Since you mention it, if anybody needs some freelance help with an app I'm available. As a self-outsourced American currently living in Vietnam I can significantly undercut $150/hr. ;)
I mean, sure, you have a cost of living which will let you attempt to compete on price for the worst projects from the worst customers, but why not just deliver desirable projects for great customers at the price which the market has decided professional iOS development is worth?
Then one time I decided to not cut my rate in half on a quote. Nobody but me seemed to notice.
So now I don't do that anymore. Life's even gooder.
When my wife quit her job at Intuit to start Copy Hackers, she also had to figure out how much to charge for her freelance copywriting work. After some investigation, she found that there are writers on eLance who charge $10 for an entire blog post and $20 for a press release. In addition, I make a very comfortable living working for a large software company -- enough that she could easily compete with the inexpensive off-shore writers because we have no real need for the extra money. However, none of that was factored into her decision, because she priced her services based on the value they would generate for her consulting clients -- and has moved her rates up twice in the past year from $50/hr to $150/hr. She has plenty of work at that rate, too...
If you are selling something on a small scale (such as what your wife is doing) it's a wrong assumption to think that everyone knows the going rate for something in the marketplace. People overpay for products and services all the time because of convenience, FUD, or simply not knowing what a typical price in the marketplace is. Sometimes of course they also infer quality into pricing thinking that it is either inferior or that there must be some catch to low pricing as well. While at a certain point (large numbers) you can get hurt, at a smaller level it is not as much of an issue.
"based on the value they would generate for her consulting clients"
Agree. That is the key in many cases to the question of "what to charge" for something (once again it definitely depends on the scale of what you are doing obviously).
I signed up for elance, looked at a few projects, and found myself seriously undercut (and I don't want to compromise on quality or bid on projects over my head).
If I do get some projects at what I believe is a correct market rate (and it's not very high), it probably won't be thanks to elance (which looks like a great website, don't get me wrong).
Joanna (my wife) stays far away from sites like eLance, because those tend to be the places where cost-conscious people go to find freelancers. The heavy focus on pricing (by both buyers and sellers) on eLance makes it challenging to sell yourself based on other benefits (like writing copy that actually converts).
But your point is well taken. If I do decide to shift my focus from my own products to consulting I'm not going to do it at too high a discount.
Can I tell you a story of something stupid I once did which nonetheless does not constrain me to always acting stupidly in the future? A particular prospect asked for a quote of my rate. I quoted my then-going rate and then, because I could not stop my fingers, said "But since we're Internet buddies I'll give you a discount." He said "OK, what's the final rate?" And I chopped 50% off. He accepted.
Note that in no point prior to that had he evinced any problems with paying the actual rate and, indeed, the difference between X and 2X is meaningless to him because a) he's a millionaire and b) neither X nor 2X comes out of his pocket, it comes out of a budget of a corporate entity he happens to own a lot of shares in, and both of us assumed (accurately) that the engagement was going to make those shares worth substantially more than X, 2X, or 10X more.
I set fire to five figures with two emails, and he probably doesn't even remember that conversation. Facepalm. But I don't have to facepalm next time, and neither do you.
To be fair I hire a lot of developers on a contract basis. If you were in Vietnam (which is pretty much always off when we're on in SF) I would expect a discount. If I'm paying SF rates I'd rather have you in SF. There's a very real communication and feedback loop in design and dev that is difficult to deal with when folks are on the other side of the world. (Heck I expect a developer in Cleveland to be less expensive then one in SF)
All that being said, and to Patrick's point. One thing I learned running a consultancy was to never assume someone is looking for a less expensive solution. Once we stopped doing this and started charging what we felt we were worth, a lot of our cash flow issues started magically clearing up.
But the going Elance rates are ridiculous. I can make more money here with way less hassle as an English teacher.
Although I don't think this is what he is doing, marketing wise sometimes people want an explanation for why the price of a product or service is less than the going rate for a certain quality.
Many people judge quality by price and by giving a reason (even one that doesn't hold water upon inspection by someone in the know) you can explain away doubts in a buyers mind and instil confidence.
Some other examples (and there are many) are companies who claim their price is less because "we don't advertise" or "we cut out the middleman" etc. so we can charge less.
Added: Above examples I am giving don't always explain away the difference in price being charged. So they could be a redherring disguising the real reason for the price differential.
Are you just upset that he is competing on price? Given his cost structure it makes perfect sense for him to want to deliver desirable projects for great customers at a great price.
Clearly you know that there is no fixed price that the market has decided professional iOS development is worth. And now that there is one additional professional iOS developer working from Vietnam the price turns out to be lower than what you think it should be.
I read that as a perfectly valid suggestion that he could raise his rates, make more money, and enjoy the clientele even more in the same stroke.
Let the client tell you your price is high, if that's the case, no need to do it yourself.
No doubt there are brilliant deals out there -- awesome devs who do great work, professionally, and don't know their worth -- SOMEWHERE. But considering how I've failed over & over to find them, I don't bother trying any more.
If you're good, you can ignore everything that goes on at low price points. And well you should.
Someone charging a freelance rate of $30/hour in north america for iOS work is either not invested much in learning the platform in-depth and therefore won't be able to do much more than populate table views and wire up transitions, or they'll tackle a complicated project at that rate and make a mess for someone else to clean up.
But what Patrick says is right: consulting is a GREAT opportunity right now for iOS devs.
However, where I disagree with him is this pivotal phrase: "Should there ever be a gap…" No no no!
Don't wait for there to be a gap. The absolute worst time to be prospecting for client work is when you need it.
I'm all for throwing your energy into growing your existing revenues, but there's no way I would have ever done what you did and I have no kids and no mortgage. We consulted while we built up our app -- and it was stressful as hell but those big fat checks were a godsend. I can't even imagine trying to squeak by on $3k pre-tax with a spouse much less kids. Or with non-subscription income.
If you read the other things I write, you'll know I'm anti-magical thinking and rainbow gum drops and fairy dust. You know, unicorns, like the one being impaled by Mr Pointy the Narwhal of Truth on my blog header (http://unicornfree.com).
Well, this is unicorns in action, dude. The deep down, heartfelt belief that if we just throw yourself at something hard enough, we must succeed, is a horrible thing we internalize from movies and TV shows. It makes great television but it's not the truth.
If you fail to protect yourself & your family, income-wise, all the joy from working on your own thing will be worthless. You will feel so terrible, and be in such stress, that you will long for the days of your boring, unrewarding job. True money stress (not "I can't afford this luxury and I want it now!" but REAL stress) is worse than almost any career dissatisfaction. Worrying about your basic needs is way more time consuming and soul-sucking than a crummy job.
So:
Bust ass to pick up consulting gigs now. Make the transition as seamless as possible. Build up a client base and you can charge more and more for better and better clients and fewer and fewer hours. It'll still be consulting, it'll still be working for somebody else, but for a while, getting paid double and triple the amount is novel enough that you'll cope.
You'll thank me later.
And take my word for it - i harbour no illusions as to the steepness of the mountain that is facing me. Looking for consulting / freelancing work is my number 1 priority during my resignation notice period. In fact, i started today and found a couple of good gigs that i'm going to pursue. I thank patio11 for the suggestion.