Entrepreneurship & Small Business

$50/hr is the base rate for IT Consultants

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  • Jan 3rd, 2014 3:03 pm
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[OP]
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Aug 4, 2013
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$50/hr is the base rate for IT Consultants

Even $50 is a bit too small if you consider the risks of being in this business. Yet many are willing to run their businesses even on $30/ hr.

I think the base rate for any IT Consultant should be $60/ hr or fixed price. What do you think?
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Feb 15, 2008
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There's a huge glut of basically anyone to do with IT in Canada. As I've posted many times in the past, a prominent Alberta-based firm can only find interviews for a mere small fraction of the IT talent it has signed up to its recruitment platform.

"IT Consultant" is a fairly generic term.

Of course, I think rates should be higher, much higher than what you even suggest. However, that's not the reality of the market at the moment and hasn't been for many years.
TodayHello wrote:
Oct 16th, 2012 9:06 pm
...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
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doing what? Installing printers & fixing network or building eHealth?
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network maintenance is actually quite hard...
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I think the term "IT Consultant" is very broad. I think the rate of pay in a market-based system, will depend on supply and demand for IT services. Basic IT services (e.g. troubleshooting basic hardware problems, replacing a hard drive in a PC, installing RAM, etc.) can be provided by more IT consultants and as a result can command a lower rate than very specialized IT services (e.g. custom network design, security services, advanced website development, etc.).

I have also found that if you're good at what you do and can provide concrete examples of your work, even smaller business people will pay a fair rate for your services. A lot of times the more advanced IT services will require someone who is not just IT-focused but can bring together a business analysis and high level perspective which starts to get into business consulting. But you have to be able to deliver what you promise.
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Mark77 wrote:
Dec 29th, 2013 8:04 pm
There's a huge glut of basically anyone to do with IT in Canada. As I've posted many times in the past, a prominent Alberta-based firm can only find interviews for a mere small fraction of the IT talent it has signed up to its recruitment platform.
Don't believe what this guy is saying. We have been trying to hire a senior .Net developer for the past 3 months. There is a glut of people who knows IT for sure, but there is shortage for qualified ones. We are working with two head hunters and they practically told us last week that there are no more candidates they can send our way for interviews. There is not enough skilled people in the market right now. At least for senior position.

I can't believe the quality of candidates we interviewed so far. A lot of them put stuffs in their resume then, come up blank during the interview. There is a glut in IT with type of people alright.
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Aug 28, 2007
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There are two (or more) issues here.

Firstly, there is the whole "skills market" thing. That exists with everything from buying a wheelbarrow to hiring an employee or engaging a contractor. The buyer is looking for something to fulfill his needs. The people offering a solution have a product that offers certain attributes. It is somewhat hard to hear but employees or a consultants are nothing more than slabs of meat that "do" things. In other words nothing more than a fancy wheelbarrow. Despite what employers and HR people say about human resources being "our most important asset", anyone in a business during a recession can tell you that is just hot air. So before you get cranked about that comment let's just go forward on the presumption it is true:

In an economy with a glut of blue wheelbarrows, a red wheelbarrow will be hard to find, and command a high price to procure one. Basic economics right? So if you replace the words "red wheelbarrow" with "Senior .Net Developer" and "blue wheelbarrow" with "IT consultant" it is quite easy to reconcile what Madara and Mark77 are saying. They are both right. In other words, in a booming economy you still find unemployed people and in a recession you still find many people in well-paid positions. It all boils down to the circumstances of what you are selling compared to what buyers require. Things like your specific skillset, geographic location, price, timing, travel, etcetera all come into play. If you are truly running your consulting practice like a business, you will have spent considerable time thinking of all the circumstances & attributes and then even more time taking action in advance to make your practice capable of surviving and even excelling during the "Murphy" times. It really ticks me off when so-called consultants whine because they can't find assignments during recessions and they haven't done this.

