Service prices
- Thread starter Slinky Bender
- Start date
My “posted” rates have stayed the same. However, most of my projects work off an agreed upon budget and I have found that in order to sell the job, I have to be much tighter on my estimates. In short, although the posted rate is the same, I’ve got more unbillable time on projects than I have in the past -- which is tantamont to a rate cut.
I think you and Wwanderer are talking about two different things.
Just to clarify terms, there is the actual time spent on a clients work, the number of hours billed, and then the amount collected.
In my experience, large firms want all time spent recorded. So if you were posting on UG and the Acme Industries file was open on your desk, good old Acme probably got charged. (Assuming you don't have a time code for goofing off.) But when its time to send out bills, you look at the Acme file and see that although there are 20 hours logged, there is only a two page letter in the file. So you write off 15 hours and bill the 5. In flusher times you might bill 10 or even the full 20.
I think Wwanderer's post related to the time billed. Yours related to how much actually gets collected which is typically a pretty large percentage.
Just to clarify terms, there is the actual time spent on a clients work, the number of hours billed, and then the amount collected.
In my experience, large firms want all time spent recorded. So if you were posting on UG and the Acme Industries file was open on your desk, good old Acme probably got charged. (Assuming you don't have a time code for goofing off.) But when its time to send out bills, you look at the Acme file and see that although there are 20 hours logged, there is only a two page letter in the file. So you write off 15 hours and bill the 5. In flusher times you might bill 10 or even the full 20.
I think Wwanderer's post related to the time billed. Yours related to how much actually gets collected which is typically a pretty large percentage.
my company goes by c)
standard rate x hours recorded = standard fee
standard fee x realization rate = amount expected to be billed
therefore, amount billed should always equal or exceed amount expected to be billed (we go by fixed fee arrangements). if it does not, then the excess is written off and the write off hits the partners' bottom line.
therefore, realization rate is "decided" on, and not calculated.
standard rate x hours recorded = standard fee
standard fee x realization rate = amount expected to be billed
therefore, amount billed should always equal or exceed amount expected to be billed (we go by fixed fee arrangements). if it does not, then the excess is written off and the write off hits the partners' bottom line.
therefore, realization rate is "decided" on, and not calculated.
Not necessarily. Say the company sells a project for $20k. It expects that at standard rates, the project will take $100k to complete. The realization rate is set at 20%. If the actual billings turn out to be $17k, they still bill $20k, and there is a $3k excess booked after "covering costs".
My company also has a number of projects that they sell so cheap, to "get their foot in the door", that the realization is set to 0%, so any time charged to the project code is valued at zero, and essentially all billings are in effect pure profit.
Of course, management is judged based on our ability to keep realization high, although it is also expected that for "signature" clients, we have to bite the bullet and give the work away in order to keep the client happy. We're also graded on the revenues we bring in, which is just the amount we actually bill. The way revenues are measured for performance purposes is very similar to how a MLM works, we get credit for the revenues brought in by the people below us, and the people above us get credit for the revenues I bring in, plus the people below me.
My company also has a number of projects that they sell so cheap, to "get their foot in the door", that the realization is set to 0%, so any time charged to the project code is valued at zero, and essentially all billings are in effect pure profit.
Of course, management is judged based on our ability to keep realization high, although it is also expected that for "signature" clients, we have to bite the bullet and give the work away in order to keep the client happy. We're also graded on the revenues we bring in, which is just the amount we actually bill. The way revenues are measured for performance purposes is very similar to how a MLM works, we get credit for the revenues brought in by the people below us, and the people above us get credit for the revenues I bring in, plus the people below me.