Monday, November 2, 2009

Consulting: time for money? You are a HO

Selling your time for money? Then you too are a HO. Lawyers do it, doctors do it, even psycho-analysts do it!

With the exception of the lawyers, those professions where the it is the norm to sell your time for money do not get cast as blood sucking leeches. But with engineering consultants we get cast in a negative light for being mercenary when we invoice for consultations and in many cases people expect to get quite a bit for free.

Here are some guidelines for billing:

  • it all should pay
  • set solid standard rates for activities
  • don't equate effort to value
  • bill on regular intervals

It all pays:
All your time has value. Don't set bad precedent by under valuing your own time. Remember your clients learn how to treat you from you. My good friend Danny runs a consultancy and recently had a brief discovery meeting to decide how much to quote for the larger project (effort he thought was needed to put together the quote). However, his assessment was that the project was much smaller than the client thought. This conclusion requires his expertise and therefore has value. His decision to not quote is in itself an engineering service one he ended up giving away for free. On my suggestion we are looking at a new discovery process that he bills for.

Set solid rates:
This idea for Danny only works if he has a predictable cost structure for his "products". Discovery, off site or asynchronous work, on site, travel days, research, etc. It is very important to realize and communicate that you value your time. Recall that if you can't bill others for the time you allocate for these activities that you are losing revenue. Set clear expectations. Things I can sleep while doing get the lowest day rate (travel), things that eat up the most of my temporal and intellectual capital get hit at the highest hourly or fixed project rates (i.e. Creating things).

Don't equate effort for value:
If you have the ability to knock out killer web pages or technical white-papers without breaking sweat doesn't mean that you should give it away. If you set precedent by setting a low bar future work (which may be more challenging) might not get it's due. If you provide unique benefit bill like it. If you fear you can't deliver that level of value get a JOB and forget about consulting.

Bill on regular intervals:
Set up a schedule for invoicing. You learn a lot about your clients by how they pay their bills, and these lessons are better learned sooner than later (when you really need the money). Don't forget you can't repo that intellectual and temporal capital.

Embrace your inner Techni-ho and remember "show me the money"