So, how much should I charge for a freelance data analysis project?

[mmytacism 0]

Here’s the story:

Last year, as a senior in college, I earned independent-study credit by doing some statistical “consulting” (I think that’s the right word) for a research team at the local hospital. The team had sent questionnaires to a group of organizations that had applied for grants within the last year (some received funding, others didn’t), and I coded all of the data, ran a bunch of statistical tests, wrote a formal report, and presented the results to the hospital staff. Good stuff to put on my transcript and resume.

Anyway, the head of the research team e-mailed me this week asking if I’d do the same thing for this year’s study. She said the staff would pay me however I wish: either by the hour or for the project as a whole. She also asked how much I’d charge for my work and said the team would be very willing to accommodate my price.

Here’s the problem: I’m really, really bad when it comes to negotiating matters of money. I’ve never been paid for this kind of work before (ah, so many years as a student peon…er, I mean research assistant), so I have absolutely no idea what I should charge. I’ve asked my former professors, but even they’re not sure what’s reasonable. My friends and co-workers think I should charge at least $15/hour, but only because “that sounds about right.”

Basically, it’d be nice to have some extra money for a while (so I can actually afford my own altimeter/goggles/etc. sometime soon), but I don’t want to rip anyone off. I told the head of the team that I’d contact her by next week so we could discuss details. So, if anyone has expertise in this area, I would LOVE to hear (well, read) your suggestions.

Should I charge by the hour or for the project as a whole? What exactly determines a reasonable rate? Should I suggest a price range instead of a single number? Is my work more valuable now than it was last year because I earned my degree?

Yeah. I’m totally clueless. Help?

Thanks!!

[NWFlyer 2]

In deciding whether to do a fixed price for the project or an hourly rate, consider how much is within your control. If you are going to go with a per-project basis, make sure that you can easily and clearly define the scope of the project and agree on this beforehand (with a written agreement!). Otherwise, you leave yourself open to scope creep. If you price it as a project, make sure you believe that you can create a good estimate of the level of work you'll need to put in.

"There is only one basic human right, the right to do as you damn well please. And with it comes the only basic human duty, the duty to take the consequences." -P.J. O'Rourke

[PhreeZone 20]

Since you have done this before, how many hours did it take last year? Anything unplanned that happened then that could happen again to adjust it? How much did this report help the hospital? $15 is budget prices for coding on a complex project but its over market prices for simple data entry. Look at the complexity of the job and how much the hospital needs/stand to gain with the information and the time needed to complete it for your pricing.

Yesterday is history
And tomorrow is a mystery

Parachutemanuals.com

[mdrejhon 8]

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My friends and co-workers think I should charge at least $15/hour, but only because “that sounds about right.”

For many people, even $30 per hour is very cheap. NEVER underprice yourself.

Not knowing more details, one big mistake that is made is people underprice themselves too much, then get too stressed out, quit, and work at a better job or get employed instead of self-employed.

In the IT industry, typical consultant "per diem" rates start at a minimum of $250 per day around here in this city (that's more than $30 per hour), and go up quite a bit from there.

Again, it depends on what your industry sector is, and what the going rate is -- but consultant rates are typically higher than salary. I'm not that good at negotiating, but if you are going to be self employed, don't make the cardinal consultant mistake of underpricing yourself. Seeing you're new, that does affect the price somewhat, but where salaried workers are being paid $15 per hour, asking $20 per hour for self-employed work isn't at all unreasonable "to start with" and they would probably still find it a whopping bargain. (Even if you feel you feel like you're overchargng)

If it's simple data entry, it may be excessively priced, but if it's real hard work with lots of study, math, etc, then it is worth well more than that.

And yes, since you're new, try to get them to quote a price before you do. There are many ways to do that cleverly and discreetly, but that's a job best for a book at your local library or Borders bookstore (try looking at recent business-negotation or "how to be a consultant" books, for example, and pay particular attention to the "negotiation" chapter). "How does $XX per hour sound?" might be more than you expected.

[KindredSpirit 0]

Seven dollars per hour.

"Kicking gravity's ass since 2003!"

[mmytacism 0]

Thanks, guys, for taking the time to read this and offer advice. I really do appreciate it.

There's some tedious coding of responses/data entry involved, but I'll also have to do some programming to run the tests (the statistical software relies on syntax written by the end user to produce the analyses) and use a little bit of math to interpret the results. Also, I'll have to write a report that explains the results in lay terms--what the statistical differences mean practically--and present this to the hospital staff in a way that's understandable.

So, yes, some of the work will be really simple, though other parts will be a little more complex.

