Often you are quoting a super high price because you don't want the work and maybe it isn't really what you love to do or your expertise.
But the buyer assumes you have a super high price because you're the best and can charge what you're worth.
End result: The buyer is unhappy with your work, because you priced as if you were a world leading expert and actually you are learning on the job and don't want to be there anyway.
"That is not the type of jobs we usually do, and if we did we'd have to use a lot of time to build competency in the problem and that would've costed you a lot. You'd be better off trying X or Y contractor, that's closer to their wheelhouse"
And as a bonus you'd still be considered for future work that's not that rather than being filed under "those are those super expensive guys we can't afford"
A friend of mine who is a plumber said he tells people this all the time, basically "this is a pretty small job and not what we normally do. If I did it, I'd have to take one of my plumbers off of this big job we're in the middle of and charge you what that is costing me, here's the number of a handyman I know who can take care of that for you"
The plumbing company I work for charges $240 per truck for the first hour in labor and $160 after that. For those prices it's definitely worth trying to google it first.
>$240 per truck for the first hour in labor and $160 after that.
That's a bargain! I needed a kitchen faucet replaced (the kit kind you can buy at Home Depot) in Los Angeles and was quoted "$225 per plumber and two would be required, one hour minimum" and this was not from a large plumbing contractor, but the one recommended by the condo front desk. And I got to thinking, "unless they show up with everything they need, which they haven't even asked me anything about (it's cosmetic, it needs to match the kitchen) there's no chance this is done in an hour"
in a condominium, I am responsible for damage my apartment does to other apartments, especially plumbing, especially downstairs from me. Plumbers would be expected to do a better job than me, and they also have insurance. Never do anything yourself in a condo if you can avoid it. IANAL, but that is my legal opinion. Perhaps I should outsource that as well :)
When I look for contractors I ask around my network first.
In recent years I’ve been getting more recommendations for who to avoid than who to hire. There are a lot of contractors and small agencies out there who have gotten good at selling the contract but not so good at delivering satisfactory work.
Often the negative recommendations are from a situation like you described where they pitched a high price or otherwise played games to charge more and more, then delivered a bare-bones result that barely worked or struggled to deliver anything at all. The gap between the expectations of a high-priced contractor and the reality of a disappointing work product leaves a bad taste.
I think a lot of these contractors operate with the mindset that customers will always be available and none of them will talk to each other or seek reference checks, but this approach suffers as the person’s reputation permeates their local industry. There are a few contractors in one niche I worked in where nearly everyone knows to avoid them, or at least to put strict oversight and micromanaging in place on their work and billing. At this point their primary audience is new startups where they can milk them for overpriced work until they catch on.
> have gotten good at selling the contract but not so good at delivering
This has been a problem beyond "recent years". In part because of splitting the sales function from the technical function - which is many agencies as soon as they decide on growth vs specialization.
For clients with a little more time and budget - i.e. a little more forethought in general, it's good reason to hire someone more broadly technically competent or at least aware just to help with the process of hiring more specialized work. At least the first time around it can end up being a recursive problem: if you hire a hiring advisor who has their mind locked on just one way to do things, then you just shot yourself in the foot.
> I think a lot of these contractors operate with the mindset that customers will always be available and none of them will talk to each other or seek reference checks, but this approach suffers as the person’s reputation permeates their local industry. There are a few contractors in one niche I worked in where nearly everyone knows to avoid them, or at least to put strict oversight and micromanaging in place on their work and billing. At this point their primary audience is new startups where they can milk them for overpriced work until they catch on.
Well, did they get out of business ? No? Then by captialism the approach is great working strategy...
Are you arguing that there is some (other) system that solves the issue of over-selling and under-delivering?
More constructively, I don't think anyone argues that there isn't (rudely speaking) a broad supply of fools waiting to be parted from their money. For the purpose of this forum the question is what can the clients (quite possible technically weak which is why they need to hire out) do to improve their odds.
Isn't that how the big name consultants work? Price it out like you're getting experts from a famous firm and then send in a green team to do the work?
Maybe. In my experience, a more common case is that the buyer has no way to evaluate value other than quoted price and so they're actually _much happier_ with a huge price than they would be with a smaller price for the same work.
You think they’re happier to pay more than to pay less? I’m having a hard time believing that hypothetical.
Regardless, companies that don’t know how to evaluate the value of quoted work will eventually figure out the value later. A client that that is initially happy with a price will likely become retroactively disappointed when they deal with another contractor in the future who has more realistic pricing.
