Some comments on fees…
Here is my reply to a post at Consulting Success regarding fees. Good info on this site — but with an emphasis on business/management consulting rather than on technical consulting.
As consulting engineers, we’ve used “project fees” for years. When quoting, we provide a budget and a general estimate for time. We use an internal hourly rate for estimates, but don’t include that in our quotes.
To me, hourly rates are useless. For example, if I’m getting a kitchen remodel, I don’t care what the contractor’s hourly rate is — I just want to know how much the project will cost. BTW, I’ve used that analogy on procurement people when asked about hourly rates.
Finally, we don’t bid “fixed fee.” Rather, we include a statement that “we will not exceed the budgetary estimate without client approval.” This gives us some room for contingencies or small changes. Clients and procurement people seem to like it too.
Hope this helps. I always appreciate Michael Zipursky’s insights.
Do you have questions of fees? Ask away…
P.S. Been a crazy week here, as Mary broke her arm. On the mend after surgery…
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Interesting concept. So, what are the considerations when formulating a project fee, versus an estimate based on an hourly rate and past experience?
Hi Ken,
Great question! In fact, more than I can do justice to in a short reply. So watch for the next post, where I will expand a bit on this important topic.
And thanks for providing “grist for the mill.”