Expenses. ISTR that Patrick did a significant amount of travelling for consulting gigs. (Which may also be a reason for avoiding them now that he has a wife and child.)
Read the blog post I linked to. There is a section that specifically says "What I did to earn those rates" that does not mention AT ALL that he is spending half/one third/some/very little money on travel and expenses. I've been independent for nearly 20 years and I rarely include travel and expenses into this big bucket called "RATE". The more I think about it, if a significant amount of that money was used for expenses than it makes the whole thing look quite bad.
He even says at one point, "Spoiler alert: there is virtually no difference in the mechanics of work done between $100 an hour, $200 an hour, and $30k a week — all of the leveling up there is in sophistication on who you go after, what engagements you propose and deliver, and how you package things for clients." which would lead me to believe that he's just charging $30k a week, just as he would charge $100/hour.
I think people need to just take this stuff with a grain of salt. i have worked with quite a few large companies over the years and I don't believe any of them would pay $30k a week for: "I combined a modest amount of programming skill (typically Rails, Ruby, and Javascript) with substantial experience with using engineering skills to move marketing/sales levers, including by doing SEO, email marketing, A/B testing, (light) UX design (typically around high-value parts of a SaaS business like signup flows or purchasing pathways), etc. I turned down essentially any gig which was strictly engineering in character and rather aggressively went after bigger projects which were “closer to the money” every couple of months.". That said, I could very easily see a company hiring someone for a $30k contract to do those things, the weekly rate just seems extremely misleading to people that are struggling to charge even $100/hr (which is not a bad rate by any means).
I used to work in software training. We charged $4k/day as a base rate. Travel was charged separately. Most contracts were M-F. That's $20k/week, and that doesn't count that your employees weren't doing their jobs for that week, they were learning stuff. Also, literally our entire curriculum was open source, so it's not like that was secret sauce.
Yeah, it's not the exact skills you're talking about, but it's similar.
I guess I'm also confused about "I don't believe any of them would pay $30k a week for" vs "I could very easily see a company hiring someone for a $30k contract to do those things". Isn't hiring someone on a contract to do these things for a week consulting?
>I guess I'm also confused about "I don't believe any of them would pay $30k a week for" vs "I could very easily see a company hiring someone for a $30k contract to do those things".
I think cityzen mean $30k a week vs. $30k total. The wording was maybe a little loose, but that is what I gathered from it.
Key point is in your opening, "I used to work in software training. WE charged $4k/day" which would lead me to believe this was a company and not a person. In that instance, training, it makes complete sense to charge those kinds of rates.
My point about $30k a week is that if ONE person walked into a room and said, "Hi, I'm Bob, this is what I do and my rate is $30k a week" it wouldn't fly very far. Now, If ONE person walked into a room and said, "Hi, I'm Bob, this is what I do and it's going to cost you $30k" is very different, whether it takes 30 minutes, one week or a year.
From my experience, many people read Patrick's blog and similar blogs to try and understand the economics of how to make more money as an independent developer. At some point this stuff becomes more about luck than it is about actual development economics. The boring companies most developers have the "privilege" of working with just don't have the ability to make these connections and justify budgets like this, worded in the context of "this is my rate per week"
The company was two people, then three. That's all the bigger it was. You can do the same thing as a one-person company. The distinction isn't that large. (I did not make that much money but first, I was a special case and second, this is about price, not about wages.)
And I do think this advice is applicable to non-training stuff, but Patrick already wrote about it at length so I won't get into that here :)
> whether it takes 30 minutes, one week or a year.
Ah, sorry, I misunderstood. Thanks for clarifying.
For F-500 corporations, a $10k day delivering a training course with assessments isn't unheard of. But nobody is close to 100% utilized doing that work.
Absolutely. We _definitely_ weren't near 100% utilized.
I actually think that might be why bootcamps became an attractive proposition; it's much easier when you're selling months at a time rather than weeks or days at a time, in a sense.
I worked in consulting/training for 4 years now, but if this work would be 100% utilized, i would have quit after one year. So the rates must be high to allow for just 50% utilization or even less.
