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Contract Pay Rates

In a comment on my post about Bad Project Management [1] Don Marti [2] says “the more money you charge, the less of your time people waste, and the more seriously they take you” and “you can affect the client more, whether you’re peddling idiocy or wisdom“.

That’s a nice theory, however I don’t recall seeing an example of it anywhere that I have worked. There are two broad categories of employers, large and small. Large companies have HR departments etc who decide on rough pay scales. Once the budget is approved (by senior management and HR) for someone’s contract fees or salary the amount of money seems to be of little concern to the line manager. They have a group of N people reporting to them who are all paid by money that comes from some mysterious place (with no direct connection to the quality or quantity of work done) and therefore the amount of money paid is not very relevant. Often team-leaders don’t even know how much the people who report to them are being paid! Note that this applies to people who have a similar job title, if I am paid twice as much as another sys-admin in a corporate environment I don’t expect to get more attention, but someone who has a more senior job title (or in the case of the UK has been to a more prestigious school or has a better accent) may get more attention.

Small companies are rarely in a position to be silly in this way. This doesn’t mean that the most highly paid person gets the most attention, it’s more a matter of making a logical case. Most of the small companies I have worked for have been run in a sensible manner, and my ideas have often received more attention than those of others because I have had a better technical background than my colleagues. However in some cases my suggestions have received less attention because I was receiving a higher pay rate. The reason is that I was being paid a rate that the company could not afford in the long-term and therefore the people who would work there in future years would have to maintain the systems in question which meant that their ability to do such maintenance was often considered to be more important than my ideas about the best way to design the system.

I have worked for a small company that had no financial pressure to do sensible things (they had some sweet deals going with major corporations which essentially gave them money for nothing). They had chaotic management which they could get away with because there were no immediate consequences for doing silly things (such as not forcing their clients to have a method of backing up servers that they installed).

I can’t claim that Don’s advice in this regard never applies, but my observations of situations where it didn’t apply lead me to believe that it’s applicable to some situations in limited areas and is not a general rule.

Don also refers to “a high number that you would quote to a client you didn’t want in order to get them to go away“. This is an issue that causes a lot of disagreement. One consultant I respect advises people to never make such quotes, if you don’t want a job then say that you are not available – one reason is that if a position is so bad that you want the potential client to go away then you don’t want to be tempted to reconsider if they agree to pay you a silly amount of money, another is that it may be considered ethically wrong to make an offer is not genuine. Another consultant I respect claims that his greatest career success was when he turned up to an interview in casual clothes, explained to the potential client that he would never wear a suit and demanded an excessive amount of money. The client agreed to such terms and he then went on to charge other clients similar amounts of money and continued to refuse to wear a suit.

I won’t claim that it’s wrong to demand excessive amounts of money to make an unwanted potential client go away and I will not rule out the possibility of doing so at some future time. But I think it should be noted that the practice is controversial and not referred to as something that anyone might do. It is something that I don’t recall doing at any previous time in my career (so I haven’t done it in a formal manner at least – I may have done so at the informal discussion phase and forgotten).

Please note that I encourage you to read my previous post with Don’s comment in it’s original context to avoid any risk of misinterpretation. The purpose of this post is not to disagree with Don (I agree with him almost all of the time) but to disagree with some very commonly held beliefs which Don represented in his comment.

3 comments to Contract Pay Rates

  • I don’t think you should quote a high figure to make people go away — because the client won’t, and they’ll actually pay you that much. What you should do is set your fees for the clients you actually want at the “go away” level.

  • Anonymous

    If you truly want the client to go away, I don’t think you should make them an offer at all. However, if you just don’t necessarily find the project as interesting, or have some other problem with it, but a higher dollar amount would compensate for that, go ahead and quote them the higher amount. If they go away, fine, and if they pay you, yay.

  • I agree — never quote a high rate to get someone to go away. Just think of the amount you would charge *if* you were going to do that, and make that your regular rate.