By John Sonmez July 2, 2015

Do You Really Bill $300 an Hour?

In this episode, I explain why I bill $300 an hour.

 

Full transcript:

John:               Hey, this is John Sonmez from simpleprogrammer.com. I got a question today about my billing rate, so whether it’s real or not and I found a few questions like this. I just want to say upfront that when I say something or do something or do something like if I post on my blog post or if it’s on a marketing message or an email or something, it’s generally true. I don’t make stuff up for marketing purposes. I don’t believe in that. Just as a general caveat, it’s generally true, but I can understand why there’s some doubts on some things.

I’m also pretty open with everything, so I’m going to be open here. Giovanni emailed me and he said, “Hi John, I just purchased your software developer marketing course with the email lesson discount. I think $199 is a good price for all this material.” So by the way, if you’re wondering what he’s talking about, if you go to devcareerboost.com, he’s talking about My How to Market Yourself as a Software Developer package that has a bunch of lessons on how to build a brand and create a blog and he signed up through my blogging course which you can do at simpleprogrammer.com and I’ll also put a link in the description where you can go to the blogging course directly and at the end of that there’s a lesson that gives you a discount on this course for going through the blogging course.

Anyway, Giovanni says, “But are you serious about charging $300 an hour or is this a marketing technique to attract more potential customers to buy your software developer marketing course? For what technology do you apply this rate? For C++ development I typically charge in the $100 to $110 an hour range. I think it’s a good hourly rate. I would consider $300 an hour too much and moreover it’s very likely that the clients would move away trying to find another contractor with a lower hourly rate especially in this economic context. I think clients tend to be kind of cost sensitive. Anyway, looking forward to consume your marketing course material. Thanks, Giovanni.”

I'm glad you asked. Obviously I encourage people to ask any question that they want. I'm pretty open about this. I was pretty open about in the marketing I think for that package I talked about how I had been charging $300 an hour. It’s kind of understandable that someone who hasn’t seen this and hasn’t gone through this material and seeing how you could do this would wonder. I mean I often wondered, right? When I first started out I think I was charging like $30 or $40 an hour and to me that was really, really good. I had gotten this one contract where I was charging $100 an hour and I said, “Wow, this is crazy how—I can’t believe someone would pay me $100 an hour.” Then I heard of people that were charging more than that like $200 an hour.

As I started marketing myself and building up the reputation in the industry I started raising my rates and I got to the point of charging $300 an hour and the first time I threw that out to a client and they didn’t even blink. They didn’t try to negotiate me down. They just signed the check.

It took some time to get to there and I can understand the scepticism about it, but honestly, and I’ll tell you this right now, just this last couple of weeks was the first start time I started turning down people at $300 an hour because it’s not worth it. Now really the minimal that I’ll do at an hourly consulting is at $500 an hour. I don’t even charge by the hour. I charge by the week. I charge $25,000 a week if I do consulting which I don’t do much consulting. There’s a couple of things to think about here.

One, I don’t want to do consulting. I want to build a productized business. I want to sell books. I want to sell my course. I want to help people. Like I said, I technically retired a while back. Now I'm just doing this because I want to do this because I want to help people because I enjoy doing this and I want to build my business. Consulting doesn’t really have a big part in that. I tend to turn down a lot of consulting.

The second part of it is obviously if you’re going to charge something like $300 to $500 an hour you’re not going to be booking 40-hour weeks with a single client. You’re not going to get a full time position with a client. No one is going to hire you for 3 months at $300 an hour or $500 an hour. At least maybe someone would but it’s going to be very, very rare. You’re probably going to have a handful of clients probably like 10 or 20 clients that are going to pay you for a couple of hours here and there and probably what you’re going to be doing and what I do when I consult is usually high level strategic things. I'm usually talking to the executive team and I'm helping them to make their developers more productive and I'm looking at the value that I'm providing them.

They might be looking at this budget of spending a million dollars on training or on this new initiative and I'm going to save them several hundred thousand dollars by coming in and making their timeline shrink down, their 2-year project, I'm going to give them a jumpstart that’s going to save them 6 months. So if that’s like a $10 million project for them to come in and have me come in for a week and pay me $25,000 to do that they’re totally cool with that. That totally makes sense and they’re happy with that.

Again, I'm pretty open about the numbers and stuff. Like I said, I'm not looking to do much consulting work. If someone approaches me—I kind of got to this point where I said, “Hey, if someone—if I'm going to do consulting work I'm going to charge a high enough amount of money that it’s going to be worth interrupting my usual routine and the things that I want to work on to work on someone else’s stuff” because I want to work on my stuff. I raised that rate and I kept raising that rate and they kept raising that rate and part of that is because I’ve been able to build a reputation and the things that I'm doing here like you’ve got to consider this as well, right?

Right now I'm recording YouTube videos. Am I getting paid to do this? No. Right? These are all free YouTube videos. When I write blog posts that’s all free content when I do my blog post. If you look at it and say, all this stuff that I do to build a reputation, to build a brand, an online presence that stuff I don’t get directly paid for. So if you took all those hours and then you looked at how many hours that I might—how much I charge to consult then you would see the more realistic picture.

Now once you build a reputation and brand and things like than then you can probably still continue to bill at an hourly rate but there’s a big investment. Someone can’t just come out here and as a programmer say, “Oh, I'm going to start billing $300 an hour.” You can’t even do $100 an hour, right? You have to have some kind of reputation or skills that are at least somewhat known in order to even do that. There are clients out there, you know?

Just to give you how far does this thing go, how much do people bill, there are certain marketing consultants out there that will come into businesses and they’ll bill $1000 or $2000 an hour or they’ll bill—their weekly rate might be $50,000 a week. It can go as high—the key thing that happens at that level is it becomes what can you—what value you’re providing that’s going to save a company money or generate them extra business and they’re going to pay you some percentage of that. That’s where it starts to come. I’ve talked about value based pricing and that’s really where that comes down to.

Yeah, so honestly that’s the truth. I pretty much say it as it is and I'm pretty much honest and upfront about things like money and my bill rates and things like that. Like I said, I'm pretty much not taking any work at the $300 an hour rate at this point. It’s not worth the time for me, honestly. I’d rather be working on my stuff. From an economic perspective maybe my stuff is not more profitable than the $300 rate, I realize that, but at the same time I want to work on—in the long run it will be, and I want to work on what I want to work on. My price is higher.

As you go through your career you’ll find different points. As you build up a brand that’s why I keep on telling software developers that’s why if you want to learn how to do something like this buy my course on how to market yourself as a software developer. Yes, it’s 300 bucks if you buy it without the discount or 200 bucks with the discount but that’s cheap. If it teaches you how to get a bill rate of a couple hundred bucks an hour that’s cheap, right? This is a no brainer if you have those kinds of aspirations of being able to do that. Anyone can do it. You just have to learn how to build it. It’s not going to happen. You’re never ever going to build those kinds of rates without a reputation. You’re going to have to be a specialist, an expert in some area, have some kind of reputation and branding in order to do that.

Anyway, good question. Thanks for asking this. Thanks for being bold enough to ask and question whether or not am I just making this stuff up because a lot of people might be thinking the same thing. Thanks again Giovanni and hopefully that answers your question. If you have a question for me you can ask me anything. Email me at john@simpleprogrammer.com and if you liked this video subscribe to the channel.

About the author

John Sonmez

John Sonmez is the founder of Simple Programmer and a life coach for software developers. He is the best selling author of the book "Soft Skills: The Software Developer's Life Manual."