Yes, this too. I assume all three of us can agree that building salable courseware is demanding and sometimes tedious, and that actually delivering a course is fucking grueling, even when you're having fun doing it (which is not every time).
Sure - so let's say you have PI insurance of $100/week, and you do an international flight each week also at $1000/rt. This still leaves you with $28,900/week pre-tax? What other major expenses can you see with private software consulting?
A "rack rate" is not a typical rate, so he'd presumably take in less money than you're assuming. He lives in Japan and most of his customers would probably be in the USA, so if he wants to be able to function he should be flying business class. He also needs somewhere to stay, transportation, and food while in the customer's city; and it is the nature of consultancies to not have anywhere approaching 100% utilization, due to time spent on research, promotion, and networking, and the fact that gigs never fall neatly into your schedule.
I'd guess that "full time consulting" would work out roughly along the lines of
* Average billing per week of consulting: $15k
* Round trip business class airfare: $3k
* Hotel, food, transportation at destination: $2k
* Profit per week of consulting: $10k
* Weeks spent doing consulting per year: 20
* Take-home (gross) salary: $200k
I'd guess this is more than Stripe pays him, but not dramatically more; and if I had a wife and child I would certainly prefer to not spend half the year away from them.
If I were running a consultancy full-time, and didn't hire anyone, I'd model that as 35 billed weeks a year at $30k. Travel to a client is billed to the client separately via a magical sentence that Thomas taught me: "I will expense travel as per your standard travel policy." I'd assume roughly $50k to $100k in overhead (legal and tax advice, travel to conferences to do prospecting, etc).
I have never ran a consultancy full-time, and didn't particularly want to start now. It was certainly an option, but spending a few years building Atlas seems much more fulfilling.
Travel to a client is billed to the client separately via a magical sentence that Thomas taught me: "I will expense travel as per your standard travel policy."
How does that work exactly? I mean, logistically -- if you're coming in from outside, you generally won't know what their standard travel policy is.
Pitch the gig, sign the contract, then you do the boring logistical details. One of them is arranging travel. At my shop that was simple: "How doed $FOO handle business travel? Are you going to book my tickets/hotel or would you prefer to be invoiced for them?" "Great; send me a copy of your travel policy."
I also thought, early in my consulting career, this would be a big deal. It never was. Nobody who can hire 10 programmers is surprised what a trip from Nagoya to SF or NYC or Berlin costs.
What you're doing is putting the client on notice that (a) you're going to have to travel to complete the engagement and (b) they're on the hook for it. From there, things usually proceed as if you were an employee rather than a consultant: you ask them how you should book the travel, and you get it reimbursed later on.
I think you ask. Rephrased, "I expect to be reimbursed for travel, but will try to keep my airfare/hotel/per diem expenses in line with what your employees get. (Hint: provide me a copy of this policy.)"
Yes, I think it's approximately as straightforward as building a SaaS company from scratch. Which is to say "non-trivial" but very, very within the realm of possibibility.
I've written a ton on this topic, on HN and my blog. So has Thomas, among many others.
Professional services can be very lucrative; film at 11. My lawyer charges $750 an hour and my accountant $600. I have no difficulty believing they have 70% utilization. I know there are HNers that find this difficult to credit. If you take nothing else from the 3 million words I've written, take "you can charge vastly more for your skill set than you do if you connect the deliverables directly to business value." (True for consulting, regular employment, selling products, etc.)
It's boringly straightforward to scale the business after you've done it once. Success breeds success; you ask your newly satisfied client for referrals and follow-on work, you use case studies made with them to target firms at similar or slightly higher levels of sophistication, you turn the one-off engagement into something that you can predictably pitch and execute like a restaurant can predictably cook eggs to order, etc.
I don't know if Patrick could do that, but I've been on the other side of deals materially equivalent to those numbers.
A 30k rack rate at those utilization rate is a high number but not an impossible one.
It is not a number you will get for software contracting. It's one you'll get for solving business problems that cost/are worth much more to your clients than that.
I don't doubt it. I've certainly seen people bill similarly (and obviously it doesn't involve writing that much code) - I'm just trying to put the pieces together in this context.
