I have been approached by a big consulting company to work on a project for one of their clients. It's a cool project and I would really like to be involved. I would never be able to land this type of client/project on my own.
I don't know this for a fact but I have a good idea this consulting company charges an hourly rate 2-3 times my normal rate to their client (a Fortune 500 company). The consulting company has asked me for my hourly rate and I'm not sot sure how to respond.
Should I be grateful for the opportunity charge my normal rate and be done with it?
Should I ask the consulting company what they will be billing my services out at? Do I even have a right to ask?
Does anyone have any experience as a subcontractor?
Unless they are desperate to fill the spot on the project, you're not going to get the rate they are charging their client -- after all, they need to pay for all the overhead they're inserting between you and the client.
My recommendation is to charge just a bit more than your normal rate and take the gig.
Of course, there's no real harm in shooting for the stars unless you *really* need the gig: most contracting firms I know will politely, if somewhat incredulously, engage in negotiations if you drop them a crazy high rate.
Robert Fischer IT Firefighter Smokejumper Consulting
Michael Breen wrote: > I have been approached by a big consulting company to work on a > project for one of their clients. It's a cool project and I would > really like to be involved. I would never be able to land this type of > client/project on my own.
> I don't know this for a fact but I have a good idea this consulting > company charges an hourly rate 2-3 times my normal rate to their > client (a Fortune 500 company). The consulting company has asked me > for my hourly rate and I'm not sot sure how to respond.
> Should I be grateful for the opportunity charge my normal rate and be > done with it?
> Should I ask the consulting company what they will be billing my > services out at? Do I even have a right to ask?
> Does anyone have any experience as a subcontractor?
I have no intention of trying to get the rate that they are charging, I just want what is fair for both of us. There really is no overhead for the consulting firm (that I can see). They are handing over this part of the project to me. I will be managing the project, coding, etc. The only overhead for them is taking part in the weekly review conference call to make sure we are on track.
On 6/13/07, Robert Fischer <robert.fisc...@smokejumperit.com> wrote:
> Unless they are desperate to fill the spot on the project, you're not > going to get the rate they are charging their client -- after all, they > need to pay for all the overhead they're inserting between you and the > client.
> My recommendation is to charge just a bit more than your normal rate and > take the gig.
> Of course, there's no real harm in shooting for the stars unless you > *really* need the gig: most contracting firms I know will politely, if > somewhat incredulously, engage in negotiations if you drop them a crazy > high rate.
> Robert Fischer > IT Firefighter > Smokejumper Consulting
> Michael Breen wrote: > > I have been approached by a big consulting company to work on a > > project for one of their clients. It's a cool project and I would > > really like to be involved. I would never be able to land this type of > > client/project on my own.
> > I don't know this for a fact but I have a good idea this consulting > > company charges an hourly rate 2-3 times my normal rate to their > > client (a Fortune 500 company). The consulting company has asked me > > for my hourly rate and I'm not sot sure how to respond.
> > Should I be grateful for the opportunity charge my normal rate and be > > done with it?
> > Should I ask the consulting company what they will be billing my > > services out at? Do I even have a right to ask?
> > Does anyone have any experience as a subcontractor?
The contractor has to take your experience into account when they hire you. If I contract work out to someone else, I am still ultimately responsible for what ends up going to the client.
Let's say I hire you to work on a site, and my client is paying me $100 per hour. I might offer you $50 because of the following:
1. I don't know your work well yet 2. I don't know how much I'll have to rewrite in the end. 3. I need to spend time communicating with you and reviewing your work.
With all that in mind, I think you need to stick to your hourly rate. The only advice I'd give on rates is that you shouldn't take a lower rate just to get the job in the hopes you'll get more work later. You need to be the one to offer volume discounts.... don't let them do that to you. :)
On 6/13/07, Michael Breen <hard...@gmail.com> wrote:
> I have been approached by a big consulting company to work on a project > for one of their clients. It's a cool project and I would really like to be > involved. I would never be able to land this type of client/project on my > own.
> I don't know this for a fact but I have a good idea this consulting > company charges an hourly rate 2-3 times my normal rate to their client (a > Fortune 500 company). The consulting company has asked me for my hourly rate > and I'm not sot sure how to respond.
> Should I be grateful for the opportunity charge my normal rate and be done > with it?
> Should I ask the consulting company what they will be billing my services > out at? Do I even have a right to ask?
> Does anyone have any experience as a subcontractor?
> I have been approached by a big consulting company to work on a > project for one of their clients. It's a cool project and I would > really like to be involved. I would never be able to land this type > of client/project on my own.
> I don't know this for a fact but I have a good idea this consulting > company charges an hourly rate 2-3 times my normal rate to their > client (a Fortune 500 company). The consulting company has asked me > for my hourly rate and I'm not sot sure how to respond.