To answer Phree's question, I know the hospital made some policy changes last year based on the results of the study (which assessed, among other things, client satisfaction), so it is useful research. Not sure if the policy changes were directly related to profit, though.

Ideally, as mdrejhon said, I *would* like the hospital team to quote a price before I do. I have to admit that even $15/hour sounds very high to me, but as a student I spent years doing technical work for cheap (e.g., I built hand-coded web sites for several departments and professors and only got paid $8/hour, because that was the highest the college was allowed to pay a student worker). I'm salaried for my current full-time position, but even before taxes this pay barely comes to $15/hour. Is it a general rule that I should be making more per hour for a consulting job than I do for a salaried job (because the salaried job comes with benefits)?

Thanks again for the tips. I'll do some research on consulting and pay negotiation.

Again, I really appreciate the advice!

Jessica

[skiskyrock 0]

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Here’s the story:

Should I charge by the hour or for the project as a whole? What exactly determines a reasonable rate? Should I suggest a price range instead of a single number? Is my work more valuable now than it was last year because I earned my degree?

Yeah. I’m totally clueless. Help?

Thanks!!

While I was still an undergrad, the company I worked for billed my time at $ 50.00/ hour. and that was in 1986 dollars.

Take what you condsider to be a fair wage . Double it (you aren't getting benefits) add a little extra for not getting to go to the office christmas party. You'll still be a bargain.

[BIGUN 1,424]

Lot of experience in this area. I currently pay a consulting development team $85.00/hr. If it's a long project, I expect a per hour price discount. Here is what I ask of them in the RFQ's (oops - request for quotes).

A narrative of the project
An MS Project plan for estimated hours from information-gathering to end-user testing.
A summation of expected results.
Budgetary estimate not to exceed 10%

As for your situation, what is your time worth? Realize your're going to get 1099's at the end of the year which means you pay both portions of the SSI plus income taxes. The good news is your better record all costs associated with the project so you can deduct it off your Earned Gross income to reduce your tax liability.

So, given that; my suggestion would be to start the negotiation at $35.00/hr and allow them to counter. In businesss, there is almost always a scheduled proposal review session where the party of the first part tries to negotiate the rate down. You can explain how you came up with the amount of time, history of success and need for the proposed compensation. Figure this... If you ask for $35.00/hr, assume ~40% is going to go to Uncle Sam and there will always be some scope-creeping.

Don't sell yourself short. Do you really need the hassle for $15.00/hr of which you'll only realize about $9.00/hr? If it's a short-term project and worth it to you for resume purposes, then do it. If you "think" there's going to be scope creep, punch it up to $25.00/hr. If it's strictly a monetary gain for financial benefit and there is no peripheral value, start at $35.00/hr.

My $.02

Edit: One should always know what they need to make and what they're willing to walk away from. Since they approached you, it sounds like they want and need you more than you need them. Never be afraid to walk away if your terms aren't met.

Nobody has time to listen; because they're desperately chasing the need of being heard.

[skymama 37]

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I'm salaried for my current full-time position, but even before taxes this pay barely comes to $15/hour. Is it a general rule that I should be making more per hour for a consulting job than I do for a salaried job (because the salaried job comes with benefits)?

I would say yes. It's my understanding that if they pay you more than $600 in a year and you are not incorporated, they are required by law to send you a 1099 form that gets reported to the government next year. You will have to claim that income. Protect yourself so you won't get screwed by taxes.

She is Da Man, and you better not mess with Da Man,
because she will lay some keepdown on you faster than, well, really fast. ~Billvon

[mmytacism 0]

Very helpful advice, all. I really appreciate it! Shows how little I actually know about the real world!

[Guest 1010]

>for a research team at the local hospital

Good advice in this thread. Don't cheapen yourself by going too low. You are the most experienced person in the world for them, for this particular task. If it is a public institution they may have listed what they pay in recent recruitment ads (local newspaper archives?). With some luck you might find something comparable in education/ skills/ knowledge/ tasks. Start higher than that, because taxes & benes you pay and they save.

And also, if they want __the same thing__ as last time, consider bidding the whole thing instead of doing it hourly. I'd think it'll take you less time this time around, right? (They were happy with the amount of time you took last time, or they wouldn't be asking you back, right?) But consider carefully, because scope creep could kill you if you don't make them pay for it. Consider your own personality and the situation in the decision. Will you be okay telling them politely and with a smile "Nope, can't do that unless its paid for using Out Of Scope time" or will that be stressful to you? If stressful then maybe hourly is better.

