing your own trail is that most of us are simply reacting. We don’t know what we’re doing, but we know that as soon as someone isn’t doing what we’re doing, then we want to call them something else. You’re not a freelance programmer anymore, you’re a consulting trainer or whatever. This is bullshit. We’re all entrepreneurs if we’re looking out for our own business, and we’re idiots if we’re not. How much money are you making? How much are you spending? These are really the only metrics that matter, and from that perspective, you and I are total losers because someone generating less value at Yahoo! was putting more cash in her pocket than me.
This is a thoughtful and well-written piece, and is accurate as it goes, but it misses that the subtext of all that not-quite-applicable advice is “seriously stop doing staff-aug contracting and start doing consulting projects so you can add a zero to your effective rate and no that’s really not hyperbole”. I’m really glad the last section is about how he moved this direction and that it’s working out for him.
And to add a data point, for senior-level staff-aug in Chicago the rate is $150-$225/h, but most clients probably want a team rather than an individual. I’m sure someone with a reputation for solving problems in an expensive niche could exceed that solo, but that quickly lookis more like project-based consulting than an hourly warm body.
What’s wrong with project-based consulting?
I price like a project- as if I would hire a separate contractor (staff-aug no less) to do each job, including the project management, and bump up the prices for my cut. I then just do it all myself and keep the money. I have a use-it-or-lose-it bank of support hours, and if I find any new problems along the way I can sell my time to that as well.
I don’t even show up to a meeting by myself, but instead bring a friend/temp as a secretary (And maybe another as one of the engineering members of my team). The cost is minuscule, but the effect is massive: They don’t see me as an individual but as a company, and that’s a good thing because people like companies.
I agree it’s good to see a little better glimpse into “how to stop contracting and learn to love consulting”, but I don’t want to do staff training either, so maybe it’s important to just say it like it is: That there’s lots of ways to do consulting, and the reason there isn’t a detailed how-to guide is just most of it is about reacting; that there’s very little one can say that applies generally to all consultants (or even most).
Who signs the NDAs for all the ficticious employees?
Hadn’t heard that. Wil try it.
Employees shouldn’t sign NDAs individually. A director, or someone otherwise charged with the responsibility of binding the company should sign them.
Also: They aren’t fictitious. I provide roles for pay, and whilst I will often do all of them myself, I will subcontract roles that I don’t want to do (or can’t do).
Hey Peter! I’d be curious to understand better what you mean. One of my main intentions with the post, although I didn’t do a very good job of saying this, was to kind of say, “If you’re confused as to why most freelancing advice seems not to apply to you, it’s not because you’re stupid or because something’s wrong, it’s because of these certain realities of the way most freelance programming work is arranged.” I tried to also point to a solution to the problem, although I can only be helpful in a limited way because I myself don’t have it totally figured out yet.
You start off and totally nail the most popular good advice given to freelance developers, and under “Consulting vs. contracting” you give a good explanation of how the two differ. In the rest of the article you do a great job of talking to contractors and saying “Yes, from where you’re standing, this advice does seem useless”.
But you don’t lead into it or end it by mentioning that consulting is not hard to move into from contracting, that it really is better for their wallet (and sanity), that the advice is not actually out-of-touch with the realities of freelancing. The “charge more” section was especially frustrating because you do a great job of explaining with real numbers how it feels to hit the ceiling on rates, but the conclusion is “if I want to escape market rates for programming, I have to offer a service other than programming”. While that can be one way past the ceiling, it is far from the only way, but this isn’t clear because it’s all still in the first-person story mode. I hate seeing anything that looks like “yeah, you just can’t charge more unless you stop coding” because it has led to really limited, crab-bucket communities of freelancers who are missing out on value they could deliver and receive.
So overall I like the piece: it’s got verisimilitude details from your personal story, it thoroughly explores common advice, it’s well-organized and written. But I felt like it missed the point of all that common advice. It sort of reinforces the idea to programming contractors that the advice isn’t useful/attainable, that it somehow missed the reality of their experience, that it could be great for them.
