In numerous posts I see a common theme. Everyone wants to talk about hourly rates. What is your rate for court?
What is your rate for Flood Certs?
Guys, few clients care about your time. Clients aren't employing surveyors because there is something magical about our time. They employ us because of our knowledge. Or more specifically, they employ us because of what we can (or should) be able to do to help them accomplish some goal.
Some goals are more important and valuable to clients. This is what we should focus upon. The value we bring to our client is what counts, not our time.
Larry P
Sometimes the equation is "Rate X Time > Value" 😉
I read last year that there were 35 lawyers billing $1,000+ per hour just on the Lehman Brothers bankruptcy case. My guess is that they are going to bill a amount greater than what the value of their service was perceived to be at the beginning of the process.
I agree Larry.
When I first started in business, I would tell a client the cheapest way for me to do their job would be by the hour at $***.** per hour. Ever time the next question would be, "Well how long do you think it will take". They do not understand and we should not expect them to. Now I just give them a "Not to Exceed" quote and I am making more for sure.
I wholly agree, which is why I highly prefer bid work to hourly. Why charge 140/hr when you can get an effective rate of 200+/hr. when you bid carefully?
I have a client who has been asking me to switch to hourly for years now but I won't even entertain the idea. The problem arose when one of the supers watched me stake out a dozen or so homes in a couple hours with Robbie the Robot by myself. They did a quick calculation and the next day I got an email asking what my hourly rates were. I quickly told them I don't stake houses at hourly rates, it's a set fee.
That is precisely why I am glad nobody watches how long it takes to build models!!
While I generally agree with you, there are exceptions.
I have "on call" contracts with a couple of local utility companies. We have hourly rates for all the different flavors of work. The least expensive is clerical. Me and a two man crew travelling costs a butt load.
It actually works out fairly well. We bill for the research prior to the crew becoming mobile. We charge for windshield. We charge for production. We charge for the crew downloading the DC. We charge for screen time. And we charge for my fat posterior to sit and look at it and sign it. We even charge for sitting down and adding all the charges up.
Sometimes we quote not-to-exceed prices when we are working for a consultant in conjunction with a utility company project. Trust me, hourly rates gross higher fees in those cases.
Hourly rates only mean trouble.
John Harmon
How do you handle re-stakes? Clients always ask for hourly rates for staking work. I charge for field time, office time, mileage, hub/lath/stakes etc. when I put the bid together. Do you use your "standard" hourly rate for that, or do you bump up the survey quote rate? Re-stakes usually have more value than first visits because now the contractor is "under the gun", so says Jedi Phipps. I have been taking notes.
Larry, can you elaborate on value based pricing. I'm not sure how you would ever take the time out of the equation. Not to exceed contracts are based on some kind of time. My question is if you have two very similar boundary surveys, one client wants a survey to know what they own and the other client has to have a survey because the city says so, even though these survey are similar they have a very different value to each client. Would these surveys be similar in cost or would the survey for the client that has been told he has to have a survey be less because to him it is of little value. Thanks Dan.
> I wholly agree, which is why I highly prefer bid work to hourly. Why charge 140/hr when you can get an effective rate of 200+/hr. when you bid carefully?
>
> I have a client who has been asking me to switch to hourly for years now but I won't even entertain the idea. The problem arose when one of the supers watched me stake out a dozen or so homes in a couple hours with Robbie the Robot by myself. They did a quick calculation and the next day I got an email asking what my hourly rates were. I quickly told them I don't stake houses at hourly rates, it's a set fee.
Yeah. The client's henchman probably wasn't around during the years and years it took you to get educated and get licensed and develop the skills and the other tools necessary to run a professional practice that stakes house corners efficiently with a robotic gun.
Did you tell him he's free do do all that for himself if he thinks your screwing him? 😉
I agree to a point.
almost all my contracts are lump sum with a per diem to fix 'problems' it protects me and the client.
Lump sum is for construction contractors.
Professionals charge by the hour. Many professional services can't be accurately estimated, I have no idea how long it's going to take to do your boundary survey.
Professionals are here to serve, not make a killing. Obviously everyone needs to make a living, that is why a fee is charged.
I tend to avoid lump sum like the plague.
I am far too optimistic.
Take my pricing the way I offer it or get someone else. Haven't run out of work since I got started in the business on my own. I know the other local surveyors and I have no reason to try to undercut any of them.
> Larry, can you elaborate on value based pricing. I'm not sure how you would ever take the time out of the equation. Not to exceed contracts are based on some kind of time. My question is if you have two very similar boundary surveys, one client wants a survey to know what they own and the other client has to have a survey because the city says so, even though these survey are similar they have a very different value to each client. Would these surveys be similar in cost or would the survey for the client that has been told he has to have a survey be less because to him it is of little value. Thanks Dan.
I have been elaborating. For the past year plus. See an entire series of articles in POB. Step by step instructions in that series.
Larry P
> Lump sum is for construction contractors.