Obviously get it down on paper in an agreement, with a very clear understanding by both sides about what is to be delivered. My wish with these is not to be overly complex, or try to screw the other side, but just record what it is you and they have already agreed to do. In the agreement have a (high) per-hour dollar amount for any out of scope items they request. Then they can decide if they want it or not. (Estimating these can take time too, but it sounds like a small enough project that you'll probably not charge for those estimates.)

>I’m really, really bad when it comes to negotiating matters of money.

Many people start out this way -- ya gotta start somewhere -- but negotiating can be practiced and learned as situations present themselves! Have some fun with it! This sounds like a super opportunity.
(The local book store will have shelves full of "how to" books for consulting, agreements, and stuff like that, including a "Consulting for Dummies." I don't recall it, but often you can spend a couple hours in a Dummies book and know something about the issues involved, well worth the $15.)

(edit for speling)

You can have it good, fast, or cheap: pick two.

[happythoughts 0]

For the first time, hourly might be better because an experienced manager will play "requirements creep".

You have to have a definite written scope to bid a project.
An experienced manager might say, "Well that's what we meant by..."

You are right though. It is an excellent opportunity. It can teach a lot about project time estimation/management and what is a realistic budget for a project.

Valuable learning experience.

[Guest 1010]

>For the first time, hourly might be better because an experienced manager will play "requirements creep".

First time out (you're right, doubtful she ever seen a real-life requirements spec (I've been living in them for years)), hourly is not at all a bad way to go. But to do the same project again, is a sweet opportunity.

You can have it good, fast, or cheap: pick two.

[GravityGirl 0]

http://www.bls.gov

Check here.

~~~~~~~~~~~~~~~~~
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[happythoughts 0]

I say charge 'em like a wounded lion.

I've never had a rate that I thought was too high.

[Guest 1010]

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I say charge 'em like a wounded lion.

yeah, but in a friendly way so they like it

You can have it good, fast, or cheap: pick two.

[mdrejhon 8]

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Is it a general rule that I should be making more per hour for a consulting job than I do for a salaried job (because the salaried job comes with benefits)?

Yep. Around here, about 50% more. That means for a salaried $15 per hour job, pay $22 per hour for a self-employed contractor. I once more than doubled my income from 1997 to 1998 when I quit my job and became a contractor. (Normally it's more like 50%, but got a 125% increase in year-to-year income because I went from a low-paying job to a dot-com boom contract)

You have overhead: Pay your own benefits, no vacation pay, no sick pay, you do your own accounting, you have more complicated taxes. Also, because of various overhead costs (from taxes to paperwork to unions), sometimes it's cheaper in some cases for the employers to pay $22 per hour to a contractor than $15 per hour to a salaried worker.

It does help if you are a registered business though (Especially if it is a sole source or a major source of income).

I also agree with BIGUN:

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Don't sell yourself short. Do you really need the hassle for $15.00/hr of which you'll only realize about $9.00/hr? If it's a short-term project and worth it to you for resume purposes, then do it. If you "think" there's going to be scope creep, punch it up to $25.00/hr. If it's strictly a monetary gain for financial benefit and there is no peripheral value, start at $35.00/hr.

[mmytacism 0]

Again, excellent advice, all. Thanks for helping a naive new graduate understand how stuff works. Seriously, I'd be totally clueless without all the responses to my post.

One other thing: I do already have a full-time, salaried job (though in an unrelated field). So, I already have a decent package of benefits (including health insurance). Should I really be charging the hospital extra because of no benefits when I do get the benefits from somewhere else?

I already work 40 hours a week at my current job, so any work I do for the hospital will be during my "free time." If that matters.

Thanks again! Much-appreciated advice!

[mmytacism 0]

So, in case anyone was interested in an update, the research group offered to pay me $30/hour.

Yay! I'm really happy with the outcome, especially because I enjoyed working with these people last year and the study is pretty interesting.

Now I'll have more money to jump (well, when the weather cooperates again...argh)!

Thanks again for all of the advice!

[happythoughts 0]

Make yourself a little spreadsheet of tasks.

First column, break the large task down into smaller ones.

Next, how long you think it will take.

Next, how long it did take.

Side notes - all the other errands that you had to do, but didn't think of them previously.

That will be an interesting and valuable document at the end of the project.

• Quote

[mdrejhon 8]

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Thanks again for all of the advice!

You're welcome. Wait till you're earning $30/hour full time when you graduate. Don't saddle yourself with too many monthly expenses (i.e. expensive house, car with high insurance, etc) and imagine what you can do with skydiving!

It may be actually the low side, but, hey, you're a student, it looks good on a resume, and they are probably happy at the price they got, and it's probably the highest you've ever got paid hourly! Baby steps...

[Chizazz 0]

37 MILLION dollars