As you mentioned, you are solo. Office work is not being passed off to a subordinate technician. It's being done by the professional. This is valuable in my opinion and should be highlighted as you explain your pricing. If the issue is your rate, then it could be easily explained that because you perform the office work less time is required than what would be necessary if you passed the work to a subordinate, thereby reducing the actual overall cost.
Shawn Billings, post: 432127, member: 6521 wrote: As you mentioned, you are solo. Office work is not being passed off to a subordinate technician. It's being done by the professional. This is valuable in my opinion and should be highlighted as you explain your pricing. If the issue is your rate, then it could be easily explained that because you perform the office work less time is required than what would be necessary if you passed the work to a subordinate, thereby reducing the actual overall cost.
While it may be valuable, it is also intrinsic as a cost and can be easily manipulated to make numbers work, whereas having subordinates typically has variable extrinsic costs that must be accounted for typically in an overhead or hourly rate. Just another way of looking at it.
Kris Morgan, post: 432464, member: 29 wrote: While it may be valuable, it is also intrinsic as a cost and can be easily manipulated to make numbers work, whereas having subordinates typically has variable extrinsic costs that must be accounted for typically in an overhead or hourly rate. Just another way of looking at it.
That's fresh to death. I'm going to have to look up some words to make sense of it. I'm thinking you made the right call on your degree choice. I'm kind of envious.
Shawn Billings, post: 432467, member: 6521 wrote: That's fresh to death. I'm going to have to look up some words to make sense of it. I'm thinking you made the right call on your degree choice. I'm kind of envious.
I think Kris is trying to say to the OP what we are all trying to say without actually saying it out loud, it's simple actually. He just has to do it.
Shawn Billings, post: 432467, member: 6521 wrote: That's fresh to death. I'm going to have to look up some words to make sense of it. I'm thinking you made the right call on your degree choice. I'm kind of envious.
Fresh to Death Baby!!!! Yeah! Man I don't know if I could have taken one more day binge watching Jersey Shore. 🙂 I'm feeling good enough now that I will GTL (gym tan laundry) tomorrow though.
Shawn Billings, post: 432467, member: 6521 wrote: That's fresh to death. I'm going to have to look up some words to make sense of it. I'm thinking you made the right call on your degree choice. I'm kind of envious.
On a serious note, another way to say it is that whatever value we place on ourselves, at least as a solo operation, is irrelevant. You need X to keep the lights on and pay the bills. If you do all the field and office time, then your time is intrinsic, or internal because you're not paying yourself, until you get paid. When the employee function comes in, those extra or outside (extrinsic) costs show up as having to be accounted for. That being said, I'd love to stand up and say I'm worth $150/hour if I'm at my desk and $200/hour if I'm in the field. The reality is, if I'm solo, my hourly cost is probably closer to $20/hour, and what I'm worth is irrelevant to what I need.
Now I totally agree that I don't want to work for wages and my license should allow for me to command a higher price, but that price should be viewed, at least in my opinion, with the costs associated with what it takes to produce the product/service. Once the break even is found, then profit should be looked at and then you get into a whole other trap. Are you risk averse like me, and hoard the profits in case you need to buy something or to you put it in your pocket and go to Disney Land? I don't know and it's not for me to say how folks use their profits. In a perfect world, you would have profit on every job and an excellent budget whereby you associate those proceeds with items to buy or pay yourself. After the last several years, I held onto the little money so long to cover repairs or rainy day stuff that my hands are cramping and it's hard to let go.
With regard to the initial thesis though, I think, that explaining why I'm doing the drafting over someone else falls on deaf ears or could come off as pretentious. I make enough mistakes with two folks checking me. 🙂
Kris Morgan, post: 432705, member: 29 wrote: If you do all the field and office time, then your time is intrinsic, or internal because you're not paying yourself, until you get paid. When the employee function comes in, those extra or outside (extrinsic) costs show up as having to be accounted for. That being said, I'd love to stand up and say I'm worth $150/hour if I'm at my desk and $200/hour if I'm in the field...
...With regard to the initial thesis though, I think, that explaining why I'm doing the drafting over someone else falls on deaf ears or could come off as pretentious. I make enough mistakes with two folks checking me. 🙂
I get what you're saying. My issue with this is that the question has to do with rates (if I understand the OP correctly). At the end of the project, the rate is going to be multiplied by some number of hours to get a subtotal for the total cost. If I have a dump truck that carries a bigger load than my competitors, I am going to have a higher rate, but my number of hours, or trips, (whatever metric you base it on) will be less. The rate may be higher than others, but you may be able to make a case that the total cost will actually be less because of improved efficiencies.
The part about being solo is questionable... for example, not all solo guys are good at CAD. We can't be perfect at everything and will bring strengths and weaknesses to whatever organization we're with. For a solo operator, his business strengths will begin and end with his own strengths. If he is good in the field and good at CAD, it can bring huge gains in efficiency. This is one reason I'm not crazy about charging hourly or providing rates as it disincentivizes efficiency. I think rates should be used internally to make sure costs are managed.
Shawn Billings, post: 432736, member: 6521 wrote: I get what you're saying. My issue with this is that the question has to do with rates (if I understand the OP correctly). At the end of the project, the rate is going to be multiplied by some number of hours to get a subtotal for the total cost. If I have a dump truck that carries a bigger load than my competitors, I am going to have a higher rate, but my number of hours, or trips, (whatever metric you base it on) will be less. The rate may be higher than others, but you may be able to make a case that the total cost will actually be less because of improved efficiencies.
The part about being solo is questionable... for example, not all solo guys are good at CAD. We can't be perfect at everything and will bring strengths and weaknesses to whatever organization we're with. For a solo operator, his business strengths will begin and end with his own strengths. If he is good in the field and good at CAD, it can bring huge gains in efficiency. This is one reason I'm not crazy about charging hourly or providing rates as it disincentivizes efficiency. I think rates should be used internally to make sure costs are managed.
I agree (mostly) with the last statement. From a business standpoint, I will make more profit on a project (normally) where I give a live and die cost rather than a price per hour. On certain jobs, where the scope is constantly changing, hourly is the only way to go (such as O&G). Finding an hourly rate, for me, is all about finding a metric to evaluate the project and my estimations and evaluate profit. That number is generated through the last 12 months of historical data of costs and is ever fluctuating and the busier I get, the more I need to revisit it (which is a good thing).
Solo operators have a unique advantage over standard business to make the math and accounting (at least from a cost or internal standpoint) MUCH easier.
Also, my wife wants to know if you ever got the brick from the Elementary School they tore down. 🙂
Kris Morgan, post: 432878, member: 29 wrote: Also, my wife wants to know if you ever got the brick from the Elementary School they tore down. 🙂
I am sorry to say I did not. I remembered I was supposed to do that about a week too late...
Please pass my apologies to Melissa. I really did intend to snag one for her.
I do agree that hourly rates have a place, but variables in business models make it difficult to justify rate comparisons against other companies.