Fees for custom development

[wingwalker]

I'm trying to get an idea of what a reasonable hourly rate is for a FileMaker developer. I've heard everything from $50.00 to $175.00. I know this is a very subjective question and is based on many factors from FileMaker experience, to location and industry. I just thought any feedback I can get will be better than what I know now.

Thanks for your help,

James

[David McQueen]

I'm trying to get an idea of what a reasonable hourly rate is for a FileMaker developer. I've heard everything from $50.00 to $175.00. I know this is a very subjective question and is based on many factors from FileMaker experience, to location and industry. I just thought any feedback I can get will be better than what I know now.

Thanks for your help,

James

Fees will change depending on the work you are doing and where you are.

I am in Canada, an hour from but not in Toronto. My fees tend to be lower than there.

I do charge different fees for different clients - It depends on what I see the responsibilities as being for a particular job.

So that will give you some sense of why fees differ.

In developing your fees, there are several strategies. Some try to figure out a value added to the client and and charge a fixed fee. Say the client saves $20000 per year with a five year program life span. They could potentially want a fee of $20,000 for the job given that their strategy is a 20% of liftime cost savings as a fee.

Others charge by the hour. In this case, you need to realistically figure out the number of billable hours you can do in a day and look at your client base to see if those hours are available to you. The number of hours is not 8 hours - could be 6 if you are lucky.

Then figure out your expenses, medical etc, depending on where you are. These expenses will be higher in the States.

From that you can set a price that will make you a living. If nothing else this gives you a minimum. If you cannot make a living, it is probably time to get a job.

In terms of discussing actual rates, in some areas this is considered an illegal practice - ie a form of price fixing. So I have stayed away from it.

HTH

Dave McQueen

[xochi]

Some thoughts:

1. For a 1-person "company", a good rule of thumb is you need to charge the same hourly rate as your equivalent salary in thousands. E.g. if you are used to making $50,000 per year, your hourly rate should be roughly $50/hour. Although in theory this would actually be a $100,000 gross (because there are roughly 2000 work hours/year), it turns out you can't bill that many hours, and you don't get benefits (retirement, health care, etc.)

2. Fixed-price bids in the software world are very very dangerous. In my experience, the general scenario you will encounter is that most clients have no clear idea what they want, and don't have the skills to describe it. Therefore, part of your job is helping them determine what they want. This is time consuming and will undoubtedly change the specifications, and will probably require you to create "mock ups" or "demos" of various features.

3. So, even though fixed price bids are dangerous, most clients will require them. This puts you in a bind -- you can't get the project w/o a fixed bid, and yet they can't create one, and you run the serious risk of losing money if the project goes over or the specifications change. My solution has been to do the contract as an hourly rate, with an initial, non-binding "estimate" (this is how most auto mechanics operate, at least here in the USA). As long as you and the client are very clear that any changes to the specifications will cost more, typically this works ok.

The client can go to their boss and get funding for the project, and once the project gets going additional work is usually easier to get approval for.

[David McQueen]

Some thoughts:

1. For a 1-person "company", a good rule of thumb is you need to charge the same hourly rate as your equivalent salary in thousands. E.g. if you are used to making $50,000 per year, your hourly rate should be roughly $50/hour. Although in theory this would actually be a $100,000 gross (because there are roughly 2000 work hours/year), it turns out you can't bill that many hours, and you don't get benefits (retirement, health care, etc.)

2. Fixed-price bids in the software world are very very dangerous. In my experience, the general scenario you will encounter is that most clients have no clear idea what they want, and don't have the skills to describe it. Therefore, part of your job is helping them determine what they want. This is time consuming and will undoubtedly change the specifications, and will probably require you to create "mock ups" or "demos" of various features.

3. So, even though fixed price bids are dangerous, most clients will require them. This puts you in a bind -- you can't get the project w/o a fixed bid, and yet they can't create one, and you run the serious risk of losing money if the project goes over or the specifications change. My solution has been to do the contract as an hourly rate, with an initial, non-binding "estimate" (this is how most auto mechanics operate, at least here in the USA). As long as you and the client are very clear that any changes to the specifications will cost more, typically this works ok.

The client can go to their boss and get funding for the project, and once the project gets going additional work is usually easier to get approval for.

I would echo the caution on fixed bid jobs. If you have to go there, the most important thing is a full detailed file specification document that all parties have signed off. The name of the game becomes follow the file spec. Prefereably complete the file spec as detailed prior to making any changes - Then it is clear what is extra and what is not.

For a large job, I would not hesitate in a bidding situation with a file spec to charge for the file spec.

Also, if you find yourself in the unenviable position where you think that your bid is being used to drive down the bid of the people they really want to do the job, demand that they pay you to play. Call it straight: " You have told me that you really want XYZ company to do this job but that you think they are expensive so you are giving me an opportunity. This means you really want me to force XYZ's bid down. I am not averse to that but you will pay me for my time and trouble." This will remove the wheat from the chaff very quickly.

I have found giving an estimate and then billing by the hour works. I submit a bill twice a month and report twice a month so that my clients know the costs they are into and where they are in a project. I report more frequently if I am having a problem or I see an issue with what has been requested. I have found this allows the clients to pay the project as an expense as opposed to a large one time captial outlay and they appreciate it. I have even had clients say lay low this month, the income stream is not there to support it. I do other things and come back to them. This type of behaviour sets up the job as an ongoing relationship rather than "wham bam thank you mam"

The only other thing I can add here is watch for abuse. If they are abusive at the start they will be abusive throughout. Abuse always breeds abuse. As one wise onsultant said, you really want clients that you would like to go to dinner with.