How I can charge so much
eikonoklastes.org
eikonoklastes.org
The reason this works is that person writing the check is usually not spending their own money, or if they are it's a drop in the bucket for them and $5k or $15k isn't much of a difference. They've probably already wasted $100k+ in salary over time having their employees try to handle the same task before deciding to bring in someone new. The other factor is the (mistaken) thinking that if you charge a lot you must be worth a lot.
At most companies the idea of giving one of their own programmers a $20k cash bonus to do a 10 week project in 1 week is out of the question, but paying a consultant to do the same thing is no big deal.
The Expensive Consultant idea is what IBM basically lives off of these days. In their case I think it's pretty unethical, but for individuals who are truly qualified it's a win-win situation and I highly recommend it as well.
It's more striking if you have overhead. Say you charge $5000 for some job, but have expenses of $4000 for it. If you double your prices, you now make $10K, but your expenses remain constant at $4K. Your profit has gone from $1K to $6K. You could afford to lose 5/6 of your customers and still break even.
My mom charges $80/hour for elementary-school tutoring, up about $10-15/hr from when she started tutoring. None of her clients have ever blinked at a price increase. I know 20-somethings who tutor high-school math and make over $100/hr.
I did some basic Windows consulting a few years ago; you know, spyware removal, installing hard drives, etc. My initial rate was $50 / hour, and I was charging $90 by the end of the summer. No one so much as batted an eye at whatever number I gave them. Not a single person tried to negotiate.
Lessons learned from mistakes I made (and you shouldn't):
1. If they say they won't engage you because of your price, it's not because of your price. Find out the real reason.
2. If they're shopping on price, let them. You don't want them.
3. If you won't compromise your quality, then you shouldn't compromise your price.
4. If they legitimately can't afford it, then reduce scope, not price.
5. If you charge top dollar, you better deliver top quality. Otherwise, don't be surprised when word gets around and the well dries up.
Once you figure out you can bill whatever you can negotiate, it makes it really hard to do startup work. The most dangerous part about it is that you always know you can pick up a bag of cash if you need it. When you've always got an attractive and easy "out", it's always out there calling to you. Yet another reason to do your startup when you are as young as possible.
Seriously. I'd like to hear more about how you managed to quit.
I think the impetus I needed was the right business. I'd been working on Virtualmin for fun for two years...somehow it never occurred to me to make it a business for most of that time. When it finally did, it all seemed inevitable: it really felt like, from day one, that as long as I worked hard, it could not possibly fail (and that initial gut feeling is turning out to be right a couple of years later).
Some things I did to make it clear to myself that I was done with that old business:
1. Gave up my downtown Austin office. (Corner of 6th and Congress, Bank of America building...best location in the whole city.)
2. Took down the old business website. I left up all of the support materials and such (and it still gets thousands of hits per day), but I removed all contact information.
3. Gave myself deadlines for launching the new business. "The website will be launched on X, and we'll be selling products by Y."
4. Did Y Combinator. Not everybody gets to do that, but it triggered a number of changes that made the break between the old life and the new one very dramatic and difficult to go back on: I sold my 350Z and had a huge garage sale to get rid of a lot of my stuff, moved to the Valley (the getting rid of stuff is enforced when moving to the Valley--I couldn't afford as much space out here as in Austin), and didn't keep my old phone numbers.
The last one has probably been the most effective. I was still occasionally taking jobs when friends asked when I still lived in Austin. The thought process is, "Hey, what can a couple of days hurt? It'll give the new company more runway." But it slows you down, and gives you a safety net. Once I didn't have the safety net, I started thinking a lot faster and lot harder about how to increase revenues to a livable amount (I've never had a lot of big expenses, even the Z, so I had enough savings to last quite a while, but moving to the Valley dips into that pretty quickly).
NOTE: I don't have a family to feed and house. My co-founder kept his full-time job throughout all of this, because he has a family. I'm not saying the dramatic "drop everything and get serious" is the right path for everyone.
Holy cow, did they get slashdotted by news.yc?
Moral: even someone who looks great on paper can do something unbelievably stupid. (At least I wasn't charging anyone $100/hr. for it!)