Rates for work in subcontract
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First, I'm not sure these terms are correct; I hardly understand the ones in my own language. The gist though is clear:
An old friend reconnected recently, and he offered me work. Thing is, he has jobs he wants to move away from his current partner: a studio that charges 600 euros for every install of their (horrible) custom-built CMS before *any* work is done. Obviously he can't calculate a decent rate for his own SMB clients like that.
So his offer is clear: he gets the clients, I create the sites. Different approaches per job: one will be PSD to code, the other may be a full clean-slate design.
Thing is of course, he won't (and can't) pay me my own full rate I would charge a client directly. So he's asking me for a subcontract rate (direct labor cost?)
My questions would be: would you do this? And what would be your price drop?
The advantages are clear: I don't have to look for clients, I don't even have to talk to them, I get to state demands (like I only work with perfect deliverables) that I can't ask clients etc.
Also, yeah I want to do this, that's not the issue. I can always get out or accept only what I like to do.
Any thoughts or experience with this? -
The most I would lower is 10% or none at all. Your work is still your work, and your time is still your time. The cost savings would be from spending less time on a project, not from reducing your rate.
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Really? That's interesting; and also a sensible take on things.
Of course this works for hourly rates, I most often charge per project. I guess I could recalculate the average time spent on a site given that I have less work...
Also, the whole admin and prospecting bit is something I never directly charge; I mean, it's freelancer overhead in a way.
Still, thanks, coz I was thinking greater discounts but it's true: the work is the work. -
Me and my roommate do the same thing. He's mainly a print/graphic artist and myself a web designer. Our clients might ask us for services that the other might be interested in and we "subcontract" each other if it goes through.
But rarely do I give his clients a discount (and vise versa) because of it. It always starts with "What would you charge for this: .. " and either continues on or ends there.
Honestly though, (off-topic) a problem I had was since he is from a mainly print background, he did not understand why I would ask certain things (demographics, company values, expectations, etc) so now if I want the job he just sends them to me and I communicate with them directly.
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@patrickyan has good advice. I would charge between 10-20% less than your normal rate, which is still a good amount. If your contact doesn't like it, then I wouldn't take the offer.
You are still putting time and effort into these projects. You should be receiving most of the money based on that. -
I actually do a block booking of 20hours a week for a company and they get a discount. I'm sorry work is work but having security is rare in this job and sometimes / some people need it. Bottom line is only go as low as it benefits you. If it benefits you to go lower than suggested here and you can pay your bills - groovy do that.
Personally this year is about setting up my own non client stuff hence I have moved down my hours but previously I was on 45hours a week in this discount basis. Fact was I required a regular wage (sometimes you do) but couldn't move to get a 'offline' job so needed to find a way freelance would work for me and this did.
For me the 20hours + discount = +++++ to set my own foundations going on. That made a strong discount worth it for me. -
When I contract to other designers (either providing development services or full design/dev) I charge my full hourly rate. The designer who is contracting me needs to factor that into the rate they charge their client.
I would look at it like this: Even if you and your friend both have the same hourly rate, you can both still make a profit from the arrangement. You get paid for the hours allocated to design/dev, and your friend gets paid the hours allocated to project management.
Also, your friend is free to charge the clients any rate he sees fit. For example, if he marked your rate up $10/hr, and the project took 40 hours, he just made $400 for doing absolutely nothing.
I do contract work where my rate is marked up in this fashion by a whopping $60/hr, and that's fine by me. I still get paid my standard rate, and the firm that contracts me has a healthy incentive to keep hiring me.
However, if you do discount your rate, I agree with @Destiny and @patrickyan: don't discount by greater than 10-20%. I give a 10% discount to friends when they are the client. -
I thought this was an interesting topic, and I've expanded my reply into a short blog post:
http://f6design.com/journal/2011/06/05/what-to-charge-when-sub-contracting/ -
I do a good bit of work on this basis, usually for print designers who aren't very familiar with the web. What I do is charge the designer my full rate and tell them to pass that cost on to the client. If they want to mark it up thats their business, I still get what I believe I'm worth.
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I commented before on @junicol 's article, but this questions is slightly different. If your contact/partner is simply selling and getting ink on paper, then you should be considering a commission structure.
The most basic commission/affiliate structure is a straight-line percentage. "Tom, you will get 15% of the gross revenue from this project, IF you are handling lead generation and closing the deals."
If he can sign two deals a week for you and make a decent living in 10-15 hours of prospecting, kudos to him.
Personal note: I have tried this before, and it was not a perfect structure. If the client sends you a referral, for instance, suddenly "Tom" wants a piece of that sale too. -
@jpjeremy Thanks for the input. I like that figure. Also: good thinking on the referrals; that hadn't crossed my mind.
Meanwhile, point is mostly moot because not much leads have been generated nor deals closed. Can't say I hadn't expected that :) -
@nilsgeylen I suspected as much. I am a marketing expert first, and a web design guy second. Unless they have spent a few years in direct sales before, most people underestimate the work and frustration involved.
I am evaluating a few different options to generate more sales, and I'll be sure to post some of the results on the forum.
