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I own and operate my own company but only employ myself with the occasional subcontractor for specialized programming (yea, the kind where we just can’t know everything). The dilemma I am in with a particular client is that they take up so much of my time, the monetary gain is nothing, if not negative, which in the end impacts me trying to take on more work in the end.
I really do not know where I am going with this whole topic but I know the input I have received in the past helped me greatly in business and now I find myself in a position where I could use some of that input again. I am one of those that realizes there is always at least 10 other people who have gone through the same thing and if even two of them share their opinions, I would be greatly thankful.
Anyways, on to the part of growing some gnads. I will try to be brief but I think it is important to try best to illustrate the situation – always helps to vent on a forum anyways :)
I started my web design work about 10 years ago. Approximately 7 years ago I started working with a start-up company. The work in the beginning was minimal at best but did involve a refreshed web design look every year or so as the company grew. I work remotely from their location.
The company really started to grow about 3 years ago and that is where my work started to take on a very significant ‘face’ to the company. At this time, I had monthly duties along with daily duties that I was responsible for. I worked at that time about 40 hours per month and billed $1200.00 per month. It was decent work and nothing too extreme; everything was more along the lines of maintaining the web site. Web site revenue at that time was nil even though I knew there was revenue out there to earn; they just never listened to me or took me up on my suggestions.
Three years ago, they hired someone for their internal office but “who would also oversee the web work” – they would be my go-to person since as the company grew, the web site grew and so did my ideas and methods of dealing with the work. This go-to person never ended up panning out to be someone that I could bounce off ideas off; instead they worked solely internally with the company and also began to sell web site advertising.
About a year and a half ago, because of the workload of the site and the increase in my responsibilities – such as extensive database programming, Flash, web site management, etc. – I doubled my fee to $2400.00. At that time I ‘was’ working 80 hours per month but things have changed since then.
Bare with me, I am getting there....
Last year they started handing off more work to me for the web site and the daily duties I needed to perform, grew as well over this whole time proportionally to the business. My hours averaged 120 per month last year but still at the rate of $2400.00, as it is today. It was fine in the beginning to be honest because the web site was kind of my pride and joy since I was there from the beginning and helped the odd time to help me bring in a client or two.
This start-up company now has their own office, employs 8 people fulltime (not counting me as I am a contractor). The owners have done very, very well for themselves as they should, since they have been very successful in their business. They went from living in a nice house to a million+ home, from a Chrysler Intrepid and minivan to 2 “very, very, very nice cars” and a minivan. I am not knocking them at all, but I think it is important to share this to help illustrate my position.
I have asked for about 6 months now to sit down and review my work with them so we can come up with a new rate for me to charge. Each time I am put off or told one of their newly-found business terms why they really have to be careful with how and where they are spending, even though they just brought on a new internal employee 3 months ago with a salary of $75,000+. They will hire others, but not consider my workload has grown too.
I asked again today but was told it would be another month before they had time to sit with me. I almost threw in the towel right there but bit my lip as I have a good idea of the pain and suffering I would have had thrown down on me by my better half when I got home. So back to my office I came and finally sat down and wrote this, something I have been thinking of doing for a bit now.
Now, I should say that I could just walk away. But let’s be honest, $2400.00 a month is $2400.00 a month. I also realize I could probably make that money up each month with my own sales - but the recession thing does make me a little concerned.
I do think this is important to relate and I do hope it is not taken the wrong way. Not to blow my own horn, but I am one of the lucky ones that can do web programming (database work) and make it look nice to the end user. Sorry if I have offended anyone but I have realized over the years that most programmers/designers can do one or the other. Thus, I seriously do not think I can be replaced with just one person. They most likely would need one programmer and one designer, but I could be wrong and probably am. On top of all of this, I can assure you that no one out there knows this particular industry that this company is involved in as well as I. Not bragging, it is just an industry I know extremely well, was involved with even before I had my first computer. Anyone trying to fill my shoes would have a hard time for a while and would need a lot of guidance and hand holding from the owners. This is one of the other benefits I bring to them.
Enough of the babble, I will get to the just of it all now....
The web site is only a small facet of their business.
- Web page views per month are 400,000+ with about 40,000 unique visitors
- Web ad sales last year were $300,000+.
- The quality and depth of my work has increased.
- My workload as grown to 140 hours per month. (Still making $2400.00)
On top of all of this, my position requires me to be available to them during working hours as well as the occasional evening. In addition, I manage the dedicated server and am responsible for it 24/7. One of my responsibilities is work that requires me to either stay up until 2am or wake up and start working by 6am. The benefits of a home office I guess. The missus hates it, but it works.
