How do I spin this? And how much should I charge?
December 6, 2007 5:16 PM   Subscribe

How do I spin this? And how much should I charge?

Posting for a friend:

So how do I spin this?

Small company – a startup, only seven people, only two years in to it, apparently “well funded” and “just about to take off” – posts an ad for a scientist. I am their dream candidate.

I work for a huge company, and solve an analogue of their problem two or three times a year. I could do this in my sleep. Don’t get me wrong: what they want done is not easy, but I am a rock star. I am in a lab full of rock stars, and I still stand out.

I really have no interest in working for the startup – been there, done that; plus I love my cushy, high paying industry job. But, I would love to consult for them! I am sure I can solve their problem in my spare time, show them how I solved it, and teach them how to solve similar problems in the future. And, hopefully, be hired to solve different problems.

So, the tricky bit, part 1: How do I convince them that they want 1/20th of my time, rather than 135% of it? My thinking is to say something along the lines of “That’s a very interesting problem you have, but it is only one problem, the same, forever. I can solve it for you in two months and then I will be bored out of my skull. You don’t need me full time – just book my services. Moreover, you won’t get just me – I will draw on my colleagues in my lab, and my contacts in industry and academia, who I will hire as necessary to help me out. I can even write articles that show up in peer reviewed journals, giving you a shiny veneer of science to market. ”

The tricky bit, part 2: How do I value my work? What I am looking to value is not so much my time as my intellectual property. Solving their problem is worth a ridiculous amount to the company, and they are already short on time in solving it. Meanwhile, I am expert in the field, and am sure I can knock the ball out of the park. They offer “competitive salary”, “incentive compensation”, and “equity”. Realistically, it will probably take me about 80 hours to solve it, so if I charged say $300/hr, that would only be $24K, which strikes me as kind of low; plus, I may want to pick up some special services from some of my contacts, which won’t be free. Does anyone have any thoughts on how to convince these guys to pay me a lump sum for the solution, and any idea how I might value the solution?
posted by juliewhite to Work & Money (10 answers total) 8 users marked this as a favorite
1. Your solution, not your time, is the product you want them to buy.

2. Give your product a price, like $50K or whatever you think it's worth.

Don't worry about the terms of the position, you're not interested in that. Just approach them as a guy who can solve their problem, maybe you'll find out they want to buy it.
posted by rhizome at 5:57 PM on December 6, 2007

Forget the "I will be bored out of my skull," part, for starters. This is all about them. "It would be most cost-effective to hire me as a part-time consultant, in case other problems like this crop up, with the appropriate privacy agreements, blah blah blah..."

If they went to the next, almost-rock-star qualified candidate, how long do you think it would take that person? Yes, you can save them money, but are you their only choice? I wouldn't overbid this. You want to keep this company around as a future source of income.

Realistically, you say it will take you two weeks to solve their problem. That said, suppose you continue working full-time in your job. Obviously, your 80 hours of work would have to be done in evening and weekend hours. Assuming you were making time-and-a-half or at most double-time, what would you make for that kind of work in your present job? You are probably a salaried employee, but you can still determine an approximate rate for what an hour's worth of work breaks down to at your salary.

I really have no way of telling whether $24K is "kinda low" because I don't know the problem you are solving, but for the amount of work you would be doing it sure sounds like a lot of cash to me. I'd opt for bidding less and leaving the door open for future opportunities.
posted by misha at 6:01 PM on December 6, 2007

Actually, I think this is perfect:

"I am positive I can solve your problem, show you I solved it, and teach you how to solve similar problems in the future - and, hopefully, be hired to solve different problems - for a fraction of the cost of hiring me as a full-time employee.

"While the problem you have is a very interesting one, it is only one problem - and the same problem, forever. I can solve it for you in two months. I can even write articles that show up in peer reviewed journals, giving you a shiny veneer of science to market. "

See, that's pretty good - and you wrote it yourself!

I would not mention drawing upon colleagues or hiring out, however. If you contract out for a solution, part of the deal is that the client is normally buying the end product (the problem solved) without having to worry over how you got there. Because hey, that isn't their problem anymore, it's yours!

