The Basics of Tech Consulting
Consultants typically bill their clients in increments of time: hours or days worked.
But this is not unique to consulting.
In fact, most professional services bill their clients by the hour, including plumbers, accountants, and therapists!
This is primarily due to the need for scheduling. Service providers, including tech consultants, only make money if they are working. That means they have to plan.
Service providers have to know roughly how many hours a client will need—say, ten hours a month. Otherwise, they may not be available when the client needs them.
What’s a fair rate?
There are three things to consider:
1) Level of Support
There is no “standard rate” in any industry. A large consulting firm may have a steep hierarchy, with hourly rates rising sharply from basic support to custom development. “On call” services, for example, typically charge a premium.
2) Scope of Work
This can vary greatly in difficulty. The needs of a company with 200 or more users will be significantly different from those of a small retail chain or a non-profit, even if they are on the same platform.
3) Length of Engagement
For larger projects booked on a multi-month contract, service providers typically offer discounts on their hourly rate since the client is committing to a large block scheduled in advance, which makes it easier to plan.
What About Fixed Bid?
For the largest projects, it’s not unusual for clients to negotiate a cap on total billings so that they do not exceed a reasonable budget for the scope of work. This is called a fixed bid. But for this method of pricing to be viable, it requires an extremely detailed scope, which takes time to create.
If you are having work done to your house, a contractor will first come to take measurements, inspect the location, and gather requirements from the home owner. Only then can she provide an estimate.
Similarly, even fixed-bid development projects tend to start with a variable-cost component called “discovery,” where the service provider completes a system review and creates a plan that specifies what work is included in the bid and when it will be delivered.
What’s normal for Zoho?
Consultants have a reputation for earning high salaries, but it’s important to consider that an hourly rate is business income, not personal income. All of the firm’s business expenses, from office space to printer paper to phone and internet and insurance and taxes, must be paid out of operating receipts. Salaries come last.
In the Zoho ecosystem, most junior consultants charge $50-70/hour, but they will be limited in what they can do. At the high end, the largest agencies typically charge $175-225/hour, often for a range of services that includes full-stack development. A good, technically competent partner will likely be somewhere between.
