If you need the money, don't take the job
From My Horrible Career
Your lovin’ gives me a thrill, but your lovin' don't pay my bills
This is the fourth of a five-part series about my horrible career: how it started, how it’s going, and what I learned from making every mistake imaginable.
- My horrible career
- Not a real developer
- Master of my domain
- If you need the money, don’t take the job
- Will write for food
The full series is now available as a book: My Horrible Career
It’s late, and the campfire is burning low. My fellow content creator Zack Proser and I are sitting on a log, chowing down on s’mores and enjoying a few spine-chilling tales of terror about my horrible career.
Well, not that horrible: I now make a living from at least two of my favourite activities, writing and mentoring. No luck so far getting people to pay me to tinker with their vintage Land Rovers, or to sit in a comfy chair eating chocolates and watching classic Doctor Who, but hope springs eternal.
Last time, we talked about how I made the leap from salaried server-monkey to starting my own company. Independence is great, but it turns out that when you quit your job, you also stop getting the regular paychecks (why does no one ever tell you these things?)
Money, like oxygen, is one of those things that you don’t really appreciate until you suddenly don’t have enough of it. Some of the biggest challenges for the newly independent developer or creator, indeed, revolve around money: how to get people to give it to you, how much to ask for, and how to be worth what you’re asking. Let’s get into that. Over to Zack.
In our last chat, John, you froze my blood with a horror story about what happened when you unwisely took on a fixed-price contract. From what you said, it doesn’t sound as though a deal like that is good for either you or the client?
It’s not. A fixed-price deal sets up the wrong incentive structure. It’s in the client’s interest to agree the lowest price possible, and then to squeeze the consultant for every drop of juice they can get. So that sucks.
On the other hand, it’s in the consultant’s interest to do the quickest and cheapest work necessary to get the client to sign off on the job. After that, they have zero incentive to fix any problems that arise. It’s just bad news all round.
So what would you recommend instead?
When someone asks for a fixed price, I’ll explain to them why that’s not in either of our interests, and suggest that instead they pay me a fair hourly rate for what I do. And, so they know what they’re in for, I’ll give them a careful and realistic estimate of how many hours it’ll take to deliver what they’ve asked for. That gives them the cost control they need, but doesn’t commit them to the whole sum right away.
Once we’ve agreed the terms, I can get started, and I have a strong incentive to deliver value for them right away. If they like the work I’m doing, and they want more, I’ll happily provide it: it pays me to do so! On the other hand, if after the first day or two they think “This guy’s no good,” they can just pay me off and wave goodbye: they’re not locked in for the long term to a vendor choice they’re already regretting.
At the end of the job, if they want further changes or enhancements, they can have them, but not for free. I’ll estimate them, and then they can decide whether or not it’s worth the extra cost. That prevents a nasty case of “just one more thing” syndrome.
One reason some companies don’t like to pay for consulting work by the hour is that they think it’ll incentivise the consultant to goof off. You know, take it slowly, invent problems and delays, anything to rack up a few extra hours. Sure, unscrupulous consultants will do that, but then it’s on the client to pick that up and get rid of them. It’s not a successful long-term strategy.
Why not?
I’ve heard it wisely said that there are two kinds of consultants: poachers and farmers. The poacher wants to make a quick kill and get clean away. The farmer, on the other hand, is in the game for the long haul. She shears the sheep closely, but gently, and nurtures it. She feeds it, cares for it, keeps it warm in the winter, and tends it when it’s sick. That way, it’ll be around for her to shear again next year.
Flattering analogy.
Okay, but I’ve worked on farms: you’ll never find a deeper love than a farmer has for her sheep. They’re literally her livelihood: if they do well, she does well. Sure, she might see a quick profit if she slaughtered them all this year, but then there’s no next year. Instead, she looks after the sheep, and they’ll look after her.
Similarly, as a consultant you could strike fast, extract as much money from the client for as little work as possible, and then ride like hell for the hills. There’ll always be more unsuspecting clients for you to predate upon, won’t there?
It seems tempting, but actually, it doesn’t work. Hunting for new clients all the time is difficult and expensive, and often it doesn’t work out: you put time and effort into meetings, proposals, and estimates, and half the time it just doesn’t go anywhere. Much better not to lose the old client in the first place.
Also, sooner or later, the word about you will get around. One way or the other. So you should be the consultant that you’d want to hire.
Repeat business is the best business, because marketing is hard. After a while, you won’t need to market your services. People will start coming to you. At that point you know you’re doing something right.
I see the value of charging by the hour, but one thing I struggle with personally is knowing what to charge. Do you have any advice?
Yes, that’s difficult. The best advice I ever got on this was “Think of a number, then double it.” If you don’t feel a little embarrassed when you tell them the rate, that probably means you’re coming in too low. If you always get a yes, then you’re definitely coming in too low.
The tendency is always to under-price yourself. Partly because you’re modest and self-effacing (that’s one of the reasons we all love you), but also because you want the business. That’s another big mistake I made starting out. I thought “Well, I don’t really know very much. I’ll charge a low rate to reflect that.”
Here’s a weird fact: businesses actually like paying a lot for consultants. It’s called the Chivas Regal effect. You know, if people see a cheap bottle of whisky, they’ll assume (rightly) that it’s horrible. But if it costs sixty bucks a bottle, they’ll assume it must be a quality product. Otherwise, how on earth could the manufacturer justify charging that much for it?
And the whisky actually tastes better because it costs a lot.
It sure does. Cheers!