In terms of valuing it, take your current annual salary and work out what that is per hour so you have a ballpark. However, I'd let them come to you with a figure first. If they balk, ask them what they were going to offer as a salary for that role, and work it out backwards from that.

caveat: I live in constant terror of not getting work because of overcharging, however, and as a result I am damn cheap.
posted by DarlingBri at 6:15 PM on December 6, 2007

Rock stars don't usually falter on pricing :-)

That said, IANAL, but your rock star's analysis seems entirely ego centric. It leaves out a lot of strategic and legal reasons why a company such as the one he is trying to approach would be at least as interested in the details of his relationship with them (employee) as it would, as he apparently is, in the actual solution, or his price for providing it, as an independent contractor. Unless his approach covers the whole of their IP concerns, he won't even get to a pricing discussion as a potential contractor, on those concerns. So, Part 1 is the make or break. If he wouldn't work for them, full time, under their standard employee arrangements, at any price, that needs to be made clear, and they'll probably base any decisions about future contact or disclosures, i.e. Part 2, on that outcome. But, if he'd work for them at, say 2.7x his current salary, that needs to come out near the front of contact. Trying to "spin" the discussion to a Part 2 negotiation is really not wise on the part of the rock star.

He's free to hold out the possibility of his interest in working for them as a contractor. But, for his sake and theirs, IP wise, it's vital not to co-mingle those discussions with Part 1 talks. And the whole discussion about his further sub-contracting development of elements of the solution raises lots and lots of issues in terms of IP. Presuming they'd want to entertain his proposal as a independent contractor, he's likely to be asked to absorb a burden of indemnification that he might not be able to support as an individual, doing work for hire. Unless he can show an asset base, or insurance, sufficient to cover claims by competitors regarding his solution being clean room, etc., he might not get far, no matter what his price. So, he should contact an IP attorney about ways to cover this exposure both for himself, and for the target firm, as a prelude to any Part 2 discussions. I think this is a bit beyond AskMe depth, quite frankly.

But good luck with the opportunity.
posted by paulsc at 6:17 PM on December 6, 2007

As a starting point, take your current annual salary, and divide by 1,000 -- use that number for your ballpark hourly rate. Then adjust up or down based on what amount of dough would be enough so that it will be worth your time to do a good job for them, but not so much that you'll feel bad if they tell you to bugger off. When you find that number, that's how much you charge.

Or, if money isn't really an issue for you, take a gamble and do it in exchange for a piece of the company.
posted by spilon at 6:26 PM on December 6, 2007

I admit that I have no advice regarding pricing, but I don't get how you are even able to offer them such a service. Isn't your current employer going to frown upon this, especially the part where you would be using their resources to solve another company's problem? Didn't you sign a noncompete agreement or anything of that sort?
posted by cabingirl at 7:08 PM on December 6, 2007

cabingirl: I think he is an academic (hence the academic journal parts of the question), which would mean that while technically the university would like a piece of the pie, most of the time academics can get away with doing some commercial work without too much fuss (after all, it's good for the uni's reputation!).

I agree that you should pitch this as a solution, not a consulting job. If you are sure you can do it, then just approach them with a price. "I can solve your problem, it will cost $xx and take me xx days/weeks to do it". I also agree that the IP will be an issue here, but you can probably nut that out with them.

How do you work out the $xx figure? I guess you need to work out how much they wanted to spend on it. If the guy they were going to hire was $yy per year and they thought he'd take zz years to do it, maybe that's a good starting figure... :)
posted by ranglin at 7:20 PM on December 6, 2007

I work for a huge company...I am in a lab full of rock won’t get just me – I will draw on my colleagues in my lab

This is not strictly an answer to your [friend's] question, but depending on the terms of your [friend's] employment agreement with this huge company that employs you[r friend] to "solve an analogue of their problem two or three times a year," that huge company might have some major issues with their full-time employee doing contract work for another company, and using their resources to do it.

This may be a reason why the start-up would prefer to bring you[r friend] on as a full-time employee-- to avoid potential litigation.
posted by dersins at 9:41 PM on December 6, 2007

Best answer: Before you do anything, check with your HR department to see if they're going to forbid the contract. It's likely they will.

That said, you think you can solve it in 80 hours. You're wrong.

I'm sure you're somewhat close to right about the time to come up with an approximate solution, but you're forgetting about the phone calls, e-mails, meetings, change requests and niggly after thoughts that will come up. Think 160 hours. All non-professional consultants estimate way, way low.

If you bill a certain price, make damned sure you specify exactly what it is and is not included in that price, and that you have a procedure and rates in place for handling change requests. Honestly, it's probably easier to bill hourly than to work it all out.
posted by Tacos Are Pretty Great at 12:23 AM on December 7, 2007

Best answer: Oh, and equity is for suckers. If you can get a piece, sure. But value it a hell of a lot lower than they will.
posted by Tacos Are Pretty Great at 12:24 AM on December 7, 2007

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