I guess in a way I just want them to appreciate all that I have done for them, to get that missing recognition and for them to finally realize they have a good deal with me but it is time to step up and give me the level of respect I know I deserve, along with the financial recognition as well.
I am realizing after finally writing this all out, it is quite a sad story. Perhaps it is time for me to be the type of business people they portray to me and be that more demanding of them as they are of me.
Perhaps, it is just time to grow some gnads and walk away. I think I could make it, just a little tough thinking of walking away from a $28,000+ per year contract. I am just tired of being ‘undervalued’ but maintenance contracts do provide some stability I have found.
Wow, only $28,000 – creates a whole new perspective when you actually see it in writing! I guess that says it all right there.
With all this said now, what would you do if you were in my position?
If I were to get that sit down with them to review my fee, knowing I am responsible for the server and web site 24/7, need to be available off hours, 140 hours on average of work a month, what are some of the thoughts you might have? Throw in some numbers if you want as well.
I asked again today but was told it would be another month before they had time to sit with me.
You could have stopped right there. That shows zero respect for what you do for them. I would walk instantly.
Is $2400 really all that much? 17ish an hour isn't a lot for someone with your skillsets. Does that include insurance and benefits?
If you really need the money then just put up with it for now while you hunt for a new job.
The company is the leader in their industry - as is the web site, beats out all of our competition hands-down.
So the bragging rights I get from it are worth something, but yes, you said it right and that is how I feel.
No benefits or insurance, I am 'just' a contractor.
If they say no, you're done. If they say, let's talk about this, you got their attention. Either way you get on with your life.
I agree with Tangor: put something in writing about the rate increase, explain why. See what happens.
Another factor is that as a contractor you should be cultivating other clients. This client is eating up so much of your time that you really don't have a client base to fall back on. Over time you've become more dependent upon them, for effectively less pay.
Best of luck, I hope it works out for you.
@JohnKelly - exactly, I do have other "maintenance" plan clients that have I have no problems with. This one just started down the wrong path and I let it go too long. I know I am capable of expanding my business and this particular client is holding me back. No other way to describe it.
@Tangor, thanks - I think that is a great way to approach it.
Like you I was always "scared" to let them go, as like you said x amount a month IS x amount a month when your self employed.
BUT that respect factor always won in the end for me! I gave them my position on the charges and they either agreed or I walked. The times I walked, I always felt better about myself and I always found a new customer :)
I agree with the suggestion of giving them a letter ( maybe even registered ) and see what happens. However I am not the one that pays your bills, and I fully understand that as well. So you may want to start looking for a new client in the event you walk ;)
Please let us know how things turn out.
Do wish you luck in this. I've been there, done that, too many times. However, time IS MONEY and I'm looking at how much time I reasonably have left to keep making it.
Factor your time for a flat contract, with a clause allowing for rate increases over time. Or give them a guaranteed for 12 months HOURLY rate for specific work (database, design, etc) if you don't want to do the whole enchilada. There should be a common ground upon which you both can agree.
Just avoid becoming a milk of magnesia gulping contractor!
Now that is a line to live by, and is really the reason I am approaching this head-on. I have a family, kids, retirement somewhere down the road. I do not have time to waste.
I am actually thinking of a 12, 6 and 3 month price. Longer it is, I will offer a discount. They can take the 3 month with both of our heads held high knowing I am not leaving them high and dry but I am not going to be stingy with my rates. I KNOW what others would charge for this sort of work even excluding my experience in their industry. I just think they have no idea.
Companies would not be paying a combined $300,000 a year to advertise on a site that does not work or appeal to their desired viewers.
Good luck!
that is how much you have effectively saved that company; how much you are worth! you show how much of a small proportion your raise in rates will be to that figure. and present in a brief meeting the nature of which is to discuss 'our' future.
if they wont meet with you, update the resume. sticky me if you do ruby.
In November I asked to review it again with them, no meeting. In December I explained to them it was getting serious and they replied that they were putting this as a top priority. Now comes February. Obvious I am not that much of a priority for them in the end.
Probably not, but it certainly does happen.
So what I would do? I would again start a timesheet with the hours worked and when that has been reached I would simply say you have an extra 3 or 4 hours beyond that and then I stop for that month. The extra shows your care but not so much that they can tred all over you.
You have shown that since you started that you are prepared to go well beyond the hours charged so why would they expect you to stop doing it now? The second you have reached the time period you send an email saying you'll do another few hours for free so prioritise the time left wisely!
In my maintenance contracts I have always included an upper limit on hours. For example, $1500/yr for up to 40 hours. Additional time billed at $60/hr. Minimum 1 hour charge per occurence, but thereafter billed by the quarter hour.
This helps to prevent the kind of project creep you have described.
