Billing Rates & Fixed Fee Pricing
Carlton's Successful Reseller Secret #10
Billing Rates in General
Across the board, most resellers charge fees
based on billing rates that range from $60 to $100 per hour for entry-level
products, $100 to $125 for mid-range products, and $125 to $150 for SQL
based products. In larger cities, you can typically add $25 per hour to
these billing rates.
|
|
Billing Rates Per Hour |
|
|
Large |
Cities |
Small |
Cities |
Small |
Towns |
|
|
Low |
High |
Low |
High |
Low |
High |
|
Entry-Level Consulting |
100 |
125 |
75 |
100 |
60 |
75 |
|
Mid-Range Consulting |
125 |
150 |
100 |
125 |
75 |
100 |
|
SQL Server Consulting |
150 |
200 |
125 |
175 |
100 |
125 |
Calculating Billing Rates
Most attorneys, CPAs, and consultants calculate
billing rates as a multiple of the consultant's salary. This multiple
usually ranges from 3.0 to 4.0, with 3.5 being a common multiple. For
example, let us assume that the consultant is paid an annual salary of
$65,000. This equates to $31.25 per hour. Assuming the company uses a
multiple of 4.0, in this case the company would bill the employ at $125 per
hour ($31.25 times 4.0). Of course the billing rate actually used is tied
closely with the number of billable hours generated by the consultant. It
has been my experience that an annual budget of 1,100 to 1,200 billable
hours are the top end of a reasonable budget range. To expect numbers
dramatically higher than this is simply unreasonable, and often leads to
consultants missing their numbers, and becoming de-motivated.
Raising Rates
Are you worried that you will lose clients by
raising your rates? Perhaps you shouldn't be. According to a recent
newsletter produced by Best software Guru Taylor Macdonald, research shows
that it happens infrequently and when it does, it is usually the clients you
want to lose.
Fixed Fee Pricing
Does the prospects of extending a fixed fee
price to your customer scare you? Actually, fixed fee pricing is a great way
to land deals and make more money. Over the years your customers have been
trained by their attorney's, consultants, and even their plumbers to be
"gun-shy" of hourly rate pricing. They feel much more comfortable accepting
a fixed fee price.
Fixed fee pricing is more profitable than hourly
rate pricing when you are well trained and your people know precisely what
they are doing. If they attack each engagement slowly and methodically,
delegating the majority of the tasks to the client's staff, they they can
minimize their time on the job - and increase profitability. Measures such
as group training, scheduling short 90 minute meetings, assigning the
client's staff homework assignments using preprinted homework assignments,
asking the client's staff not to take phone calls or interruptions while you
are meeting with them, holding training sessions at your location, etc all
minimize your time on the job. An efficiently run implementation engagement
can shave 30% of the time off the typical budget, but with fixed fee pricing
you can bill for these hours anyway.
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