w*rk advice - contracting

[WM]

I work as an independent contractor doing data analysis for various clients. I'm looking for advice about what to do (if anything) as I finish up a project for a new client. I was called in to analyze some data and draft a report. At Client's insistence, we agreed on a lump sum rather than hourly contract. The amount she offered me for the work was (my hourly rate) x (the number of hours her best data person thought it would take to do the work). I was a little worried about getting underpaid, knowing that it would probably take me a little longer than her best data person since I was new to the project. But from what I could tell of the project, it didn't look that complicated. And there were other aspects that appealed to me.

Now that we're winding down, I see that it's taken me less than half the time her best data person estimated it would take. In other words, I'm going to end up making more than twice what I would have on this job if she'd paid me hourly. Great for me! And the work overall went well for both of us, as far as I know.

I found out today that the people who did this work last year for her (including her best data person) cost her multiple times what she paid me, because the first person screwed it up and then the best data person had to fix it. Even so, I have no idea how it could have taken them so many hours to do the work.

My question - I'd be interested in doing more work for this client. But I think she sees me as kind of "expensive" because my regular hourly rate is higher than she's used to paying. That's partly why she wanted to do the lump sum. In the interest of letting her know that she can hire me without breaking her budget, do I say anything about the fact that I could have done it for less?

I don't want to give away just how little time this took me, and I don't want to imply that her best data person isn't very competent (bdp recently left anyway, but Client and her regular staff all agree that bdp is super smart and capable). But I'd hate to have her not call me next time because she assumes I'd cost too much.

Thoughts?

 

[Ed_The_Gypsy]

Consider continuing on the same terms--lump sum. You take a small risk, but she will be happy.

DO NOT tell her how little time it took you.

Ed the Contractor

 

[kumquat]

You can probably estimate your time better than others. Do it. If your estimate varies from theirs by a significant amount, wonder why.

Sounds like she is looking for the cheapest "agreed in advance" number. Sounds like you did it.

 

[HpRyder]

From her perspective your cheap and fast. Her history is that her staff "cost her multiple times what she paid me..." and its "...taken me less than half the time her best data person estimated it would take...". Don't knock her staff competence, your the expert and should paid for your expertise. You sure didn't break her budget, the staff that messed up did. You didn't blow her schedule, the staff did that all on their own. Your the white knight, riding in to save her. You made her look good to her management. That's what contractors do, go in and fix things that are messed up beyond the capabilities of staff. If she's got the work and the money for you, you bet she'll get you back. She's interested in performance.

Keep your rate the same and take the next project as a fixed fee. Just ask her what the next project is. Let her worry about her budget. You only worry if the burn rate is too high & she's going to run out of money before you finish. If she thinks she paid you too much for too little value, you had better believe she will tell you.

 

[SteveL]

The fact that you completed and turned in the work in shorter time than both of you estimated can't be hidden unless you delay turning it in.

I'd opt for sitting down with her and explaining that you were able to do the job in less time than she expected. You don't have to slam the old guy. The facts will speak for themselves. I used to have lots of projects done by IT folks, and their productivity varied all over the place. They were all smart, but not all as talented in the execution. I'd tell her, without a bragging demeanor, that you are good, and very productive, and hence worth what you charge. Results count.

 

[WM]

Thanks for the comments. That was my thought, too, to continue with the lump sum agreements in the future. I see no reason to change to hourly with her as long as I can get enough info on future projects to estimate my time accurately. The first project with a new client is always the hardest to estimate.

Just ask her what the next project is.

That's a good idea, just asking what the next project is. And your point is well-taken that she's primarily interested in performance. I'm finishing up the work this morning to address some things she was freaking out about yesterday, but I expect that by the time I'm done going over things with her she will feel very good about the work.

The fact that you completed and turned in the work in shorter time than both of you estimated can't be hidden unless you delay turning it in.

Actually, she will have no idea unless I tell her, because I work from home and the project took about 40 hours spread over 5 months.

 

[Nords]

Thanks for the comments. That was my thought, too, to continue with the lump sum agreements in the future. I see no reason to change to hourly with her as long as I can get enough info on future projects to estimate my time accurately. The first project with a new client is always the hardest to estimate.