Secondly, is the "rate" thing. It is somewhat related to the skills market description above. Anyone who has been running a consulting business long enough knows that certain tasks are priced out according to what the market thinks they are worth. For example, the office cleaner is not paid the same rate as your accountant. A desktop support IT consultant is not paid the same rate as a business analyst IT consultant. Furthermore the current rate varies and begins to fall into a normal distribution that can be best described as a "rate band". That variation is based on a few factors like:
i) overall economy - When the overall economy is booming, rates are at the high end of the band; when the economy slows rates will drift down. You should be acutely aware of your rate band and when you need to bill at the top end and when you should bill at the low end.

ii) geographic location - The rates for a specific skill will be different between Calgary and Toronto. It may be higher in one today and be lower at another time - a mobile worker can take advantage of that.

iii) experience - Experience is only a factor if you are truly learning more things. It is laughable that employees expect more money (a raise) every year for doing the same task. If you want a higher rate you have to offer more value (more skills) to the buyer. An office cleaner with 20 years experience will never get paid more. But if he gets accounting skills he can jump to the low end of the accounting rate band.

iv) buyer intransigence - This means those idiot buyers who are trying to get something or someone "on the cheap". They get what they deserve. If their business model is reliant on consistently procuring their input costs under market value... they will only be successful in the short term... no self-respecting consultant will or should accept an assignment with these dirt bags. Unfortunately, those same people I railed about for not being proactive with their consultancy business model will lower their rate in hopes of two things "getting their foot in the door" or "getting cash flow to put food on the table" Neither of those work - all it does is sustain the dirt bags a little longer. I'm not saying you should be a prima donna at not get out of bed unless you get your "high" rate. But it is self-defeating to drop your rate below the low end of your rate band for your skill. You screwed yourself by not doing strategic planning for your consultancy business.

v) supply & demand - This is really just a subset of the proactive strategic planning. You need to ensure you have the marketable skills for tomorrow by learning them today when you have revenue to support the investment and training. If you are not watching your industry for future impacts you'll be caught with useless skills and nothing to sell. A buggy-whip manufacturer needs to switch to something else when automobiles come along.

And as for OP's suggestion of fixed minimum rates... that is not going to happen any time soon. There is no exterior force like a union mandate or government edict - most of us wouldn't want it anyways. I do agree that a minimum rate should be in every consultant's thought process, but it would be different for everyone. Candidly, I think the $50 is pretty reasonable guess. I wouldn't describe it as compensation for risk as I see being an employee as a much bigger risk. However, I would say your need about that much just to keep the lights on in a consultancy business - to cover operating costs and leave some money to invest in strategic planning. Your first priority at that rate would be investment in skill improvement so you get into a band that is well above that. The people that are foolish enough to work as "contractors" for $30/hr (or the dirt bags that would offer that rate) haven't thought any further than... oh that's $60K a year. The dirt bags are just offloading the 30% payroll premium (CPP, EI, health, taxes). Those contractors are heading for self-inflicted poverty.
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sexyboi wrote:
Dec 29th, 2013 7:52 pm
Even $50 is a bit too small if you consider the risks of being in this business. Yet many are willing to run their businesses even on $30/ hr.

I think the base rate for any IT Consultant should be $60/ hr or fixed price. What do you think?
You cannot have a "base rate" for an IT Consultant because the range of tasks that could be performed by such a broad job title is vast. You could be looking at someone who just does hardware repairs and OS reloads to an individual that build complete virtual server environments, automates desktop deployment, etc..

It would be nice if more people actually understood IT, and realized that it is such a broad field that you cannot lump everyone together. It's like saying "I work on houses" when you could be the guy that does site cleanup or the engineer that designs the structural components of a house. The wage difference between those two jobs is great, yet they both work on houses. Just like a guy who installs RAM and a guy who configures SANs both work in IT.
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sexyboi wrote:
Dec 29th, 2013 7:52 pm
Even $50 is a bit too small if you consider the risks of being in this business. Yet many are willing to run their businesses even on $30/ hr.

I think the base rate for any IT Consultant should be $60/ hr or fixed price. What do you think?
IT "consulting" work is a wide net.
$30 is probably for someone to come install a printer or setup some software, run some network cables.

