Usability and User Experience Resources
Idea Market Afterthoughts 2005

How Do You Determine Your Rate?

Activator: Dana Chisnell

For independent consultants in usability or technical communication, setting a rate isn’t always easy or obvious. There are a number of ways to get to an hourly rate, but what’s the best? And what are the considerations that go into that magic number?

The consensus of the attendees was that there are three top things to do in determining your rate:

Ask questions, for example:

• What do you want to make?
• What can the client pay?
• What is the project?
• What skills and expertise are involved?

Create a business plan:

• Know what your expense are and are going to be.
• Think about how much you want to work.

Account for job, location, scope, domain and other factors, such as:

• Industry, company, country, economy.
• Your expertise and seniority.
• How much you want or need the work.

Those are the highlights, but below are the other great things that attendees talked about.

Ways to get at a basic hourly rate

• Decide what you want to make in a month, quarter, or year.
• Review the STC salary survey, both for international and local (some chapters have salary surveys).
• Look at rates and salaries for other, related fields.
• Search on the Internet.
• Take your old salary (or the salary of someone you know who is like you and does what you do) and remove the last three zeros. E.g., $60,000 annual gets you $60.00 an hour.
• Find out how much the client can pay for the project and work out how many hours it will take.
• Talk to friends and colleagues about their rates.

Things to think about to increase or decrease your rate

• What’s the title or the job requirement?
• How do you feel about the project, schedule, and company?
• How badly do you want to work for this client?
• What industry sector is the company in? How is it funded? Is it for profit or non-profit?
• If the client is known, how demanding are they? If you don’t know the client, what is your impression from your first interactions?
• How well does the client understand your value and skills and the scope of the project?
• How well defined is the project?
• Is the engagement a long one or short one? Will there likely be return work?
• What’s your level of expertise in the domain and the methodology?
• How many disciplines are you qualified to work in?
• What’s your level of efficiency and productivity?
• How many projects can you do at once?
• What other means of support do you have?
• How willing are you to either walk away from the project or take the work because you’re “hungry”?
• What’s the rest of the market like? How much in demand are your services?
• Do you have to invest in software or training, the cost for which you would have to recoup on the project?

Other tips

• On fixed price projects, build in a percentage for overage in the case of scope creep. Then raise a flag to the client as you approach the original estimate and then again when you start to use the overage.
• Consider creating a day rate.