Imagine a manager has some problem they can’t fix. What’s their response? Hire a consultant. A cheap consultant? Absolutely not. Only bad managers have cheaply-solved problems.
The more they spend, the greater the kudos they’ll get from upstairs, and the bigger their budget will be next year. After all, the division with the most expensive problems must be the most important one in the company.
And everyone can relax and feel good knowing that the problem’s being taken care of by the highest-priced consultancy firm available.
Wait, what?
I’m serious. When you’re on trial for murder, do you want to hire the cheapest lawyer in the phone book? I don’t think so. You go to the super expensive lawyer, the one that defends Tom Cruise against whatever the latest weird and concerning allegations might be.
Okay, someone else, not Tom Cruise: I don’t want to hear from his lawyers. But that’s my point.
So it’s about being reassuringly expensive.
It really is. You have to actually be good at what you’re doing too, of course, or the whole scheme falls apart. What the client’s money really buys, though, is that delightful feeling of making the thing somebody else’s problem. You know, we’ve turned it all over to a top-tier expert, and now we just don’t have to think about it anymore. The more that person charges, the more reassured the client feels.
It’s better for you, too, because when they’re paying you a lot of money, they put a lot of value on your advice. By contrast, the less they’re paying, the less they’re inclined to listen to you. You need them to listen to you, and that’s why you need to charge top dollar.
In “Secrets of Consulting”, which is the first book everybody should read on this subject, the incredibly wise Jerry Weinberg says:
Make sure they pay you enough so they’ll do what you say.
That’s genius, but… how do you work out how much that should be?
Here’s a good way to get to the right number: every time a client accepts your price, make it a little bit higher the next time around. When people start complaining, or turning you down, you know you’re getting into the ballpark. When your acceptance rate falls to about fifty percent, then you’re probably there.
And don’t forget, the more clients you work with, the more you learn. The more you’ve learned, the better a consultant you are, and the more you can charge. So your price should steadily increase over time (but make sure it’s always in line with your value).
What if they want to negotiate?
You can negotiate on everything else, but don’t negotiate on price. Would you go to the cheapest dentist? Would you haggle with your brain surgeon from the operating table? I hope not. Some things just aren’t worth cheaping out on. Clients will still try, but you should politely decline.
Clients who want a discount always turn out to be the worst clients, if you cave in to them. By offering you less, they’re really saying “We don’t think you’re worth what you’re asking.” You don’t want to work for someone who sees you that way.
Plus, people who ask for discounts are habitual cheapskates. They think they’re smarter than everybody else: only suckers pay sticker price. They think you’re trying to take them for a sucker.
If you accept their lowball offer, now they know they’ve got you on the hook. They’ll try to screw you in every other way, too: asking for extra things here and there, demanding shorter deadlines, out-of-hours support, every little deal-sweetener they can think of.
Unless you really can’t survive without that client, don’t take them on. Jerry Weinberg also says “If you need the money, don’t take the job.”
That’s great advice. I’m putting “Secrets of Consulting” on my reading list! What else?
One common problem is that the client doesn’t know anything about the subject area: if they did, they wouldn’t need you. So they also don’t know what constitutes a fair price for the work. When they hear your rate, it may sound too high, and you won’t get the deal.
But that’s okay. You just dodged a bullet, because you don’t actually want a client who doesn’t understand the value of what you do. That’ll never be a profitable engagement, in any sense of the word.
Once someone got in touch with me and, when I quoted my rate, they said “Gosh, that’s so much more than we were expecting. We’d like to hire you, but there’s a guy in Eastern Europe who says he’ll do it for like 20% of that.” I said fine. Absolutely, go with the cheap guy. If he can do the same quality work as me for a fifth of what I charge, I told them, then it’s positively their fiduciary duty to hire him, which they did.
A few months later they came back to me and said, “Now we understand why he was so cheap. Are you still available, by any chance?” And of course I was… at the rate I originally quoted.
Business Jack does not play gentle.
That ended up being a long and very rewarding engagement, and they were super happy with my work. Partly because it was good, if I say so myself, but also because they’d seen something of the cheaper alternative. They’d learned the value of what I do, and I learned that it’s okay not to let yourself be beat down on price.
Things can still go squirrely even after you’ve landed the gig, too. You know, you give the client the benefit of your expertise, and they say something like “Thanks very much, but that won’t work for us. We’re going to do XYZ instead, because money / politics / reasons.”
It’s easy to get upset in that situation, and start arguing with them or berating them. What kind of idiots pay for an expensive consultant and then ignore what they say? The commonest kind, it turns out.
The fact is that they may just not be ready to hear what you’re saying. Sometimes they need a little time to think about it, and sometimes they need to learn what happens if they do it the other way. In fact, I’ve gone so far as to formulate what I call Bitfield’s First Law of Consulting:
Sometimes the client needs to feel the pain of not taking your advice, before they’re ready to take your advice.
It’s amazing how effective that can be. When they do come back to you, it’s often with a greatly increased respect for what you say next. “He said we’d crash and burn if we did X, and he was right! This guy really knows what he’s talking about. Let’s listen to him in a rapt, respectful silence.”
I’m doing just that. Shall we take another natural break, and return for a final bite of your wisdom s’more later on?
Sure thing. We’ll talk about how my consulting career ended up taking me somewhere quite unexpected, but that turned out to be exactly where I needed to be. See you next time.
Next: Will write for food
And you can read the whole series right now in this charming, fun-size ebook: My Horrible Career