That's a good idea, just asking what the next project is. And your point is well-taken that she's primarily interested in performance. I'm finishing up the work this morning to address some things she was freaking out about yesterday, but I expect that by the time I'm done going over things with her she will feel very good about the work.

Actually, she will have no idea unless I tell her, because I work from home and the project took about 40 hours spread over 5 months.

I can't understand why anyone would be ethically bound to tell the customer that you worked far more efficiently & effectively than you expected to. Maybe you got lucky, but it's probably because you're worth what they're paying you. They took a bet on a fixed-price contract and "lost"-- they got what they wanted and on time. Enjoy your bonus, because it might never happen again!

You could continue to take these bets until some other contractor undercuts your price. Or is it possible to negotiate a lower hourly rate that you'd be happy with?

Does the company have any interest in you training their personnel?

 

[Meadbh]

WM, perhaps you were able to complete the work in 40 hours because you are so damn good at it! The same job might have taken internal staff double the time, if they were able to do it at all.

I am currently doing some consulting which is being paid by the hour. I'm not generating as much income as I had expected, because I'm too efficient!

 

[RockyMtn]

I do some consulting and either work on a retainer for an agreed upon miinimum number of hours (which then reverts to hourly rate if I exceed that number) or just on a flat hourly basis.

Depending on the size of the retainer I may discount by 5% off my hourly rate if I think that there is a good chance the project won't use up the full retainer. I would estimate this happens about 75% of the time.

I get a locked incomce stream with the retainer...the employer feels that they are getting a good deal with the 5% reduction off my hourly rate...and I'm protected if the project goes longs.

 

[FreeAtLast]

You did one job and it turned out in your favor. It could have gone the other way and you would be on the loosing end. You bid the job and delivered. She was happy with the lump sum arrangement as your normal rate was higher.

You could send a nice note thanking her for the business indicating that you enjoyed the job and hope that you can work together again in the future.

I would just continue on the same terms since you were both happy.

 

[WM]

I can't understand why anyone would be ethically bound to tell the customer that you worked far more efficiently & effectively than you expected to... Enjoy your bonus, because it might never happen again!

Does the company have any interest in you training their personnel?

I'm not worried about the ethics - she made her offer and I took it. There's nothing unfair about that. The question is how to make sure that I stay at the top of her list of people to call the next time she needs help.

Her data person didn't have time to do the work this year, which is the main reason I got called in. But as far as she knows, if her data person had done the work, she could have paid about 12% less.

RockyMtn's retainer strategy is interesting and might work well with her, that's a good idea.

As far as training her staff, that's an interesting thought. I'm not sure if I do things differently or just faster. I probably wouldn't suggest it now, but that could be good to keep in mind for later.

WM, perhaps you were able to complete the work in 40 hours because you are so damn good at it!

Yes, that's the way I like to look at it It sounds like it's time for you to raise your hourly rate!

You could send a nice note thanking her for the business indicating that you enjoyed the job and hope that you can work together again in the future.

I would just continue on the same terms since you were both happy.

That's a good idea, to send a note. I sent her one after the first time we met for an informational interview and she seemed very appreciative.

I think in general the thing to do will be to make sure and talk with her as we close the project about what other work she might have coming up. If she seems concerned about rates, then maybe I could suggest the retainer idea as a solution.

 

[deserat]

I can't understand why anyone would be ethically bound to tell the customer that you worked far more efficiently & effectively than you expected to. Maybe you got lucky, but it's probably because you're worth what they're paying you. They took a bet on a fixed-price contract and "lost"-- they got what they wanted and on time. Enjoy your bonus, because it might never happen again!

You could continue to take these bets until some other contractor undercuts your price. Or is it possible to negotiate a lower hourly rate that you'd be happy with?

Does the company have any interest in you training their personnel?

+1 - why should you penalize yourself for being efficient? You should get a premium for that. Fixed price or value pricing is the way to go for a known effort - as you get better your profit margin goes up. You are benefiting from your experience (as well as your customer) - you can cut a deal for a larger project if you'd like.

 

[target2019]

Offer a 5-10% discount if invoice is paid promptly.
Win-Win.