Pricing Calculations for Work & Projects
Recently I’ve been paying a lot more attention to the job market as I go through the finding, hiring, and gaining customers routine with a number of different companies, recruiters, and individuals I know within the industry. Conversations kick off a million different ways. In this post I’m going to tackle how I work pricing of a job for myself. Many companies have some criteria based on what others in the company are paid and someone in human resources often has some spreadsheet or whatever that tracks this stuff. This is the flip side of the coin, this is my pricing list. It’s really simple, it’s based on what I’m looking for in life and what a company can give me, which in turn dictates what I can do for a company and aligning with what they want too. In the end, this helps insure we both get a win out of the relationship.
Pricing
Work Desire — The first thing I always think to myself is, “Do I even want to do the work being discussed?” Even though it is more complex then a yes or now. For instance, the main work might be some horrid migration going from a legacy Oracle Database and moving to Postgresql as the core job. But outside of that core job there might be some excellent potential to work with data that is super interesting from a scientific perspective, or logistical freight perspective. (As I find the freight industry very interesting, it ranks high on my “let’s do this” list) Even though the later is vastly more interesting, both need done so it still ends up with a positive “let’s do this” rating. In every possible project I always give it a measure of somewhere on the “Nope” to “let’s do this” spectrum. More toward nope, the increase may go as high as 40% more, more toward the let’s do this, it might even move toward taking a lower price point by 15%. In summary, the desire to do the work on hand is a massive factor in deciding the price I’ll take for the work.
Skills — There are two aspects of jobs which can be broken out into the poorly worded phrases soft skill and hard skill categories. Generally one refers to a person’s communication, writing, and organizational skills and the other refers to someone’s understanding and knowledge around writing code, technical documentation knowledge (let’s be real, this is the expectation), and to some level rudimentary reasoning skills.
The truth is, if we’re honest with ourselves the divide of soft and hard skills is wrong for so many reasons, including the words soft and hard themselves. These designations ought to simply be called skills and discussed in the full context of the individual. The paradigms of the personality tests and introversion and extraversion come into play too, all important to determine effectively how these skills need to be used within a job. But the most important thing is to realize and accept the fact that all the skills an individual has are important in their interplay within the job. Belittling one or other other doesn’t do anybody any good.
My simple approach is listen, learn, and always aim to improve my skills. All of them in any way that I can at any point that I can. Maybe sometimes I need to focus on one skill, and I will, but overall I aim to keep a solid improving competence across what I do as a whole, it makes all of the individual skills that much more useful if I can deliver them with all the others.
If a company acknowledges that a whole package of skills is what is important, not delineating them into the false premise and broken ideals of soft and hard skills, they get a discount break on my demands. I work it out like this, if they’re understanding and it’s understood in general among the company I’m willing to be flexible by taking off about 2% of my asking prices. If I’m talking to a company that has a clearly naive understanding around communication, no blame or anything, but it’ll need to be an increase of 5–10% in my pricing.
Geography — Depending on remote or onsite work has some huge pricing implications. If a company is remote, they instantly get more attention for two reasons:
- It’s either highly likely they’re good at effective communication and waste a more minimal amount of time with meetings and such, or they’re at least open to doing better or becoming more efficient in their communication and being a remote first type of workplace.
- I work best, and can contribute most effectively when I control my geographic location. Forcing an office environment and respective time frame around that office environment immediately decreases what will and can be done.
As a side effect of being remote, not only am I able to be more productive for the vast majority of companies, I’m happy to cut about 2% off of my pricing.
What about onsite? I never rule out onsite work, because it can be extremely rewarding, useful, and in many cases if a company is ok with remote but wants a split of onsite work I’m very happy with that arrangement too. It often doesn’t even cut into my productivity as I can then get a bit of the best of both situations. But let’s talk about what area this applies to.
