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Presented to The IEEE Consultants Network of Northern NJ February 28, 2003 by Jim Boyd

Presented to The IEEE Consultants Network of Northern NJ February 28, 2003 by Jim Boyd XL Research Inc. PIC Microcontroller Based Designs for Consumer and Industrial Products. Pricing Your Con$ulting $ervice$. Major Parameters Affecting Price Strategies.

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Presented to The IEEE Consultants Network of Northern NJ February 28, 2003 by Jim Boyd

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  1. Presented to The IEEE Consultants Network of Northern NJ February 28, 2003 by Jim Boyd XL Research Inc. PIC Microcontroller Based Designs for Consumer and Industrial Products Pricing Your Con$ulting $ervice$

  2. Major Parameters Affecting Price Strategies First Client = Previous employer? Type of contract Fixed-Fee (Risk-based) Time & Materials (Short Term - “Consulting”) Time & Materials (Long Term - “Contract Engineering”) Equity Participation Type of Prospect Referral Direct Mail Response Cold Call Potential for Repeat Business or Referral Urgency Level of Client’s Need Availability of Similar Expertise Elsewhere Feb 2003 - J. Boyd

  3. “The More Things Change, The More They Stay The Same . . .”French Proverb Fee chart originally prepared in 1994 by CNNNJ member, Werner Engelmeir Feb 2003 - J. Boyd

  4. Basis of Some Popular Pricing Methods Actual cost of operating your practice Client’s actual cost of using alternatives Market Pricing (Supply & Demand) Size of Client’s Wallet Size of Consultant’s Wallet Feb 2003 - J. Boyd

  5. Using Your Actual Cost Basis . . . Feb 2003 - J. Boyd

  6. When Using Client’s Replacement Cost . . . Estimate the client’s overhead, including all of the factors listed in the previous slide: “Loaded Labor Rate” is anywhere from 1.8 to 3.0 times an employee’s annual salary Typical Loading factor : 1.8 to 2.2 Ask the client “What’s your Loaded Labor Rate?” Rule of Thumb: Break-even Hourly Consulting rate: = Equivalent Annual Salary / 1000 Feb 2003 - J. Boyd

  7. My “Negotiating” Tips for Hourly Consulting Use a pre-printed Fee Schedule. Send the Fee Schedule with your Promotional material as early as possible in the inquiry cycle. Never negotiate your rate without getting something in return. Enter the negotiation process with a firm concept of your fee requirements. Be prepared to say “NO”. Never give the impression that you need the work, even if you desperately do. Feb 2003 - J. Boyd

  8. My “Profitability” Tips for Hourly Consulting Whenever possible, arrange two or more active clients to avoid work gaps. Consider switching to a Pre-Paid Retainer basis - Not getting paid on time or being paid late is the biggest profitability drain in consulting. Never agree to an unpaid technical proposal - it’s the second biggest profitability drain in consulting. Add 10-15% charge on travel & material expenses. Set a Minimum Daily charge for client site work. Feb 2003 - J. Boyd

  9. About The Speaker . . . Jim Boyd, XL Research Inc., [www.PICConsult.com] designs microcontroller-based products for consumer and industrial applications. Since 1978, XL has delivered designs for arcade games, cordless telephones, experimental solar homes, high-speed printing machinery, fire alarm systems and a control system for a U.S. prison. Jim specializes in PIC-based applications and is an Authorized Consultant for Microchip Technologies.

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