Should I have a rate card?
July 5, 2014 1:41 PM Subscribe
I'm doing the ground work in setting up a small side business. This business would target a specific demographic with a defined subset of residential design services. I feel compelled to do a 'rate card' but I wonder if anyone here has experience with using a rate card as a service provider. Trying to figure out pros and cons and whether I've missed something. As a consumer, I think I'd love to see some up-front rates but I know that, realistically, it would keep me from hiring someone if I felt like I couldn't afford them (even if I could).
A little more info –
One category of the design services include exploration of whether you can do an addition or renovation on your home. So, code research could be one component. Creating a site map of the property to determine where the setbacks are and other issues that could alter your plan would be another level of service. Consulting on how the home interior might be restructured to accommodate a renovation would be another service. Doing an "as-built" set would be a high-level of service and might be a precursor to a real project -- however, I would stop short of doing architectural design services and would refer to a designer or architect for full development/construction of a design.
I'm also planning to offer interior space-planning. How to work within the footprint of your home to accommodate a new baby, a grandparent, a home-office, etc.
The reasons for doing a rate card would be to show A) how affordable the base level of services can be and, B) to avoid going in to situations where clients have no idea how much things should cost but definitely can not pay what I'm asking. On the other hand, I've hired professionals in the past where I've been nervous about the cost, met them, decided to take the risk, hired them, paid out very dearly in cash (in my relative opinion) and been thrilled with the level of service and came to understand how worth it they were. So, there's some salespersonship going on there – perhaps f I can get in the door, I can convince them of my worth and make some good money.
However, as this is a side business, I can't spend all my time going on fruitless sales calls. So, I'm thinking of offering a rate card – and maybe it's a rate range for the basic category of services and then being quite open about my hourly rate. Some people will tally that up and say they can't afford it. Other people may think what I'm charging is quite low and therefore I must not be very good. And, of course, I have the potential for shooting myself in the foot – agreeing to a rate and then realizing a project is just far more complicated than the flat rate. I think I can handle those situations with aplomb but, you know, it's not a fun conversation to have.
Please tell me your experience with rate cards and whether it's a good idea or a bad idea for a small businessperson.
A little more info –
One category of the design services include exploration of whether you can do an addition or renovation on your home. So, code research could be one component. Creating a site map of the property to determine where the setbacks are and other issues that could alter your plan would be another level of service. Consulting on how the home interior might be restructured to accommodate a renovation would be another service. Doing an "as-built" set would be a high-level of service and might be a precursor to a real project -- however, I would stop short of doing architectural design services and would refer to a designer or architect for full development/construction of a design.
I'm also planning to offer interior space-planning. How to work within the footprint of your home to accommodate a new baby, a grandparent, a home-office, etc.
The reasons for doing a rate card would be to show A) how affordable the base level of services can be and, B) to avoid going in to situations where clients have no idea how much things should cost but definitely can not pay what I'm asking. On the other hand, I've hired professionals in the past where I've been nervous about the cost, met them, decided to take the risk, hired them, paid out very dearly in cash (in my relative opinion) and been thrilled with the level of service and came to understand how worth it they were. So, there's some salespersonship going on there – perhaps f I can get in the door, I can convince them of my worth and make some good money.
However, as this is a side business, I can't spend all my time going on fruitless sales calls. So, I'm thinking of offering a rate card – and maybe it's a rate range for the basic category of services and then being quite open about my hourly rate. Some people will tally that up and say they can't afford it. Other people may think what I'm charging is quite low and therefore I must not be very good. And, of course, I have the potential for shooting myself in the foot – agreeing to a rate and then realizing a project is just far more complicated than the flat rate. I think I can handle those situations with aplomb but, you know, it's not a fun conversation to have.
Please tell me your experience with rate cards and whether it's a good idea or a bad idea for a small businessperson.