Charge what you think that your time is worth. if you're contracting already, you should have a hourly rate already in mind. Even if you feel like they're making a lot of money off of you, it's not the end of the world. If you do good work for them, it's not unheard to ask for a _raise_ at a later point in time. I've seen several subcontractors do this in the past when working for us, and those that were doing a good job... and making us money.. were almost always greeted with a warm response.
There are a lot of other factors that come into play in these situations as well. As a sub-contractor, you're not really liable for anything beyond your work, while the company that landed the contract is. (especially with a fortune 500 company).
If you're an employee, it's often the case that the employer is charging a few times your hourly rate when you're working for clients. This is very normal and allows the company to pay for everything else involved (like marketing, project management, etc..) that helps them land the bigger deals. I wouldn't focus too much on the "they're making 2-3x off of me" point of view, because it should really be about getting what you feel you're worth.
> Should I be grateful for the opportunity charge my normal rate and > be done with it?
Ask for a little bit more, if you feel confident in it. Most companies will negotiate on hourly prices of sub-contractors. For example, I always negotiate rates and almost every contractor has been flexible and several of them have come back to renegotiate later on.
> Should I ask the consulting company what they will be billing my > services out at? Do I even have a right to ask?
If you feel it's necessary, you should. At PLANET ARGON, we've had sub-contractors ask in the past and we've always been open about this.
In a nutshell, charge what you feel that you're worth and don't be afraid to let someone make money off of you. If you do that consistently, that's _should_ be a mutually rewarding scenario.
Good luck!
Robby
-- Robby Russell Founder and Executive Director
PLANET ARGON, LLC Ruby on Rails Development, Consulting & Hosting
> The contractor has to take your experience into account when they > hire you. If I contract work out to someone else, I am still > ultimately responsible for what ends up going to the client.
> Let's say I hire you to work on a site, and my client is paying me > $100 per hour. I might offer you $50 because of the following:
> 1. I don't know your work well yet > 2. I don't know how much I'll have to rewrite in the end. > 3. I need to spend time communicating with you and reviewing your > work.
> With all that in mind, I think you need to stick to your hourly > rate. The only advice I'd give on rates is that you shouldn't > take a lower rate just to get the job in the hopes you'll get more > work later. You need to be the one to offer volume discounts.... > don't let them do that to you. :)
Brian,
Excellent points here and it echoes how we approach things at our firm with sub-contractors.
We've had to rewrite code written by sub-contractors in the past... and if we didn't have some breathing room in the price difference, we'd have been an a very precarious situation. On that note... if you're hiring a sub-contractor... always keep a very close eye on the work that they're producing, until you get comfortable with them.
-Robby
-- Robby Russell Founder and Executive Director
PLANET ARGON, LLC Ruby on Rails Development, Consulting & Hosting
Overhead is much more than direct project-related overhead. Overhead covers the cost that went into securing the original contract, the cost of maintaining the contract (i.e. managing the client so the contract stays in place), the cost of all of the non-direct charge employees (upper level management and their staff), office operating costs, etc. Granted those costs may seem high to you but they are a necessary evil of doing business as your company grows. And above all of that the consulting company is still in business to make a profit I'm sure. :-)
V/r Anthony
On 6/13/07, Michael Breen <hard...@gmail.com> wrote:
> I have no intention of trying to get the rate that they are charging, I > just want what is fair for both of us. There really is no overhead for the > consulting firm (that I can see). They are handing over this part of the > project to me. I will be managing the project, coding, etc. The only > overhead for them is taking part in the weekly review conference call to > make sure we are on track.
> On 6/13/07, Robert Fischer <robert.fisc...@smokejumperit.com> wrote:
> > Unless they are desperate to fill the spot on the project, you're not > > going to get the rate they are charging their client -- after all, they > > need to pay for all the overhead they're inserting between you and the > > client.
> > My recommendation is to charge just a bit more than your normal rate and > > take the gig.
> > Of course, there's no real harm in shooting for the stars unless you > > *really* need the gig: most contracting firms I know will politely, if > > somewhat incredulously, engage in negotiations if you drop them a crazy > > high rate.
> > Robert Fischer > > IT Firefighter > > Smokejumper Consulting
> > Michael Breen wrote: > > > I have been approached by a big consulting company to work on a > > > project for one of their clients. It's a cool project and I would > > > really like to be involved. I would never be able to land this type of > > > client/project on my own.
> > > I don't know this for a fact but I have a good idea this consulting > > > company charges an hourly rate 2-3 times my normal rate to their > > > client (a Fortune 500 company). The consulting company has asked me > > > for my hourly rate and I'm not sot sure how to respond.
