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Re: Contract Engineer - off list response requested
To: CRTech <crtech@crtech.org>
Subject: Re: Contract Engineer - off list response requested
From: "Marcos O'Rourke" <mo@kwve.com>
Date: Tue, 20 Mar 2018 04:42:08 +0000
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In-reply-to: <75A96D41-7B9D-46A8-8CD4-93804A53374C@ieee.org>
References: <5311867C-FC7A-4902-87A3-6BEC3AC1A2FF@am91.org> <75A96D41-7B9D-46A8-8CD4-93804A53374C@ieee.org>
Thank you for that great explanation. When I asked my mentor essentially the same question he asked if what I do is more technical than a plumber. He then said I shouldn’t charge less than a plumber. 

On Mon, Mar 19, 2018 at 21:20 Sherrod Munday <smunday@ieee.org> wrote:
On Mar 19, 2018, at 17:15, Dan Harder <dan@am91.org> wrote:
The GM and I will discuss me becoming a 1099 contract employee for the station. I’d be grateful if those who do contract work, could email me **off list** to let me know what you charge so I can bring information to the discussion I’ll be having with the GM soon.

Dan:

First of all, congratulations on “taking the plunge”.  It’s a bit scary, but it’s good to hear you’ve got enough regular VO work to make this an extra gig.

Second, I’m responding to the List publicly because the concepts you’re discussing are probably relevant and interesting to other people as well.  I won’t get into specific rates here because it’s exactly the focal point of my responses below.

I'll discuss each of your points for the benefit of the community.  

BTW, I’m going to go a bit long on this so you (and others) have some meat to chew on for a while.  (And feel free to consider this post as “TLDR” if you’re so inclined. ;-)


Specifically, what do you charge for:
-studio engineering/computer networking work

What you charge here will be directly related to your degree of mastery of those areas of work.  If you are fully experienced in those skillsets and could confident and legitimately walk into another unrelated station that doesn’t know you and offer the same services with strong references from prior employers or contract clients, you should consider -- and market -- yourself as an expert and charge appropriately.   

When I was a young, fresh-out-of-college kid with little work experience (i.e. between 1-2 years of experience) in those areas, I charged a very low hourly rate for my first contract job.  As time went on and I became more of an expert in those areas, I increased my rate on new contract jobs.  (I changed contract clients just enough to not have to increase rates for existing clients - something you’ll have to consider if this is a long-term plan.) 


-phone consults or troubleshooting

This should depend on scope and duration of the contract job.  Are you offering one-time consults with no association with future or other work at the same station?  If so, it’s the standard “bulk purchasing power” economics at play: more work contracted = less expensive per unit of work.  A one-time phone consult should be charged at a higher rate than a phone consult that’s part of an ongoing contract agreement with a station.

In my case, I’ve often charged nothing for phone calls under five (5) minutes to provide a long-term client a reasonable chance to ask a quick “what should I investigate?” style question without having to worry about paying for it.  If they want to get into a deeper “walk me through it, please” call, then the hourly clock kicks in if the call goes beyond five minutes with a minimum of 15 minutes charged per call.  To keep it simple on bookkeeping, I’ve always rounded to the nearest quarter-hour after the initial minimum charge, just like all other types of work (see below).


-Remote Desktop sessions

Here’s a question to consider:  Why would an RDP/VNC/TeamViewer session be charged any differently than your standard hourly rate?  

It’s your time that you’re providing them, regardless of how it’s spent.  Sure, your cost basis is lower if you’re not commuting to the station (see next question) but that time you spend on Remote Desktop support is time you cannot spend on other projects, so it should be billed at a rate commensurate with your general experience and abilities and not solely on what specific type of work you’re doing at the moment.  

Besides, the work you’re doing could rapidly change from a pure RDP session (perhaps in response to an emailed request) into a telephone call to discuss real-time what you’re observing, and that may turn into having to drive to the station to resolve an issue that turns out to be bigger than the requestor originally realized.  

In such a scenario, do you really want to have to do accounting with three different rates?


-do you charge for time driving to the stations or just mileage

This one’s really up to you, and it may depend on the situation.  There are a couple of factors you should consider, but my personal preference is to not give away time spent getting to and from a job site.

The only question I have regarding charging for mileage is: How would you charge if you’re a passenger with a station employee driving (e.g. he’s taking you from the studio to the transmitter)?

Regarding time spent driving, though:

For self-employment tax purposes, your mileage and/or actual expenses (depending on how you want to account to the IRS: this is a big question that I will skip but you should research) are going to be deductible as a business expense.  You could choose to waive the charge for driving time because of this, but I would recommend against it for the same reason as the point I raised above:

Any time you spend driving is time you cannot spend earning money any other way.  Are you willing to give that up?