In my experience contracting, I’ve encountered a lot of “You paid how much for this!?” situations when dealing with work from prior contractors. Once they realize how bad and/or overpriced the work of a prior contractor was, that person’s reputation is done. Ironically, the contractor will often try to use them as references for other clients because they were initially happy.
> You think they’re happier to pay more than to pay less? I’m having a hard time believing that hypothetical.
I believe it. Here's an anecdote which blew my mind when I saw it as a kid, and which illustrates the point.
When I was growing up, we had a guy in our church who made guitars. Beautiful instruments (seriously, look up Petros guitars sometime because they're really beautiful), and played/sounded good to boot. Bruce was charging between $3000 and $6000 at the time depending on specifics, so while pricey they weren't expensive by guitar standards. He told me that he got feedback from customers that they weren't sure whether or not his guitars would be good, because they were priced so reasonably (compared to what one would expect to spend on a custom made guitar).
So Bruce decided to raise his prices, and see what happened. He said his sales went up after raising prices, presumably because the guitars were now at a price point where people went "yeah this is what a custom handmade instrument should cost" rather than "what's the catch here". Weird, but hard to argue with results. People aren't always rational buyers, as someone else pointed out.
Tl;dr: Payless Shoes, a discount shoe retailer, opened a fake high-end store under the Palessi name and got fashion influencers to gush about how great the shoes were. People who actually bought such Palessi shoes probably were happier with them than if they’d bought them at Payless.
Years ago, a luxury car company (I believe it was Mercedes) did a study measuring demand with the same car across a relatively wide range of prices. Contrary to economic models that assume rational actors, there was a point where lowering price further made demand go down. People apparently assumed the higher price tag on a car made it more attractive as a consumer.
Probably why Mercedes does not bring their lower-end or lower-optioned car models to North America. They want to maintain their image as a luxury marque so they can command premium prices that their customers are happy to pay.
Commit to doing a good job, or at least a job that meets what you promise to the customer.
Back when I did support and custom dev, our minimum price was $100K/year (back when $100K was a lot of money). Most of those contracts were fabulously profitable. But once in a while a bug would be reported that took five or even ten person-months to fix, scrambling all our other plans in the process. So what: we didn’t charge extra and didn’t complain to the customer. Led to crazy levels of customer loyalty.
Exactly. A high price does not necessarily promise that you have the technical solution ready to go. There is such a thing as building an understanding with the client (even if the contract text itself is more conservative). That leads to a "relationship" with some level of solid grounds for it. As opposed to a common practive of throwing a one-off contract over the wall and merely praying that this will go well.
I don't want to discuss with plumber how he is going to fit the pipes I want him done and gone from my house as soon as possible.
The same with people using my software, they want to tend to their customers not spend time making my software better. Most of people don't even care about filling in bugs unless it is something that breaks their work.
Lots of entrepreneur porn is about "how we get nice meetings with the customers while sipping pumpkin spice latte" ... sorry but no that is not the way world works. If you want to earn money make yourself useful and do your job in efficient way.
You quote high to inform them honestly what it would take, rather than deciding for yourself what is really their choice not yours. Your choice is to not take a job if you just don't want to or can't of course, but is not to tell anyone else what they want or what it's worth to them to get it.
So as long as you don't mind doing the job fundamentally, but it's just a matter of resources or time or efficiency etc, (you're not being asked to do something you morally object to, or totally unrelated to the kind of work you want to do, or requires something like living on an oil rig for a year etc...) then you have no excuse to do anything but make your best guess at the honest estimate whatever that is however outlandish you think it is, including whatever no-promises cya terms you think should apply, and just tell them that. "It will be $200k, 4 months minimum, and you might get nothing in the end."
And part of that is also giving your best honest advice about what they should actually do, and your reasoning. Some other approach that you think is better, or recommendation how to find some other supplier who could do the approach they wanted "that will require rust and high availability, so you want to look for shops that specialize in rust and high availability...", whatever.
The end result is that they are the ones who decide not to do it rather than you. And if they go for it, well, considering you weren't bullshitting them but giving your honest best info, recommendation, and reasoning, you take it and do the job. If that means spending 2 months just learning a new system or language and throwing away a bunch of experiments just to get started, or hiring someone else to do some part you can't do, so be it. You put all that into the quote, and they said do it, so enjoy your big safe gig for the next while.
> ... maybe it isn't really what you love to do or your expertise...
And that means that you would follow the author's advice and say "no" because you know in advance that it's not your area of expertise and not what you want to do, and most importantly you haven't stated any long-term benefits of making this short-term sacrifice.
