Wednesday, March 3, 2010

Contract Quoting - The "Fickle" Fee

One of the advantages of intentionally working part-time is the added flexibility gained by having several extra hours every week. Occasionally, I will use that spare time to do a little bit of contract work for various companies. I enjoy independent contract work because it pays very well and it gives me a bit of work variety. Since my job skills are more than sufficient to meet any task I undertake, there are really only two challenges that I continually confront in taking on contract jobs. The first challenge is establishing excellent rapport with my clients and establishing a solid reputation in the eyes of potential clients. The second challenge is accurately quoting the tasks I undertake, so that I can maximize both value provided to the client and monetary profit.

The first challenge usually isn't too difficult. The second one, however, requires a delicate balance. Ideally, my rates should properly correspond to the task at hand. When I properly evaluate a task, I earn nearly exactly my target rate, while still leaving a little margin for additional customization, if desired by my client. If I underestimate a task, then the client receives no additional value, but my profitability begins to sink. Since my tasks vary a fair bit, it can be challenging to accurately estimate the amount of work it will take to perform the given assignment. Just today, I was struck by a realization that will greatly simplify my quoting process.

Generally, when I perform a task for a male client, the desired result is clearly understood by the client and easily communicated to me with a minimal amount of clarification and dialogue. Most men know exactly what they are looking for and can quickly describe exactly how they want it. However, as I was working on a task for a female client, I discovered that even with work-related tasks and projects, women can be quite capricious in their desires. The project that initially consisted of a request for one custom database query soon expanded into a request for two separate queries. Once both had been finished, she added several new criteria and field format requirements which had never been part of the initial request, nor part of the revised request. If I were billing on a hourly rate, this would be of no concern, but given the fixed price of the project contract, every new addition cut into my profitability.

Based on this experience, and my knowledge of human nature, I have decided to factor something else into my quoting process. From now on, I will now add a "fickle" fee to my contracts. I will take my base estimate and add a 30-50% markup, as a fickle fee, based on the following criteria. If the client is female, the fickle fee automatically applies unless she has consistently demonstrated a pronouced level of decisiveness and clarity of communication. If the client is male, the fickle fee is automatically waived unless he has demonstrated an inability to be decisive or to clearly communicate his requirements. By assuming that female clients will generally be capricious, and by generally assuming that male clients will be clear and direct, my quoting process should much more accurately match the amount of work I actually have to perform. It's by no coincidence that my work experience matches the truths Game teaches about the female nature.

By charging a fickle fee, I won't be as quickly frustrated by those whose desires and needs change quickly and without warning. That will result in a great synergy with my other contracting challenge: establishing and maintaining excellent rapport with my clients. It's hard to always respond well to people who make your work more challenging and complicated. By expecting women to be fickle, even at managerial and directorial levels, I will reduce my stress, increase my profitability and increase the accuracy of my quoting.

7 comments:

  1. LOL. Yeah, women will sue at a drop of the hat.

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  2. It's ok to add a fudge factor into your pricing as long as your pricing is transparent.

    As for your other observation, it matches mine. It's a hunter/gatherer thing. We tend to hunt for something specific and anything that meets or exceeds criteria is acceptable. Women tend to be more "open minded" and graze, seeking to optimize within the time allotted for grazing. Compare the way men and women *typically* (outliers aside) shop, and you'll see the obvious difference. This is also the reason most ads are directed at women -- more easily swayed because they are looking to optimize, whereas guys are less swayed in many cases because we more often tend to satisfice. Big gender difference. Causes a lot of marital stress about money and so on.

    But you should price as you wish -- as long as you disclose and are transparent there should not be an issue.

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  3. Don't ever talk about this again. You're setting yourself up for a lawsuit.

    I think it's a great idea and makes great business sense.

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  4. I think that it's very logical, and makes sense.

    Also, I don't think that it actually discriminates against women. It's a analytical process by which calculating in extra work ahead of time will be part of the estimate process. The increase in price isn't based on what a person's gender is, but on what their habits are, and how that will effect the amount of work to be done.

    Women are different than men. This can be a good thing. This can also mean more work, and therefore higher prices. It's all pretty objective and reasonable.

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