> > > Should I be grateful for the opportunity charge my normal rate and be > > > done with it?
> > > Should I ask the consulting company what they will be billing my > > > services out at? Do I even have a right to ask?
> > > Does anyone have any experience as a subcontractor?
> > > Thanks for the help. > > > Mike
-- Cell: 808 782-5046 Current Location: Melbourne, FL
> There are a lot of other factors that come into play in these > situations as well. As a sub-contractor, you're not really liable for > anything beyond your work, while the company that landed the contract > is. (especially with a fortune 500 company).
I'd be careful in assuming anything with regards to the extent of your liability in case things go really bad. You don't want to find yourself in a "joint and several liability" suit from a big co as it means you'll have to fight the lead contractor to prove what amount of damages, if any, your work was liable for. I get shivers just thinking about how bad that could be.
As always, I would make sure to get a clear definition of what you are and aren't liable for, and ideally some level of indemnification from the lead contractor (hey, I can dream...)
Others have covered the financial aspects, but there's more than that to think about. You should ask for and evaluate a copy of the contract with the prime contractor that you'll be working under. Off the top of my head, you need to understand:
- Whether you're working as someone's employee or as a true independent contractor (this has tax implications, of course) - What code ownership, if any, you retain - Whether your getting paid is contingent in any way on the ultimate client paying their bills (it shouldn't be)
Subcontracting can be fraught with issues that do not come up in regular contracting arrangements, because you can get caught in the middle of power struggles. It works best if you know the people you're working with well, and trust them. Otherwise I've seen -
- Subcontractors being told by the prime contractor to pad their hours because the ultimate client is too dumb to recognize what a job should cost. This leaves you in the awkward position of being told to participate in fraud. - Subcontractors being told by the ultimate client to do A while the prime contractor tells them to do B. This gets to be a problem when the lines of authority aren't clearly drawn.
Also, you should recognize that the client's contract with the prime contractor almost certainly contains a clause that prohibits the client from attempting to hire away any subcontractors for a period extending beyond the completion of the contract, probably a year or more. So taking the subcontract will likely rule out your working directly for the client for some time to come.
Lots of good advice on this already. So I'll just say this: if your rate is low, use this opportunity to bring it up to market levels.
And here's a story. I run a Rails contracting shop with several employees under me, and we usually contract directly with clients. We subcontracted on a project through a big consulting firm this winter, and worked on a gig for a well-funded startup. We got a rate that was about 25% lower than we normally charge. Then the startup ran out of money, and guess who took the hit? Not us. We got paid, since our contract was through the consulting firm. But the consulting firm lost quite a bit of money on the failed contract.
On 6/13/07, Michael Breen <hard...@gmail.com> wrote:
> I have been approached by a big consulting company to work on a project > for one of their clients. It's a cool project and I would really like to be > involved. I would never be able to land this type of client/project on my > own.
> I don't know this for a fact but I have a good idea this consulting > company charges an hourly rate 2-3 times my normal rate to their client (a > Fortune 500 company). The consulting company has asked me for my hourly rate > and I'm not sot sure how to respond.
> Should I be grateful for the opportunity charge my normal rate and be done > with it?
> Should I ask the consulting company what they will be billing my services > out at? Do I even have a right to ask?
> Does anyone have any experience as a subcontractor?
I have had just the opposite results. Recently a company I was being subcontracted though went bankrupt and I didn't get paid at all. I haven't done allot of subcontracting but the majority of if has been bad.
Lots of good advice on this already. So I'll just say this: if your rate is low, use this opportunity to bring it up to market levels.
And here's a story. I run a Rails contracting shop with several employees under me, and we usually contract directly with clients. We subcontracted on a project through a big consulting firm this winter, and worked on a gig for a well-funded startup . We got a rate that was about 25% lower than we normally charge. Then the startup ran out of money, and guess who took the hit? Not us. We got paid, since our contract was through the consulting firm. But the consulting firm lost quite a bit of money on the failed contract.
On 6/13/07, Michael Breen < hardbap @ gmail .com > wrote:
I have been approached by a big consulting company to work on a project for one of their clients. It's a cool project and I would really like to be involved. I would never be able to land this type of client/project on my own.
I don't know this for a fact but I have a good idea this consulting company charges an hourly rate 2-3 times my normal rate to their client (a Fortune 500 company). The consulting company has asked me for my hourly rate and I'm not sot sure how to respond.
Should I be grateful for the opportunity charge my normal rate and be done with it?
Should I ask the consulting company what they will be billing my services out at? Do I even have a right to ask?
Does anyone have any experience as a subcontractor?
Thanks for the help. Mike
-- Myles A. Braithwaite Monkey in your Soul - http :// miys .net/ myles @ monkeyinyoursoul .com