(Also, I count myself lucky to have seen your invitation request in the queue so you could join the conversation here. Welcome!)
What other ways do you know of? I’m genuinely very curious about this. The 3 ways I’ve found, like I mentioned in the post, are 1) do very specialized work that’s not readily available anywhere else, 2) charge a “rush rate” for an emergency, 3) charge by the project and offer a service other than programming.
One thing that makes it hard for me is that I haven’t been able to find many examples of programmers escaping market rates. In fact, I’m actually among the most successful freelancers I know, which kind of sucks because I don’t consider myself particularly successful (yet). So most of the time I’m blazing my own trail as opposed to copying successful tactics from people who are ahead of where I am now.
When I picture the Econ 101 graph of supply and demand setting prices, your first way is about limited supply and your second is about increased demand. So I agree those two are the fundamental ways to see a higher price for programming work.
But I strongly disagree with your third way. Charging by the project is great, and you don’t have to get away from programming to do it. Define projects oriented that have a high expectation or delivering a lot of business value, then charge a percentage of that. An ass in a seat pushing tickets along looks like you’re as much of a fungible resource as the chair you’re sitting on. Don’t work like you’re an office chair. Work like you’re a systems thinker who can identify areas where you have the most leverage, make sure they know the value that’s on the table for them, and charge like your work is an investment.
To get low-level: stop offering hours and taking direction. If someone wants their site hosted, that’s not 90 hours of AWS config, that’s a project with a one-button deployment pipeline, a targeted uptime, an early-warning monitoring system, a disaster recovery plan, a retainer for emergency security fixes, the right amount of performance to meet their measured needs. Same work, serious presentation. Don’t stop being a programmer, just start being a businessman.
Agree with everything except the “stop being a programmer” part. Indeed: A programmer who does business is more powerful than a businessman who can program.
We never changed who we are; we are hacking at companies the way we once hacked at computers.
B2B sales is ultimately a justification game: Is the procurement-guy going to look stupid for hiring you? Does he think he will? Will hiring you affect his career?
Too many people think about B2B-sales in-terms of their own money; their mortgage, their salary, etc. This is a mistake. A business doesn’t care about those things. It is the procurement guy’s job to solve a business problem with company money, and I like money.
I don’t charge by the project even though I price like a project: I have rate-cards for roles, and whilst I subcontract some things I don’t want to do, I have a lot of automation on my end that allows me to adequately fill these roles myself. Because I present as a company, I have more credibility, which enables me to charge for the “manager” role as well, as well as a business-overhead (that decision alone generates a return of about 3x what my “software engineering” day rate is).
My customer believes they’re buying outsource/nearshore services. Good for them.
I sell a “use-it-or-lose-it” hours bank for support. I do not charge a “rush rate” ever; to get me to “rush”, my customer needs to pay in advance, and they need to pay regularly (i.e. the time expires). This generates some recurring revenue, since my code doesn’t actually break that often. The customer doesn’t care because they need an SLA for contractual reasons anyway; they’re not worried about value since it’s not their money.
I charge for advice. I charge for meetings. I don’t show my customer what their product looks like, I show them what my other customers bought. I never build a POC for free. Ever.
Sometimes, I’ll take a revshare on projects. I call them royalties, but it’s the same thing; It’s recurring revenue. The customer likes negotiating for the ability to sell my work later, but I treat it as a referral that they pay me for. Win-win.
The more money that flows through me, the more dollars I can take a cut of. Anything that I need, I try to buy it. I don’t charge for expenses, but I lease the equipment I buy back to the customer.
The reason you feel like you’re blazing your own trail is that most of us are simply reacting. We don’t know what we’re doing, but we know that as soon as someone isn’t doing what we’re doing, then we want to call them something else. You’re not a freelance programmer anymore, you’re a consulting trainer or whatever. This is bullshit. We’re all entrepreneurs if we’re looking out for our own business, and we’re idiots if we’re not. How much money are you making? How much are you spending? These are really the only metrics that matter, and from that perspective, you and I are total losers because someone generating less value at Yahoo! was putting more cash in her pocket than me.