The proper economic term here is “Opportunity Cost”.  If you look that up, you’ll learn that it basically means “What opportunity for income are you giving up by taking a certain action (or inaction)?”  I.e., by driving to a station, you’re giving up the time to earn anything for another station (or side gig like VO work), so what is it costing you to give up that time?  The rate you charge for driving should be *at least* that which you could earn by doing something else (like phone/RDP/onsite engineering work/VO work), or else it makes more sense to stay home and do that other work.

Others may differ here and suggest that you could charge a lower rate for driving time.  That’s ultimately up to you and what you deem is a fair cost to the client.  But I’d strongly encourage you to not give it away for free, if for no other reason than not setting a precedent of some of your time being less valuable or even free.


-any other things I should consider

Keep your clients happy.  Don’t nickel and dime them to death.  Be willing to give some extra time on the phone for free sometimes, even if it goes beyond your established “tripwire” duration.  It’s better to spend a few extra minutes at no charge just to make them happy that you’re still working with them than to irritate or lose them as a client by charging them for 15 minutes of time because the phone call went 30 seconds longer than five minutes.  

In other words, use common sense and be reasonable.  They’ll appreciate it.

Something else to consider:

While the rate you charge them may seem like a lot of money compared to your (prior) annual salary converted into an hourly rate, recognize that most organizations offer benefits that you as an employee may never directly see.  Oftentimes, benefits like employee (and often family) health insurance, matching 401(k) or 403(b) contributions, and even Paid Time Off for sick and vacation time total up to 25-45% of the base salary for a full-time employee.  

As a contract employee, you won’t be receiving *any* of those benefits, so your hourly rate can -- and *should* -- be a good bit higher than your [former] salaried rate in order for you to be able to provide those things for yourself.  As just one example, you should go price some open-market health insurance (if you don’t already have some portable insurance) before you decide on a rate.

For a good place to start determining your contracting rate, multiply your former FT hourly rate by 1.25 and make that your absolute lowest *baseline* price.  Remember, your client isn’t going to be paying for you to work for them on a regular 40-hour work week, so their cost is going to go way down overall anyway.  (And, unless they keep you on a retainer, there may be times they don’t pay you *anything* for a number of months if they don’t have any work they need done.)

And one last extra point:

Consider whether it makes sense to offer a “retainer” option where you commit to providing them up to a certain number of hours of work each month for a fixed fee.  This can help them even out cash flow and help ensure a regular source of income for you as well.


I’m really offering contract engineering as a courtesy to not leave the station without engineering.

While that’s laudable and obviously done with pure & good intentions, don’t sell yourself short by only thinking about donating to a ministry.  Even ministries have to spend money to continue their mission, and (if I dare to write this publicly) it won’t be your “official” responsibility to worry about how the ministry gets or spends its money if you’re not [any longer] an employee that has a fiduciary responsibility to the organization.  

That might sound a bit callous even though it’s not meant to be hard-hearted.  It’s just a word of encouragement that as a contract employee you don't need to worry about maintaining the same level of responsibility and concern as a regular (FT or PT) employee.

And BTW, don’t take this to mean at all that I’m not concerned about the financial well-being of my clients.  I make it a point to regularly let my clients know that I’m attempting to be a good steward of their resources so they know I’m not going to waste my -- or their -- time, which in this case directly translates to money.  And feel free to give them a discount every now and then if the situation warrants it (like a job goes a lot longer than you might have estimated prior to starting on it).



One final personal anecdote regarding rates, and it really sums up what my opinions are on the whole “how much should I charge?” question that comes up here every so often:

============

On one particular contract job I did years ago right after I decided to raise my rates, I had an initial face-to-face “interview” meeting with the responsible party of an organization.  After we discussed the scope and duration of the job, I assured him that I could do the job, and when it came time to give him my rate, I gulped silently and told him what I wanted to earn (which was also what I believed I was worth).  

He paused for a moment, then looked me straight in the eye and said (paraphrased), “You know, that’s more than I was hoping to pay for this job, but I believe that you are the right person for it and I am confident you’ll be able to get the job done as we’ve discussed.  And one thing I learned many years ago is to never argue with a man over what he’s worth.  I’ve learned that if you pay a man what he says he’s worth, he’ll work reliably and happily to get the job done.”  

This man was decidedly a non-Christian, but even he understood what 1 Timothy 5:8 says: 

“The laborer is worthy of his wages.” (NASB)

--
Sherrod Munday

--

--
Marcos O'Rourke, CBRE CBNE
Chief Engineer
K-Wave Radio

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Follow-Ups: Re: Contract Engineer - off list response requested
(James Richardson <jreelectronics@gmail.com>, 20 Mar 2018 08:37:30 -0000)
Re: Contract Engineer - off list response requested
(Sherrod Munday <smunday@ieee.org>, 20 Mar 2018 10:14:48 -0000)
References: Contract Engineer - off list response requested
(Dan Harder <dan@am91.org>, 19 Mar 2018 21:15:51 -0000)
Re: Contract Engineer - off list response requested
(Sherrod Munday <smunday@ieee.org>, 20 Mar 2018 04:20:13 -0000)
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