>
I think I've made a pretty compelling case for my point of view over the past year plus. See the series of articles in POB.
You know I like you David. Will keep an open mind that I am wrong and you are right. Back up your assertions with facts and data please.
> Professionals charge by the hour. Many professional services can't be accurately estimated, I have no idea how long it's going to take to do your boundary survey.
>
Who says professionals have to charge by the hour? How did professionals charge before the invention of the billable hour just over 100 years ago?
> Professionals are here to serve, not make a killing. Obviously everyone needs to make a living, that is why a fee is charged.
Study carefully, and you might just find that charging by the hour is much less ethical than charging lump sum. I am not prepared to give away everything I know just now. But that will be a topic for a future article.
Larry P
> I tend to avoid lump sum like the plague.
>
> I am far too optimistic.
>
> Take my pricing the way I offer it or get someone else. Haven't run out of work since I got started in the business on my own. I know the other local surveyors and I have no reason to try to undercut any of them.
I never said that hourly rates can't and won't work, just that there is a better way that is tied to something that actually matters to our clients. Most clients don't care one bit about your time.
Larry P
> Lump sum is for construction contractors.
>
> Professionals charge by the hour. Many professional services can't be accurately estimated, I have no idea how long it's going to take to do your boundary survey.
>
> Professionals are here to serve, not make a killing. Obviously everyone needs to make a living, that is why a fee is charged.
For the 20 years that I was in business, everything I did was by an hourly fee. The client would ask, "How long would it take and how much would it cost?" I would tell them I didn't know as it was impossible to try to determine what kind of problems we would run into or what it would take to resolve them and every job was different. There is no cut and dried method of anticipating what would be involved any project." They would again ask, "Well, how much?" I would tell them, "They weren't listening, that I didn't know how much and it would by the hour, if it turned out to $1,000 or $10,000!" I charged for everything, EDM time, crew time, mileage plus hourly rate on vehicles, computer time, all office time, all materials, meals and motel when out of town, driving time to and from the job because it didn't cost me less for wages I had to pay the staff just because we were on the road, (Workmens Comp still comes into play also), all reproduction costs for maps, etc., clerical time was also on an hourly fee. If I was still in business, I would never do a lump sum (bid! Ugh) on anything and would still be charging an hourly fee. If I was to do a lump sum, it would be for 10% of the valuation of the property, providing it was worth anything.
90% of my work was route surveys, either pipe lines or buried telephone cable routes, that involved maybe ½ mile or maybe 300 miles. Every project, the cost per mile varied and there was no way to set a standard per mile cost.
In response to your question, I believe most clients care more about your rates than you think. And, while lump-sum pricing may be fine for an ordinary boundary survey, I venture to say that a sophisticated client only prefers a lump-sum whenever he believes it is cheaper than the alternative, or is unconcerned with quality. Leastwise, that was my experience in such matters during my 33 year career with a diversified energy company.
From a sophisticated client’s perspective, it is much easier to order/administer a survey upon time and materials basis than by lump-sum, as the client seldom knows what the survey is worth, even though he may appreciate its importance and have a price in mind. A lump-sum basis begs for bids in order to satisfy the bean counters, which delays commencement of the survey, whereas time and materials facilitates the selection of the consultant upon the basis of qualifications.
I am sure you will agree that what really matters to your clients is a quality product at a reasonable price. While you will probably disagree, I believe this is more readily achieved via time and materials than by lump-sum.
Not everyone reads POB Larry, perhaps could you do a blog or go over your high points here?
I will admit
I will admit that I received a call yesterday about a job where it may be necessary to give them a lump sum number, if I choose to take the job. I provided the caller a range and added how, without much better information and some research, I really didn't know whether I might be able to do it for less or for much more. My main goal was to be as honest and professional as possible.
This is a situation where an 80-acre tract is to be split such that the husband gets a certain acreage and the wife gets a certain acreage as approved by the court. I have been in this situation before. No matter what you do, you will be approached by both parties and get to hear who did what to who and why things went down the drain. Then, once you get the outer boundary handled you will find that there isn't the perfect 80 that was used for the determination of who gets what. OK, do I prorate accordingly or is one party's number to be fixed and the other to float? Which one is fixed? Payment will arrive from one to four months after job completion, not before or upon delivery.
As this may require a full section breakdown, or it may not, the number of days involved and to completion can vary quite a bit. If I can find a modern survey showing the section has already been broke down, I might be in and out in three hours. If not, and I need to bring in a backhoe to search for stones set in the 1800's, my time line just got stretched out to a week. As you know to never believe anything about accessibility that the client tells you, the ease of accessing all the control points and final line points can change things tremendously. We did a job last week where we were driving across a corn field knocking down corn 6-feet tall. Try getting permission like that from adjoiners who you must cross in order to reach the center of section.
As to the value of the job to the client, in this case it is less than zero. Neither one wants to pay the bill because it's the other one's fault that this is necessary. I am merely one more "detail" in wrapping up this God-awful mess.
