Group Discussions

Thinking about a tiered pay rate

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  I'm just getting started in software consulting, trying to land my first job. Ideally I'm looking for part-time work, 20-25 hr/wk, but my first good prospect wants three-quarter time, 30-40 (45?) hr/wk. I'm thinking about proposing a tiered pay rate, and wanted to see what you guys think.
  
  
  
  The problem with part-time work is that the client often wants the flexibilty to have more hours available when you're close to a deadline or a true emergency comes up. The lower pay given to part-timers is a discount for not having these extra hours available, and the disadvantage to the consultant is that you can be pushed into working a full-time schedule anyway but at the lower part-time rate.
  
  
  
  Here's how my idea would work:
  
  Suppose that the full time rate for the work was $70/hr for an expectation of 40 hr/wk. Currently, a part-time person might get only $60 or $65/hr due to the discount factor.
  
  
  
  Under a tiered rate, the first 20 hours would be billed at $60/hr, the next 5 hours would be billed at $68/hr, the next 5 would be billed at $76/hr, and so forth. What happens is that the effective rate goes up as the number of hours billed increases, with the crossover point occurring at 40 hours. This gives the consultant a reward for working extra hours and the employer an incentive for keeping the hours lower.
  
  
  
  What do you think? Would it work? Would clients go for it?

  Flag as inappropriate Posted by SoftwareMom on 12th July 2007
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  I think they would go for it.
  
  
  
  YOU are the boss.
  
  
  
  Also, remember this (and I realize I am late with this answer): You wanted part time. Someone else wants something you don't necessarily want, so I would automatically charge them more. I would even be very honest about it. "I would really prefer this arrangement, but I CAN accommodate you. However, in order to justify the extra time taken from my family, I will have to raise my rates for this arrangement.
  
  
  
  If you are willing to consider my ideal hourly schedule, of 20-25 hours/week, I can give you a break on my hourly rate."
  
  
  
  Personally, I would charge more to client who gives you less hours-- more money for you that way!
  
  
  
  Remember that YOU are the boss. I don't know that I'd undersell yourself by doing tiered though-- just charge more for arrangements that are less than ideal. AND, if you find yourself working over 40 hours, tell them ahead of time that you will charge them time and a half. They will either make it worth your while, or they will make sure to respect your boundaries.
  
  
  
  (P.S., I think that if these are the fees you are currently charging, you should raise them)

  Flag as inappropriate Posted by Jen Creer on 14th August 2007