Yes. This is a very likely problem. When I evaluate quotes on the other side, I usually weed out the highest and the lowest ones. The highest one is usually some middleman re-contracting out the work adding on his profit. Or someone like you said, just trying to price out the job instead of refusing the job honestly.
For personal relations I will maintain that it's always better to be clear and give a straight yes or no. Nobody likes being left hanging in uncertainty, and nobody likes people who always do that to them - people who cannot even provide a "maybe" - when asked even simple questions.
In that case you ought to be reframing the problem, answering a different question that you are comfortable giving a definite yes or no too.
For example,
Them: “Will you do x thing for me by year end?”
You: “Are you actually trying to solve y problem? What if I refer you to Z person by end of day? Or start by bringing you some research around X by end of month?”
Tbh the same applies to business not just personal
I disagree, I like a qualified answer. I often have other options and this allows me to use them.
"Can you do X?" "Maybe, I'm very busy so I might not get to it this week" "Ok nevermind I'll ask [other team member] / I'll do it / I'll do Y instead"
If you say no when you're busy/uncertain, you quickly become useless to me and I'll learn not to ask you for things. But if you say yes, I'm counting on you and I will be both disappointed and in trouble if you don't deliver.
I have a similar anecdote in my career as a developer.
At the height of the financial crisis I was just 2 years out of school and working for a small startup. Our first child was just born, and I got fired from my job as they discovered I was trying to bootstrap my side-project. There was no non-compete clauses in my contract but the company used it as an excuse to avoid paying me severance as they laid off a quarter of the staff the following week.
So there I was, anxious that no one would hire a young developer who has a tarnished work experience with a newborn at home.
I was desperate to just find some work. I eventually got two offers with the exact same salary as the job I had gotten fired from. One job sounded more appealing and offered me a chance to learn and grow. The other was for a job to maintain an existing legacy codebase for a struggling company that just went from 100 employees to 10. My wife suggested to just counter-offer with a 50% increase for the unappealing job. If I didn't get it, it was no big loss as I had another in hand. Sure enough, they accepted and the job wasn't actually that bad in the end.
Strangely, when I look back everything turned out in the end for me. I got a 50% pay raise and I also got to spend 3 months at home with my newborn child while unemployed.
> If they say “yes,” you’re happy because the terms or money are so good, it more than compensates for the distraction, perhaps funding the thing you really want to do.
Perhaps. Make sure you're high bar is high enough. Opportunity cost is an underappreciated metric. The exceptional (read: as in a rare exception well above average, mean, etc.) can be addicting, and eventually self-defeating (read: before you know it your temporary digital ditch digger stint gets less stint-y and more permanent-esque). It's like a bad-ish romantic relationship that goes on too long. Regrets, and the some.
If you're going to go this route, be certain to plan your exit. For example, "The first X weeks are $Y per hour. After that we revisit, if necessary." Baking this into the agreement will force you at the end of X weeks to recalibrate the revenue vs the opportunity costs.
In fact, for any type of contract work with too many unknowns and/or too much possible career friction always include a time limit along with the rate.
There are things I don't really love doing like ghostwriting company blogs but if the project is short and well-defined (and is something I can actually do a good job of fairly quickly), I'll take a few $K from you. I'd be much more hesitant to commit to something more open-ended even if the income stream were good if it were something I was doing strictly for the money.
The other thing I wanted to mention, aside from opportunity cost, is risk. I'm not suggesting never leave your sweet spot. That would be stupid on my part :)
However, as you leave your sweet spot, be aware (read: beware) of what you don't know. Be aware of the fact that bad decisions are very similar to trust...one slip and you've lost 10x more than you anticipated. If you're going to leave your sweet spot be sure you're prepared for the worse. It can and does happen.
Put in real terms, over the years I've worked as a contractor for a number of marketing / web dev agencies. The more successful ones didn't get there from yes, they got there because of no. No to projects beyond them. No to clients with expectations out of proportion to budget. No for the win, so to speak.
I've also seen those same agencies start to drink their own Kool Aid. They get in a financial pinch and take on work / clients they're not tuned for. For example, they don't have the in house expertise in the technology / solution required. Eventually the project costs more than it brings in *and* the team is miserable, has lost faith, leaves the conpany, etc.
If you're leaving your sweet spot and you're not concerned, you're probably doing it all wrong.
The hourly rate example is a clear tell. If you're selling your time by the hour you're already doing the wrong work. Consulting = death, and I mean that literally. The months of our career are finite and we should allocate them carefully
No consulting is always death, you’re dividing up your energy into little packets of focus and you just can’t accomplish much
You can only get the value of your work over time though equity. If your impact really is large, nobody could afford to pay the net present value up front (and only a lowlife would want to damage the company by taking out cash like that)
I think we are using the same word to reference two different things.