First, there is the I can bike, bus, train, tram, light rail, boat, or walk it to the office this gets high priority over anything else in the in office category. I only add on a small 2 or 4% to my pricing for this situation. If the company has thought intelligently about this and offers indoor arrangement for cyclists, showers, transit passes, or other amenities I’ll usually even decrease my increase by 50%. If a company is outside of a reasonable 30–50 minute bike, bus, train, tram, light rail, boat, or walk to the office I instantly add approximately ~15% to my pricing. One exception would be if I just fly to their office for a few days a week or per month and spend that time “bike, bus, train, tram, light rail, boat, or walking” to the office.
Geographic Amenities — As real estate professionals always say price is about location, location, and location. This is so very true in choosing companies to work for also. The geographic area, as discussed in the previous point, also has another key element that drastically affects my pricing. It applies to in office requirements and works very simply, like this.
If the office where I’ll be commuting to on a regular basis (at least every other day or so) is located in a food desert then I have to instantly add ~15% to my pricing ask. It’s simple, if I’m to decrease my standard of life, decrease my opportunity to stay healthy, live well, and eat foods that help sustain my well being then I’m going to need to compensate for that unfortunate request on their behalf.
Another is if I need to commute outside of certain distance from where I live, which I’ve drawn a very rough map up below, which generally would place me near a prospective food desert, then again the additional risk, travel time, and related complexities just to get in office will force me to raise my pricing request by up to ~15%. In the map below for example, the northern end of the pink outlined area I need to increase in pricing for, but the further south and travel time areas would require an additional ~2 to upwards of 10% increase in pricing. The orange outlined areas would require a minimum of a 15% pricing bump just because of the inconvenience of trip time, congestion, increased costs on my behalf, and related unnecessary complexities just to work in office in those areas. Of course, I’ve decided where I live, and this is again to insure that we’re both matching expectations and meeting my needs as well as the company’s needs. If I’m killing myself slowly with some arduous commute and languishing with poor food options while in the office, it doesn’t do the client any better if I let myself fall into this situation without gaining recompense for this extra effort requested. There’s one more image there that shows where I would happily fly an a semi-frequent basis
Contracting, Consulting or Full Time or Long Term Project Work — Now we get to the meat of how long a particular job is expected to last. This gets into the longevity of the pricing and even into the realm and expectation of price increases (i.e. raises, etc). Of course, getting to this point logically is an often high risk, volatile, and inaccurate practice. From SWAGs to every other method used, schedules almost always get messy the longer out something is on the calendar. Suffice for this, we’ve made a determination around X, and X it will be for the foreseeable future.
If a job is temporary, i.e. 1099 in the ole’ US of A, the 1099 has to cover insurance, gap and risk, the gaps before and after the contract from focusing on a singular thing for a temporary basis, also the medicare and social security share of both side (i.e. and employee) etc. So a 1099 rate must be at minimum 30% or more than a W-2 rate. A W-2 rate, depending on what comes along with that for benefits, can also vary dramatically. With the complexities of the ACA it can even be necessary to take concern with startup and shutdown of health care coverage, which means the rate may need to go up approximately 5–10% just for that gap position.
On the topic of a full time position, if it’s the case of diving directly into being full time I may or may not need to have an additional 5–10% added to the salary req, because I would prefer we meet halfway, complete a contract to hire to insure we both meet criteria for a good working relationship. Even if it’s just a few weeks of consulting. Depending on the mission of the company, what it builds, and what the need is, I’m happy to go ~10–15% over under on the median salary for the area.
Summary
Fortunately I’ve gotten good enough at this, that I can usually calculate this pricing in a matter of seconds. Before I really had my system down it was very cumbersome. If you put together your own pricing system, make sure to memorize and test out calculations beforehand so that you know when and what you’ll put on the table. It helps immensely if pricing is stated as early as possible, with firmness, and clarity around intent. Whatever you’re going for, I strongly proffer advice to determine what the median rate in the area is and pricing accordingly! It’ll work out better for you and your prospective client/employer/team.
