How much should I charge?

October 17, 2005 2:55 PM

A former colleague of mine has a consultancy business and wants to subcontract some work to me. I would be introduced to the client as the person who will be handling all aspects of the project and will also be the main point of contact for that client. I know how much this client will be billed on a monthly basis and my question is what percentage of that amount should I realistically expect to receive for doing all the work? Is there a standard subcontractor percentage that I can quote?
posted by gfrobe to work & money (4 comments total)

You should expect from 60 to 90 percent, depending on who is handling the billing, whether you are easily replaced, whether you and your former colleague have other business together, and whether you could conceivably take this client completely away from your former colleague.
posted by Mo Nickels at 3:43 PM on October 17, 2005

Mo Nickels is right on the money. Maybe go in the middle, since you're handling everything, but your colleague is doing you a favour by offering you the work.

Note: if you've never done consulting before, maybe go closer to 60%. You may find yourself needing hand-holding from your colleague.
posted by acoutu at 4:53 PM on October 17, 2005

Also make sure calculate the minimum you need to make it worth your while (e.g., if it's full time, it should at the very least pay all your bills with a comfortable margin left over). If this number is higher than 60%, adjust your fee accordingly.

If it's not full time, the general rule I've been taught for going into self-employment is that you should count on one non-billable hour (time you spend on your business that no-one is paying you for: hunting for clients, doing your bookkeeping, etc.) for every billable hour. So if you're relying on multiple clients for income and you want to work 40 hours per week, you should bill such that you make your income target by doing 20 hours of billable work per week. Of course this varies tremendously from one business to another but it's something that catches alot of people by surprise.
posted by winston at 5:10 PM on October 17, 2005

20 - 30% to the person originating the contract is reasonable if it's a friend. This is basically a one time "referral fee" on the entire project. If your friend is handling anything else that you might be forgetting - like billing, taxes, insurance etc. than the percentage fee might be higher. I'd also suggest making sure that you and your friend have an understanding on the future projects with this client - wil you be working on your own (100% of the fee) or will he expect payment from you? Also, I love winston's idea of charging one hour for every "down" hour.
posted by marc1919 at 7:42 PM on October 19, 2005