For more technical things like servers, custom software development, project management, security... etc, you probably looking at anywhere from $70 to $120/hr depending on experience and nature of the project.
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madara wrote:
Dec 30th, 2013 10:40 am
Don't believe what this guy is saying. We have been trying to hire a senior .Net developer for the past 3 months. There is a glut of people who knows IT for sure, but there is shortage for qualified ones. We are working with two head hunters and they practically told us last week that there are no more candidates they can send our way for interviews. There is not enough skilled people in the market right now. At least for senior position.

I can't believe the quality of candidates we interviewed so far. A lot of them put stuffs in their resume then, come up blank during the interview. There is a glut in IT with type of people alright.
If there's no more candidates for the head hunter to show you, it simply means there's no more candidates for the salary you're offering. Simply put: you've been out bid by other companies who are willing to pay more. Supply and demand. If you want the best, you have to pay the best. It sounds to me like your standards are too high for the amount of money you're willing to pay.
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Oct 24, 2013
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I charge $90 plus HST for Network maintenance, planning and consulting. I usually give on bigger job a 10-15% discount. I don't sell Hardware. I shop around for the best price and charge a 5% "finders fee". This makes it sure that they get the best possible price in Hardware and I don't deal with hardware warranty, but charge as well a flat rate to fix hardware issues. I always disclose if I get a kickback.
KISS. Keep It Simple System.

I save my customers tons of $$$ due to the fact that I can solve most requests with open source software very user-friendly.

My clients are small til midsized businesses, many in the medical field.
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adamtheman wrote:
Dec 30th, 2013 2:43 pm
If there's no more candidates for the head hunter to show you, it simply means there's no more candidates for the salary you're offering. Simply put: you've been out bid by other companies who are willing to pay more. Supply and demand. If you want the best, you have to pay the best. It sounds to me like your standards are too high for the amount of money you're willing to pay.
It is not a salary, but skill set issue. We have lowered our standards a couple of times already and still can't find someone. We're offering between 80K-90K for senior + up to 10% bonus. 3 weeks vacation too. If you are senior, you should know your stuff and not draw blank during interiews. At least know the principles of OOP, web development and support. You should be able to connect with other teams in IT to deliver a solution and not scratch your head and guess. I don't think that is too much. I'm not even senior level yet and I know these through experience.

I remember interviewing someone with 3 MS certifications including DBA. He can't even come up with a simple design for Employee and Skillset tables.
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madara wrote:
Dec 30th, 2013 10:40 am
Don't believe what this guy is saying. We have been trying to hire a senior .Net developer for the past 3 months. There is a glut of people who knows IT for sure, but there is shortage for qualified ones. We are working with two head hunters and they practically told us last week that there are no more candidates they can send our way for interviews. There is not enough skilled people in the market right now. At least for senior position.

I can't believe the quality of candidates we interviewed so far. A lot of them put stuffs in their resume then, come up blank during the interview. There is a glut in IT with type of people alright.
.Net development is not IT. IT relates to maintenance of infrastructure, not development.
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stak74 wrote:
Dec 30th, 2013 8:03 pm
I charge $90 plus HST for Network maintenance, planning and consulting. I usually give on bigger job a 10-15% discount. I don't sell Hardware. I shop around for the best price and charge a 5% "finders fee". This makes it sure that they get the best possible price in Hardware and I don't deal with hardware warranty, but charge as well a flat rate to fix hardware issues. I always disclose if I get a kickback.
KISS. Keep It Simple System.

I save my customers tons of $$$ due to the fact that I can solve most requests with open source software very user-friendly.

My clients are small til midsized businesses, many in the medical field.
This is the way to go. I did this for three years to put food on the table. If I could, I booked the calls on the same day so I could maximize my trip. If you take on huge clients, they demand you show up right away due to how much money they shovel your way. This can be disrupting to other accounts. It also helps if you have a friend in the same boat and you use each other in cases of overflow where multiple businesses need your help at the same time.
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slavka012 wrote:
Jan 1st, 2014 4:52 pm
.Net development is not IT. IT relates to maintenance of infrastructure, not development.
IT=Information Technology.

Thanks for the new sig!

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