Need help with IT consulting rate

[zeruty]

Hey ATOT, it's been a long time.

I have a question that I think this might be a good place to be answered.

What would be a reasonable IT consulting rate to charge a company? Would it normally be hourly or per job? In this case, the location would be Seattle.

I have a friend who has a small business with 1 employee. I do all the IT work for his business. I set up everything, and maintain it.

Ive worked in IT jobs, but never done individual consulting type work before, other than for friends.

We don't have any set rates. It's usually something simple, and I don't ask for much. In other words, he gets the "buddy rate".

He recently had a situation where the building flooded from a leaking pipe. He had water damage to 2 computers, and all the computers, printers, etc had to be removed from the store so they could replace carpet and drywall.

So I need to create an invoice and figure out how much to charge for my work, so he can submit it to his insurance company.
Normally he gets the "buddy rate", but obviously not if his insurance company is paying, they can pay me something in line with what they'd have to pay some company to do the same work.

Should I charge an hourly rate, or some kind of flat rate? What would the insurance company be expecting?

Each visit is a 46 mile round trip for me. And during a pandemic, while I live with and take care of my immunocompromised mother. Do I charge for travel? And would there be a covid surcharge?

 

[Viper GTS]

I doubt anyone would blink at $200-300/hour including travel time depending on your location.

Here in the greater NYC area auto mechanics are ~$125/hr. I wouldn't do it for under $300/hour here. Seattle is probably fairly similar.

Viper GTS

 

[s0me0nesmind1]

Uhhhh... wait, so you're going to have your "buddy" pay less - but you're going to bill the insurance to say that you charged your buddy a higher price?

Preeeeeeeeeeeeeeeettty sure that sounds fraudulent?


But anyhow - Anything with the word "consulting" in it is generally hourly rates in my experience in life.... But I'm also bias because I've worked in consulting.

Viper's estimate of $200/hr seems reasonable, $300 if you're really a certain expert with lots of seniority.

 

[Viper GTS]

Uhhhh... wait, so you're going to have your "buddy" pay less - but you're going to bill the insurance to say that you charged your buddy a higher price?

Preeeeeeeeeeeeeeeettty sure that sounds fraudulent?

He just means he's willing to work cheap when the one paying is his friend, but when an insurance company is footing the bill he wants market rate.

Entirely reasonable, and in no way fraudulent.

Viper GTS

 

[s0me0nesmind1]

He just means he's willing to work cheap when the one paying is his friend, but when an insurance company is footing the bill he wants market rate.

Entirely reasonable, and in no way fraudulent.

Viper GTS

Gotcha, I was thinking along the lines of sending him a fat bill for more - the buddy pays him a different amount at the "buddy rate" but sends a bill on to insurance as-if he paid the full amount.

 

[Grey_Beard]

The rates here are reasonable. You can also see what a place like Best Buy charges for their Geek Squad. When billing, the travel time is also billed at the stated hourly rate and the miles are charged based on the published rate that the IRS has. You could also do a bundle or set price for each computer set up and data transfer or cap the invoice hours at some amount. Hourly, set price or cap are all things normally fine for these services. Travel time and expenses are always extra.

 

[zeruty]

Viper is right. Every other time I've done work for my friend, I don't charge much. Because my friend is paying, his business is new and still becoming established.

But the flood wasn't his fault. It's the fault of the building owner and the insurance is responsible for paying for the work.
I'm sure they've paid tens of thousands for the other work required. There's no reason for me to not charge them a reasonable rate in line with what they'd have paid some company to do the same work.

 

[dullard]

He gets the buddy rate, his insurance company doesn't.

This line can be read two ways (one way gives background story interest to your post, the other way is fraud). It would be best to edit it. "In normal situations, I would charge him my buddy rate. But in this situation I will charge him the market rate" is much more clear.

A quick Google search shows $75/hour is typical for water damage for the country as a whole. Seattle is a high cost area, so, I would have no problem thinking it would be higher there. Also, you can reasonably expect computer expertise is costlier than just cleaning up damaged drywall. The best answer though, is to call up a competitor in Seattle and see what they would estimate over the phone. This is because you want to charge actual market rates.

Yes, you can charge for your time driving. I wouldn't bother with mileage rates as that is extra of paperwork to truly keep track of the exact miles for a few bucks.

 

[Kaido]

In my area, the rate varies between $35 to $250 per hour for general IT contracting. Specialized technicians like legacy database programmers can command a higher rate. Travel & expenses are negotiated into the contract.

My buddy does computer-driven machine emergency repair (ex. automated cutting machines) & his fee is $8,000 for a weekend. It works out to about $300 an hour for two 12-hour shifts (Sat/Sun) plus travel expenses. Discounts are applied based on loyalty (previous jobs) & payment history. Works out great because companies needing his support simply can't afford not to have him, lol. The world will largely pay you what it thinks you're worth!