If you are a contractor, then it may be time to renegotiate your contract and put an hourly limit on your time commitment.
Chances are they have no real grasp of the time you are committing to this contract. Your failure to put an hourly limit on the contract simply exacerbates the problem.
Good luck!
Yes they 'could' replace you, but that takes time and effort and like you said 1 person might not have all the tools you have not to mention they will have to learn the system you built. Are you going to train them? No, Why would you?
The one thing I learned is that your time is worth being compensated for.
I would create a new work contract, detail ALL the duties you fulfill, put a price tag or put a time estimate next to each item, then detail your hourly rate.
It should look something like this.
Monthly data Import $300
Content Updates (est 40 hours/month @ $40/hour)
Development Work (est 50 hours/month @ $85/hour)
And so on... make sure you detail everything you do... every task.
Be fair, and research what other contractors/development houses charge.
Come to them with the work contract, even if you have to walk into their office and lay it on their desk yourself. Ask them to review and be open to negotiate, and if they aren't willing to work something out with you then walk away.... it will be tough but you sound competent and you will be ok.
Chances are once you are gone they will see how much they need you and they will approach you. If that happens make sure your rates have increased since you last spoke with them.
Don't be sad about giving up the site and bragging rights, you won't loose those. You will still be the guy who made that site what it is today.
Your client will be more likely to walk away from a contract if they feel you are holding them hostage with your skill set, technology choices, or otherwise. In great part, the choice to keep you on at a higher rate or to let you walk is an emotional decision: if you were "that" special then why would you have provided such inexpensive services for such a long time?
Wake up and smell the coffee: by not accommodating your requests to meet, and ignoring the price comparison (wrong thing to do in the first place, but too late to worry about now), the client is buying time - hopefully you'll give up whining. And they're successful at that if they can postpone future meeting dates a month at a time. Who does this guy think he is?
Watching the money? That's a question of having their priorities backwards if the site generates 300K...
Another big red flag is that you have been working closely with this company for 7 years, and yet you have not benefited from their growth. That's a very long time to stand still. You are not an employee, and yet you fully behave like one.
Sorry to sound overly harsh, but I think there's no question about you having to think of an exit strategy right now. Plan to leave in 3 months, do the bare minimum at this company and get new clients - call their biggest competitor tomorrow morning and triple your current rate. One month before you leave, or as late as your contract allows you to do so, you tell them that unfortunately you will not renew the contract and that it has been a pleasure working with them for all those years. Walk off with a smile....
It's been my experience that the above is exactly what they are thinking. It's also been my experience that even if you leave, they will likely muddle on without you.
The repeated delays and obvious stalls may very well be buying time while they look around.
But, as noted above, now is not the most advantageous time to lose revenue, particularly if you are US-based as we have less of a safety net -particularly health care- than our EU counterparts.
I'd begin by drumming up other business. If it starts to crowd them out, good, let them know that other higher-paying clients are taking more of your time.
In the end, I think you will part company, one way or the other. I'd document your repeated attempts at discussing the issue, perhaps even this thread, as it will help you show that the fault wasn't yours. In "well protected" businesses departures and what's said after the departures often turn ugly.
@dbcooper - Don't get me wrong. I know i am replaceable, it just would not be easy at first. Whoever does come along needs to learn the industry. I work fully unsupervised and my 'content' work never needs to be reviewed. This is where they would need to put some focus when I leave.
I have come to the basic conclusion that I will be dropping off a letter with my new rates to them sometime in the next 2 weeks (when I am next there at the office).
These rates will reflect the going rate for a webmaster/programmer.
The agreement I will have prepared will set a maximum amount of hours, most likely 80 per calendar month.
Anything over and above that would be charged full hourl rate. They would receive a weekly log of my hours.
Everything is prepaid by the 15th of the preceeding month.
Minimum 3 month commitment.
They may pay 3 months in advance for 5% off.
In November I asked to review it again with them, no meeting. In December I explained to them it was getting serious and they replied that they were putting this as a top priority. Now comes February. Obvious I am not that much of a priority for them in the end.
People, like dogs, can be trained. You have successfully trained them to know that they can continue to put you off, and your production will not stop. Why should they meet? Their deal can only get worse, so they have every incentive to avoid discussing it. If they are intelligent business people as you have stated, then they have constantly been monitoring their expenses and looking for ways to trim them. They have undoubtedly checked to see if they could get web work done cheaper somewhere else, and have decided that you are the best bargain - and a bargain you will continue to be until you force a meeting.
They may pay 3 months in advance for 5% off
Leave this part out of your negotiations, please.
[edited by: MrHard at 4:50 am (utc) on Feb. 28, 2009]