Equity increasing in value, as has been discussed on HN multiple times, is not a guarantee - and businesses engage all kinds of other businesses for all kinds of help.
There are lots of ways to structure a temporary engagement that's mutually beneficial to both parties - in the short & long term.
Career is a means to an end. Billing hourly I can look after my family, not get too stressed, and focus on what really matters when I'm off the clock. Even if the EV from swinging for the fences would be higher, it's not worth the risk.
I never give a definite answer before I'm at least somewhat familiar with the problem at hand and their deadlines - I'm not able to tell from this article alone if the author did that.
Anyway this approach is profitable but comes with two downsides:
-You risk getting stuck with a project that was much larger than you anticipated.
-Eventually you find that your business is not what you originally envisioned.
I used to work for a company that wanted to get into the Big Data space back when that was a fashionable buzzword.
I went to an interview there a couple of years after parting ways only to discover that while they still heavily advertised big data, deep learning and whatnot, their main money maker was some pretty standard DevOps.
This is also why you should get multiple quotes for any transaction without an obvious and transparent market. When your roofer quotes you $XK to replace your shingles, that might be what he thinks is a competitive rate in your market, or it might be the "I am too busy but if they really want to pay that much I'll find a way to make it work" rate.
A guy who's drowning in business and a guy who's sitting idle will likely quote you very different rates. Obviously you should also be conscious of why someone is busier than another, but sometimes it's just a matter of timing, etc.
// That's why no one goes out of their way to hire unemployed people
I don't know why someone would "go out of their way" to do that, but the numbers take care of it. For example, if I post a job at $XXXK per year, if XXX < FAANG salary, I would expect nobody from FAANG to apply, but I might get some "laid off from FAANG" candidates.
This is good advice that has also stood me well over the years.
If you are doing custom development you can also use this at a finer level of granularity: charge a lot for parts of the project you’d rather not do (even possibly pay a bonus for the poor person on the team who draws the short straw and has to do that part, and maintain it) and charge less for the parts the customer might be on the fence about but you know will either make them happy (though they don’t realize it yet) and/or help you get future business elsewhere.
To expand a little: look over the horizon. Imagine you are thinking of expanding into the banking market at some point down the road.
Customer A says, “hey, would you add a feature to your emoji generator to interface with the ACH system?” Stupid request, maintenance nightmare. But you might get paid to have one person get some exposure to the horror show that is banking APIs. Exposure that might later help you think a bit better when it’s time to start thinking about that market. Of course charge a LOT because it’s new and charge a LOT for the maintenance contract. Maybe it helps you estimate engineering and marketing budget, or maybe it helps you decide on a different expansion path.
The converse is true too. Customer B wants hospital integration so they can add cute emojis to messages like “hey, you’ve only got four months to live. Have a nice day!” You’re not stupid so you know you never want to get anywhere near the tarpit of medical software. So you can confidently say “no” (phrasing it, “we don’t believe we could honestly provide the necessary level of support you’d require and don’t want to let you down blah blah blah”).
say "yes" for things you aren't into doing but just make sure you ask for super high amounts of money, so that you're happy if they accept your offer.
nice theory for "getting more money is good" but doesn't work for "I have no time". If people could package up "more time" for me in some kind of interdimensional container, I'd be all set.
Yep. I'm almost certainly not going to cancel personal plans especially for something that's "just business." However, if I don't have any urgent plans and you want me to do some well-scoped short-term job for you or even hop on a plane for a consulting day, I'll probably do it for a fairly generous hourly rate/per diem. But I won't be a bargain unless it's something I really want to do or could lead to some sort of follow-on business.
If you end up in a situation where people consistently offer you more money than you are otherwise getting, you will solve the time problem by shifting to the more-money type work...
If your big (technically, your ask) isn't high enough to cause you to make the time, the it's not high enough.
A decade+ later lots of people (potential customers, investors) also prefer not say “no”.
In my work with startup founders, I regularly say, “people say ‘no’ in a lot of ways, many are very subtle. But when they say ‘yes’ it’s clear and obvious.”
Did you read the article? It's not about toxic positivity, it's about how to craft "no" and "yes" such that they're not absolute and can still make both sides happy. Has nothing to do with feelings.
Often you are quoting a super high price because you don't want the work and maybe it isn't really what you love to do or your expertise.
But the buyer assumes you have a super high price because you're the best and can charge what you're worth.
End result: The buyer is unhappy with your work, because you priced as if you were a world leading expert and actually you are learning on the job and don't want to be there anyway.