What is an appropriate hourly rate for IT consulting services?

In My Humble Opinion (IMHO)
#1

I’m talking about high-level IT consulting services, like project manage and execute moving a company’s business computing environment, designing and implementing the business systems to allow them to enter the cloud, etc. (as opposed to desktop support-oriented stuff like installing Windows 7 on a workstation, or removing viruses from a laptop, and other low-end IT work etc.).

I have a number in mind, but I’m looking to broaden my thinking on this, and the SDMB is always a good place to do that. FWIW, I’m in the Boston area.

#2

For reference (Forbes): http://www.forbes.com/2006/11/06/bostonconsulting-marsh-mckinsey-ent-fin-cx_mc_1106pricing.html

Wik iAnswers: http://wiki.answers.com/Q/What_is_the_average_hourly_rate_for_a_computer_consultant

#3

Those rates seem high. Unless your skillset is comparable to Mckinsey and Accenture strategy consultants and you are starting your own business. But I don’t really know.

#4

It will be somewhat particular to your client’s area of business, and other factors like the size of the business. The range could be very wide.

The extent of the services provided is also a factor. An independent consultant isn’t seen as bringing breadth with his services. He has no backup, no assistance, and no diversity of skills and knowledge to apply to his work. The independent will always say he has the experience and contacts to provide that, but he doesn’t look as valuable as a large firm with abundant resources.

There’s also the technical or management level of the work. Obviously, the higher the level of expertise, the greater the rate. Just describing something as ‘designing and implementing the business systems to allow them to enter the cloud’ doesn’t make it high level work. You have to consider how many people are involved in, and depending on the development. A manager of a team will charge more than someone who works indepently.

I don’t know if you are a buyer or a seller here either.

As a little factual information, but not much use without more detail, I know programmers in the Boston area who work for as little as $50 an hour as consultants (though that is very low), and a management consultant charging $2000 per diem. But I don’t think either of those numbers represents anything typical.

#5

When considering your hourly rate, you need to remember you will be paying your employer portion of taxes and social security, so that is one factor bumping up the price above what you might have thought.

The metric I always use is - what would you consider a normal annual rate for the job as a regular employee? Divide that by 1,000, that would be your starting point for an hourly rate ($100,00 annual = $100 hourly rate, etc.)

Again, that’s the starting point - the client might be looking for cheap (ugh! They get what they pay for…). Whatever the market will bear, and all that.

Also, are you going to be incurring travel expenses? That can justify 15-18% of the rate, or an increase to your base, however you want to slice it.

#6

For IT project management my experience is (guesstimating)…

3-5 year experience: $90-100/Hr
5-10: 100-150/Hr
10-15: $125-$175/Hr
15-20+: $150-$225/Hr

Of course my experience is just one data point.

ETA - I should add: this is what the client is charged (what a consultant of consulting company would charge the client), if you are working for a consulting company expect to be paid somewhere around 50% of those rates.

#7

Are you looking for someone to just act as a consultant on the project or are you looking for a contractor type who will handle implementation as well?

If the latter, the bosses hourly rate is pretty much irrelevant against his dozens of minions moving boxes, building cloud based apps, and configuring servers.

In my area the former type would run around $150-$175/hr. This would be a guy who is going to write a plan for a local IT firm to implement for a bunch of $70-$100 per billable hour techs. The consultant is kinda like an architecht on a construction project. They design and help make sure the construction crew understands the details of the project.

#8

Things that need to be considered:
(a) What are regulatory, fiduciary and contractual obligations involved?
(b) What level of insurances are required for the consultant
© How many successful prior projects can the consultant provide a POC for?
(d) How complex is the corporate environment? If you have a small 30 person, programming company that is entirely different than say a regional bank with competing departments and an aggressive acquisition strategy.

Also, as a side note, these sorts of projects are the best time to hit a target, so pay attention to security needs during the process of your project.

#9

I’m going to be the consultant.
The company is a software company, less than 100 employees. One of the managers, a friend of mine, approached me to offer me a job if he can get the position created. In the course of some email correspondence with him I offered to do some contract work to accomplish some of their objectives in the event he couldn’t get the principals to buy in to creating a new position and bringing me on as a regular, full-time employee. So. I’m going in next week to assess their environment, fill out paperwork (1099) and agree to terms.

First project would be to PM their move.

#10

a None above and beyond what the company carries, except some insurance for the moving van(s)
b None.
c 3 or 4, but I’ll be taken at my work (which is enough in this case)
d It is not a very complex environment, but they are a software company, so all their value is in their servers/storage/etc.

#11

If you have an idea what the full time position would pay, a risk averse approach would be to double that hourly rate. It’s pretty much in line what their costs would be if you were an employee, and wouldn’t sound excessive. You will be paid well for your time, assuming you get a commitment for a reasonable minimum amount of hours. If you charge higher you are gambling on how they will perceive the value of your services, and whether they will consider you for further contracting or employment. If you think you can knock their socks off with your ability, aim higher.

#12

I’m going to knock their socks off. I’m really, really good at what I do, and I’ve got a lot of recent experience doing exactly what they need done, so Bob’s your uncle. I’ve also got a couple really talented people I can pull in for the move itself as insurance policies.

#13

In that case I wouldn’t lowball them. Ask something that shows what you’re worth.

We have a software consultant that we call in every once in a while when we have too much work on our hands. He isn’t cheap, but he’s an expert in exactly our industry, with many years experience. He’s worth what we pay him.

#14

I wouldn’t think anything less than $150/hr for this kinda stuff, high skilled helpers at $100-$125 range. If all goes well this might be banged out and most bugs hammered out in a couple weeks, at which point hiring on as some kind of short term employee might bite you in the ass. Nobody does significant server work for less than $100/hr even in my market.

#15

Update: I had my meeting yesterday, and we agreed on $150/hr for my consulting services.

#16

Congrats Winston! Now you have to work your ass off. Can’t tell you how jealous I am :wink: I think I have to stop taking the easy money and go after the challenges myself.

#17

Yeah, I was thinking last night “What the hell did I get myself into?!?”, but then I think about the money I’m gonna make, and the boat I’m gonna buy with it, and I feel better. :slight_smile: