The owner of a factory where I've been doing steady work for a couple of ye
ars has asked me to travel to another factory he owns. He will pay all trav
The first trip, to evaluate what they need to do to bring their ageing equi
pment up to date, will likely involve one or two nights away from home, and
one or two days looking over the situation. There will almost certainly be
more (and probably longer) trips in the future to implement the upgrades.
For the work I do in the local plant, I bill $150 per hour plus materials a
nd expenses with a two-hour minimum, and there have been no complaints abou
t my bills which sometimes run in the tens of thousands. I am at a loss, ho
wever, for how to bill for this trip.
Any suggestions are welcome.
On Mon, 23 May 2016 19:35:19 -0700 (PDT), rangerssuck
Trade work probably is different from publicity writing, but when I
was doing it I had an hourly rate ($120), a day rate ($800) and a
travel-time rate ($60). I did not bill for overnight stays; only for
actual daytime travel, because I had to sleep anyway, but daytime
travel prevented me from otherwise making money.
Expenses were billed without markup. Any services I bought for the
client, like printing or photography, were marked up 20%. Advertising
buys were marked up 15%, which is the industry standard.
I rarely actually billed at those rates, but they were my basis for
generating quotations for particular jobs. That's what my clients
wanted to see.
On Mon, 23 May 2016 19:35:19 -0700 (PDT), rangerssuck
I don't know whether it is applicable, but on jobs that required
travel to a distant site and than a stay there we usually billed the
day that you left for the site as a billable day and the day that you
left the site to return as a on-billable day. Most of these trips
would be from 4 to 12 hours travel and most clients seemed to view it
On the other hand, if a guy flew out from the U.S. we usually got
billed for travel time both ways :-)
Or, you might consider a day rate for travel days. Say 50% of a normal
day's billing, plus per diem if needed, for food and lodging.
On Mon, 23 May 2016 19:35:19 -0700, rangerssuck wrote:
I normally bill an eight hour day for each work day, plus 1/2 a day for a
full-day's travel, and all expenses (well, food, travel and lodging --
you're normally expected to fund the hookers and any sex toys out of your
own pocket). This is based on the fact that a REALLY GOOD day for me,
where I walk into my office at 9:00AM and leave at 6:00PM with a break
for lunch probably gives me about six billable hours, with the rest of
the time spent doing marketing, billing, sales, sitting on the pot, and
Looking ahead, if you do the job keep all the receipts and be prepared to
fill out some arcane form to make the accountants happy. Having separate
business and personal credit cards can be a big help.
On 05/23/2016 9:35 PM, rangerssuck wrote:
Besides the other comments simply on alternatives for billing, a few
other (more or less random) thoughts--
There's no hint here of this being a job for which you're bringing back
specifications so they can send out for bids for the subsequent work?
If no, how much do you want to "invest" as "marketing" to ensure the
follow-on work may play into it as well as what your other job prospects
and needs/wants are with/without the subsequent work.
If they are putting out an RFP and you'll be in line with the rest (or
worse, excluded from biddng by dint of having prepared the package) then
you'll want to charge full value, of course.
Many more items could play into the decision that are related to the
need for the work and how badly you want it but the _last_ thing a
consultant needs for long-term success is to not feel their rates are
unjustified--the trick is in finding what is that balance between what
the particular market niche you're competing in will bear and what you
must have to make the income you need.
And, on the other side, don't undervalue yourself. I have a friend who
started a software business that just barely struggled along until she
increased her rates by about 50%, at which point customers started taking
her much, much more seriously.
Well, I was always in an environment where I knew if not exactly fairly
closely who/what the competition was and what they were billing as well.
"What the market will bear" didn't even consider the thought of being
under-priced to the point of hobbyist. I was (and probably remain so)
pretty proud of my value to the client, _undercharging_ would not be a
crime of which I would have been accused... <VBG>
On Tuesday, May 24, 2016 at 1:12:13 PM UTC-4, dpb wrote:
Whoa, wait a minute. There are some misconceptions here.
1) I have been a consultant for over thirty years, and my business is profi
table - not wildly so, but my house and cars are paid for and I'm still on
my first wife.
2) This is a customer who I trust, and he trusts me. He is NOT going to tak
e my specs and run out to some other guy to do the work. As I said, I have
done something close to a hundred thousand dollars in work for this guy ove
r the past couple of years, and he knows very well that I'm worth every pen
3) I have, in the past been down that ugly road of "I write the specs (esse
ntially designing the whole project) and then they give the job to the chea
p guy." This is not that job. If there is work to be done in the plant, it
will be done by me and my crew, or perhaps by their in-house staff under my
I like the idea of billing full time for the time I am at their plant and h
alf time for travel. They have booked the plane tickets, the hotel and the
car. All I have out of pocket is food and the Uber to & from the airport, a
ll together a couple of hundred bucks, tops.
Of course, while I was typing this, I got a call from the plant manager ask
ing if I would bring "some tools" to maybe fix one of the machines tomorrow
. After I told him that TSA wouldn't allow me to carry on even a screwdrive
r, we put that off. If they have the tools there, great. If not, it'll have
to wait for the next trip when I will check my tools as luggage, or UPS th
em in advance. As it stands, all I am bringing is my laptop, a notebook and
I'm left wondering then how there could be any question whatsoever what
your charges would be--unless you "just never" travel overnight, maybe?
You'll never get past the "not wildly so" until you also submit an
expense account for those travel incidentals. Keep receipts; many will
require them be submitted with your invoice so they have the records to
justify _their_ subsequent deduction.
Even as a sole proprietor, I always added an 11% "overhead" as well.
On Tuesday, May 24, 2016 at 1:56:01 PM UTC-4, dpb wrote:
That is correct on two counts.
1) In over thirty years in business this is the very first over night trip
. Every other job has been within a couple of hours drive. most are much cl
oser, and for many, I never have to leave my shop.
2) The "not wildly so" has been a deliberate personal choice. I have, over
the years, fought to keep this a small shop. I have turned down large jobs
- jobs which I could easily do but would put me in the uncomfortable (for m
e) position of having to expand, borrow money for materials and equipment a
nd to hire full-time personnel.
As the business stands, I make a comfortable living and don't own a dime to
anyone. I have steady customers and an ample supply of new ones. I have no
problem "firing" customers who give me agita. I haven't spent a dime on ad
vertising since the early 1980s, as every bit of work I do comes from word
of mouth from satisfied customers. The work is almost always interesting an
d most of the time, fun. When people ask me what I do, I tell them, "I get
paid to play with other people's toys."
So, at this point, I'm looking much less at a "wildly successful" business
and more at a comfortable semi-retirement where I get to play more with my
Well, I think you've done well from that description.
The "other guy" always has way cooler toys to play with than I do.
They normally call it work though ;-)
I try to settle for small items nowadays. Just don't have room for
OK, background context can change the picture entirely.
Given the type of work it seems you're doing, I was just coming back to
say I thought the Gunner-type of billing made the most sense.
On the other while it probably doesn't matter for your particular
situation, even as a sole proprietorship as a marketing ploy I costed
proposals and billed at a given hourly rate and then added markup to it
for Overhead & Expenses and Administrative to get the full billing rate.
I felt it had the primary advantage with the primary customer base
(electric utilities, "the big guys") as they were fully aware of the
cost of fringe benefits, vacation and sick pay, etc., etc., etc., and
showing the breakdown made them consider that it was no different for me
as self-employed although I could have a quite a lot lower multiplier
than they and still be comfortable. Even if you don't actually go so
far as to changing your practice, going through the exercise to compute
those necessary multipliers (and, perhaps, working backwards from what
you're billing to see what your actual hourly wage rate is, roughly) is,
if nothing else, informative.
As far as the present goal, while I don't agree with all his many
predilections regarding _never_ using deficit financing (there would be
_no_ production agriculture in the US if everybody followed that model;
there simply isn't enough money in the enterprise to cash flow inputs
when they're needed as one simple example), Dave Ramsey has much to
credit with advice to "live like noone else so you can live like no one
Just as an outsider throwing advice, I'd suggest you'll get to that more
comfortable semi-retirement a lot sooner and it'll be a lot more
comfortable if you'll be a little more aggressive on the revenue side
On Tuesday, May 24, 2016 at 3:02:27 PM UTC-4, dpb wrote:
Oh PLEASE don't feed me straight lines :-) See, the difference is my billin
g is real, his is fantasy. The proof would be in the tax returns, if he had
any. But let's not get started on that.
Are you saying that you't write an invoice with, say, $100 for labor and $2
0 for markup, or just bill $120 and be done with it. IOW, did you itemize y
our markup on the invoice? That is interesting. I had one customer (since f
ired by me) who insisted on a discount. So, I would overbill him 20% and th
en give him a 10% discount. He felt good about it.
My customers have also included some heavy hitters - AT&T, Verizon, Lucent,
IBM, Fujitsu, Daewoo. All in all, they are pretty easy to deal with, as th
e people who write the checks have no idea what they're for, and couldn't c
are less as long as the invoice is rubber-stamped by someone.
Oh, i'm pretty much on schedule now. I've got savings, a house that's bigge
r than I want to retire in (with property values rising) and in a location
(just outside of NYC) where I don't plan to stay after retirement. I'll do
just fine a few hundred miles away with a smaller house.
Yes, I showed the breakdown on invoices identically as in proposals.
Was thinking should mention a primary reason I began doing that came
from one thing I had learned/seen in an earlier life working for a major
corp was that as a middle manager of the level roughly equivalent to
those making decisions on work I never saw fully-burdened labor rates
for any of my subordinates; only their base wage. Thus, often these
managers would not know what even their own company's cost structure was
so when presented the outside consultant's fully-burdened rate cold it
just seemed so out of line they were immediately put off (and had been
for years, generally, this not being a new experience). Consequently,
if you came in instead at a base wage similar to or at least in touch
with what they were used to seeing, even though the total was the same
they could relate and it eased the pain.
An invoice template looked basically like--here's one w/ some actual
numbers even from almost 20 yr ago...
Actual Hours Rate/Hour Actual Cost
Direct Material 3,217.00
Purchased Parts 0.00
Name One 429.50 37.25 15,030.38
Name Two 0.00 21.75 0.00
Total Direct Labor 429.50 15,998.88
Total Direct Costs 27,401.63
Overhead Rate X Base
OH 80.00% 15,030.38 12,799.10
Fringe 30.00% 15,030.38 4,799.68
Material 11.00% 3,217.00 353.87
Total Overhead 17,952.65
Total Direct Cost & Overhead $45,354.28
My experience was never issues with them paying the invoice once had the
contract; the issue was that most of my work was competitively bid and
so anything that could ease the pain of the cost of the outside expert
was an advantage.
As the above shows, then I was billing that client at $78.25/hr but the
base wage was under $40; as noted, it all really was aimed at the
bidding time but kept consistency in billing simply so could always
relate it back to the proposal if ever were any question. The travel
and purchased parts, etc. (this was an instrumentation R&D project) were
backed up by attached invoices including copies of vendor invoices,
etc., etc., etc., ... Originals kept for own IRS records, of course.
For the sole proprietorship, the formality was, strictly speaking, pure
nonsense and fabrication but it served its purpose well in my market I'm
sure. The form came directly from that used by the $2B+ consulting firm
through whom I had consulted prior to going off on own; it matched up
with their requirements for DCAA (Defense Contractors Audit Agency) and
they had all kinds of corporate data that justified every percentage
down to the penny and was audited. I just kept the categories and
plugged in numbers that worked given my expenses and target income and
since I wasn't dealing with US Gov't contracts didn't have to justify
them to anybody other than again to be competitive in my market niche.
On the future, sounds like you've got a plan...good luck!
I gave up the consulting gig and came back to the family farm after dad
died--that's been over 15 year now which seems impossible to believe. I
kept a couple of contracts as a "tide over" for the first couple of
years then just let them lapse when they came to a conclusion.
On Tue, 24 May 2016 10:40:36 -0700, rangerssuck wrote:
I actually offer that as a plus if someone wants me to bid firm-fixed. I
basically say "I only bid firm-fixed based on complete specifications,
which you do not have, I'll write them _suitable to shop them around to
other people_ for XXX/hour (or other mutually agreeable terms)".
Usually that convinces them that it'll be cheaper, if riskier, to just
pay me by the hour to get the work done -- if they get extravagant with
mid-project changes I'll remind them that it'll up the costs, which
either gets them to pull back their horns, or at least mutes the
screaming over the final bill.
Control systems, embedded software and circuit design
The owner of a factory where I've been doing steady work for a couple of
years has asked me to travel to another factory he owns. He will pay all
The first trip, to evaluate what they need to do to bring their ageing
equipment up to date, will likely involve one or two nights away from home,
and one or two days looking over the situation. There will almost certainly
be more (and probably longer) trips in the future to implement the upgrades.
For the work I do in the local plant, I bill $150 per hour plus materials
and expenses with a two-hour minimum, and there have been no complaints
about my bills which sometimes run in the tens of thousands. I am at a loss,
however, for how to bill for this trip.
Any suggestions are welcome.
If you are busy you need to make up for other work not done in that time
period, plus any inconvenience. If you are not busy charge what you think
is fair. Sounds like a good customer who likes your work. If you are fair
they will understand.
I sat through a couple accounting classes and a coupel business classes.
The number one thing they all seemed to agree on is get paid.
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