As a consumer, I enjoy rate cards - they help me understand what I am asking and figure out what my budget would be. Your concerns are valid - especially if you are in a field where every job is essentially a custom job. You could get around it by giving sample rates for specific jobs you have done - for example, it cost $X to complete a 300 sq ft finished basement. That way, even clients with a smaller or larger size job at least have a ball park to work with, but you aren't tied to a quote if it turns out that their job is particularly expensive for some reason. It might also be a good idea to give out your rate card only after being asked, rather than having it posted or your website.
posted by fermezporte at 1:56 PM on July 5, 2014 [3 favorites]
posted by fermezporte at 1:56 PM on July 5, 2014 [3 favorites]
I also wanted to suggest giving examples as fermezporte recommended. It would give me a general idea of what sorts of things would be possible with what sorts of amounts of money, which would usually be all I would need to figure out if it would be useful for me to talk to the service provider in question.
posted by kmennie at 2:06 PM on July 5, 2014
posted by kmennie at 2:06 PM on July 5, 2014
I'm probably your target market: homeowner, willing to spend on home renovation, and much more importantly I'm willing to pay for conceptual design plans. For example, we hired a Landscape Architect to do our concept plan. We considered that a separate function from the build plan. Most people don't pay for conceptual design. (They either have their own vision or they consider conceptual work part of the build/permitting. That's probably why you see a lot of horrible home renos.)
I have zero interest in contacting someone who can't give me the basic cost upfront. It doesn't need to be a rate card, but it does need to be something. A list of unpriced services isn't enough. For our current project, we contacted the landscape architecture professional association and they sent a list that included the providers overall project size in $. Providers could select in categories of total job cost, i.e. <$25K, $25-50K, $50-100, etc. We took a list of 40 providers and axed our everyone who either didn't give a price range or only did work well above our price range. That was enough for me because I have some knowledge of how jobs are costed.
If it was a person with no experience renovations, then I think you need to give something: total job cost of an example, cost per hour, something.
Another thing is that professionals know what their services cost. We interviewed 3 LAs all with more than 20 years of experience in our local market. We asked questions like "how much would it cost to take the concept plan to build plan?" and "Will you do construction administration? If so how is it costed?" They didn't hand us a rate card, but they said "Build plans would cost X dollars" and "Construction admin costs X/hr." They had a rate card in their head, even if they didn't give it to us.
posted by 26.2 at 3:19 PM on July 5, 2014 [2 favorites]
I have zero interest in contacting someone who can't give me the basic cost upfront. It doesn't need to be a rate card, but it does need to be something. A list of unpriced services isn't enough. For our current project, we contacted the landscape architecture professional association and they sent a list that included the providers overall project size in $. Providers could select in categories of total job cost, i.e. <$25K, $25-50K, $50-100, etc. We took a list of 40 providers and axed our everyone who either didn't give a price range or only did work well above our price range. That was enough for me because I have some knowledge of how jobs are costed.
If it was a person with no experience renovations, then I think you need to give something: total job cost of an example, cost per hour, something.
Another thing is that professionals know what their services cost. We interviewed 3 LAs all with more than 20 years of experience in our local market. We asked questions like "how much would it cost to take the concept plan to build plan?" and "Will you do construction administration? If so how is it costed?" They didn't hand us a rate card, but they said "Build plans would cost X dollars" and "Construction admin costs X/hr." They had a rate card in their head, even if they didn't give it to us.
posted by 26.2 at 3:19 PM on July 5, 2014 [2 favorites]
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But I also don't have a rate card because I want the liberty to hike my rates up for a potential new client who seems like they're going to be extraordinarily difficult to work with. (And because sometimes I'm happy to do some projects for very much less than my MSRP, so to speak.) This would especially be the case for any kind of work with a creative or subjective element to it -- like organizing or decorating -- where there's a potential point of contention about the quality of the work or whether it's been completed.
posted by Andrhia at 1:52 PM on July 5, 2014 [4 favorites]