On a tangent, I keep a small fleet of spare equipment in my storage unit & require that my customers keep off-site image backups for just such emergencies, as part of their disaster recovery plan. Recently had a client have a site fire & it saved their bacon! Tools like Macrium Redeploy can restore to dissimilar hardware (i.e. grab their backups & throw them on your spare cheap machines) or virtualization (P2V) as needed, in order to get people back up & running quickly. Profit impact can be pretty high for a lot of companies if they're unable to use their machines & access their data even for just a week. Facebook alone loses $6.3 million dollars for every hour of downtime:

Facebook’s Catastrophic Blackout Could Cost $90 Million in Lost Revenue

Facebook's "worst ever" downtime of 14 hours could cost the company up to $90 million in lost revenue based on 2018 earnings figures.

www.ccn.com

The statistics of unplanned downtime are quite compelling:

Downtime, Outages and Failures - Understanding Their True Costs

Most enterprises don’t know the real cost of an IT network or application downtime. Here you can overview all the relevant industry benchmarks including a comparison to past ones, and learn how to calculate your loss potential

www.evolven.com

Of course, it depends on the company. A couple computers going down could either be no big deal, or could be business-threatening. I have some clients in the financial & DCC realms who simply can't afford downtime. They have fiber, they have 4G backup, they have DR plans that go as far as using smartphones as hotspots from different vendors for emergency Internet access with spare laptops that dial into VPS systems, simply because of all of the money they stand to lose.

Anyway, quoting it out depends on a lot on what you charge, what your "buddy" rate is, what's average in your location, etc.

 

[zeruty]

This line can be read two ways (one way gives background story interest to your post, the other way is fraud). It would be best to edit it. "In normal situations, I would charge him my buddy rate. But in this situation I will charge him the market rate" is much more clear.

Edited, how's that?

 

[dullard]

Edited, how's that?

Works for me.

 

[zeruty]

I didn't keep that great of records, but just used Google maps timeline to check all the time I spent there to do this work. Add in a low estimate for travel time, and the total would be 26 hours. 28 if you include the time I spent at home trying to clean up and get working a barely water damaged motherboard. Which failed.

26 * $200 = $5200
Wow, that seems like a lot.
I've always undervalued my work, so that seems crazy to me.

Even 26 * $150 = $3900 seems like a lot.

Does that seem sane for:
Emergency visit to the store to assess and mitigate damage
Testing 2 computers
Replacing power supply in one, after replacement was received.
Removing and attempting to clean a water damaged motherboard, and reinstalling.
Then researching a replacement computer for him to purchase.
Installing and configuring all the software and printers(this is a print shop).
Unboxing and setting all the computers back up (the flood cleanup company packed them up and stored them while the building repairs were completed)



Sent from my SM-N950U using Tapatalk

 

[Viper GTS]

It seems like a lot to you but that and more gets paid every single day.

Don't undervalue yourself on this, it's way higher than you make normally because they aren't buying your time by the year (or paying your benefits, retirement contributions, employer taxes, etc).

$2000+/day is what I typically pay for on-site around here. Maybe $1500 if it's relatively low skilled labor aside from familiarity with their own product. But $2000-2500 is the norm.

Viper GTS

 

[Tweak155]

I didn't keep that great of records, but just used Google maps timeline to check all the time I spent there to do this work. Add in a low estimate for travel time, and the total would be 26 hours. 28 if you include the time I spent at home trying to clean up and get working a barely water damaged motherboard. Which failed.

26 * $200 = $5200
Wow, that seems like a lot.
I've always undervalued my work, so that seems crazy to me.

Even 26 * $150 = $3900 seems like a lot.

Does that seem sane for:
Emergency visit to the store to assess and mitigate damage
Testing 2 computers
Replacing power supply in one, after replacement was received.
Removing and attempting to clean a water damaged motherboard, and reinstalling.
Then researching a replacement computer for him to purchase.
Installing and configuring all the software and printers(this is a print shop).
Unboxing and setting all the computers back up (the flood cleanup company packed them up and stored them while the building repairs were completed)



Sent from my SM-N950U using Tapatalk

I would at least charge the $150/hr.

 

[s0me0nesmind1]

It seems like a lot to you but that and more gets paid every single day.

Don't undervalue yourself on this, it's way higher than you make normally because they aren't buying your time by the year (or paying your benefits, retirement contributions, employer taxes, etc).

$2000+/day is what I typically pay for on-site around here. Maybe $1500 if it's relatively low skilled labor aside from familiarity with their own product. But $2000-2500 is the norm.

Viper GTS

Well to be honest I have zero clue what his expertise is and what skills he used.

I honestly think basic computer repair stuff to be worth as small as 50-100$ an hour. For 200+ I presume you have some decent experience and expertise with stuff like security and admin (DBA, Sysadmin, etc.) Skills.

 

[lxskllr]

There's also an emergency surcharge. There's a difference in a scheduled gig, and fixing a disaster.

 

[PowerEngineer]

So, I am wondering just how carefully you have been handling your consulting business for friends. If you do not produce invoices, then have the payments been under the table and not reported for tax purposes? Generating an invoice starts a paper trail that may be reason to consider formalizing your consulting business by forming an LLC and setting up business accounting. Just a thought...