[bdunn]

I am in a VERY low-tech, slightly rural area where the median income is somewhere north of $30k a year. In no way does that affect my pricing, and I charge more than most Bay Area consultants.

My method is pretty simple: understand the client's business, get to the root of why they're thinking they need Project X, and then only proposing solutions that have a high likelihood to return a positive investment (this sometimes means having hotly debated arguments with said clients.) In short, in no way do I position myself as "tell me what you want and I'll build it."

The end result has been positive growth and ROI for my clients, which makes my hourly rate immaterial if the product I deliver yields steep dividends.

[patio11]

Like Brennan, I live in a VERY slow-tech, more-than-slightly rural area. That isn't my pricing anchor, though.

Suffice it to say that I was charging a rate many American engineers my age would have been (too) happy to take when I started out, and my most recent rate is 7.5X that, and in a few months I'll be putting 10X on proposals and winning a similar percentage of them.

Lawyers who made their last client millions attributable to a two week engagement probably do better than me, but the typical lawyer working for my clients didn't do that recently, so without knowing anything about their rate card I'm going to assume it's below mine.

We're really not just blowing smoke here.

[Silhouette]

Thanks (to both of you) for the replies.

We're really not just blowing smoke here.

I'm not claiming you are. On the contrary, I agree your argument, under the right conditions. However, I am concerned that you are generalising way, way too much and you're setting up a lot of naive but entrepreneurial young developers for a nasty reality check.

Here in the UK, the vast majority of freelance/contract work isn't the kind of lucrative consultancy gig that various HN regulars seem to be arguing everyone should move towards. Obviously there is a significant amount of high-end consultancy work around, but mostly the freelance market is more about having a flexible workforce, where local businesses can bring in extra resources on demand without the overheads of full employment and freelancers retain a lot more flexibility than full-time employees working for a single employer. The freelancers are often still working with others, it's just for a specific project and with arm's length management etc.

Now, please consider that there is usually no way for someone in that position to demonstrate the kind of direct value contribution that is the basis for your arguments to clients that much higher rates are justified. If nothing else, it may be impossible to properly separate the value of contributions from different contractors working on the same project.

Moreover, it's all very well arguing that your contribution has raised £X for the client (for some impressively large X) and so you are worth a significant chunk of that £X in fees, but this relies on the fact that the client can't buy a contribution of equal worth to them for a lower price elsewhere. There are numerous highly skilled freelancers who by their nature are always looking for the next job, and unless some sort of mass unionisation happens or you're talking about an extremely specific niche where literally only a tiny number of consultants could do the job at all, you simply aren't going to be competitive at 10x the going rate. Sure, maybe you're worth it, but that still doesn't help if any of 20 other people with a similar skill set is willing to do the job to a similar standard but for only 2x the going rate.

So while I have no objection to pointing out that developing valuable skills and then pitching yourself as a consultant in a certain field can be extremely lucrative relative to being a freelance code monkey, I do think it's misleading at best to suggest that all, or even most, freelance software developers can just put their rates up rapidly and change themselves into consultants in the way that worked for you guys (and to some extent for me, I suppose). The strategy doesn't scale to the freelance software development industry as a whole, and in many cases it would never work if individuals tried to do it alone without taking the relevant part of their profession along with them en masse. Even if it did, it would probably mean doing a very different job and potentially giving up some of the benefits or choices that motivate many people to turn to freelancing in the first place.

[sedev]

"Moreover, it's all very well arguing that your contribution has raised £X for the client (for some impressively large X) and so you are worth a significant chunk of that £X in fees, but this relies on the fact that the client can't buy a contribution of equal worth to them for a lower price elsewhere. There are numerous highly skilled freelancers who by their nature are always looking for the next job, and [...] you simply aren't going to be competitive at 10x the going rate. Sure, maybe you're worth it, but that still doesn't help if any of 20 other people with a similar skill set is willing to do the job to a similar standard but for only 2x the going rate."

This is why Mr. McKenzie is forever telling people "don't be a commodity." You are describing competition among commodity programmers. Don't be a commodity. You can - and I am paraphrasing him here - take yourself almost entirely out of the "commodity programmer" pool by a number of simple changes, such as not calling yourself a programmer, quantifying the business value you're adding, and negotiating confidently (part of which is not anchoring the price of your work to the price of commodity work).

You have more power than you think to stop being an interchangeable part. Being an interchangeable part sucks, you're right! Mr. McKenzie is trying to point out to you that you can stop.

[Silhouette]

This is why Mr. McKenzie is forever telling people "don't be a commodity."

I've never noticed Patrick himself use that exact phrase, so I'm a little wary of putting words into his mouth here, but let's consider your point in isolation.

The basic principle here is that in order not to be that kind of commodity programmer, you must have some combination of skills, knowledge and resources available that is both rare and valuable.

Programming is hardly an esoteric skill set, and neither is being able to speak "business" to business people. Do these skills have value? Absolutely, often a great deal of it. And sure, not everyone in software development is a great developer, and not everyone in software development is good at communicating with non-technical people who play other roles in the wider organisation. But for the argument to work in more than a handful of exceptional cases, it doesn't need "not everyone" to have those skills, it needs "almost no-one" to have those skills. If what you offer isn't rare, chances are you're offering a commodity service whether you realise it or not.

In reality, there are many, many people out there with the technical and communication skills to make the kinds of high-value contribution that Patrick and co talk about. Many people do it all the time, whether as freelancers or employees. And while a lot of those people would have difficulty formally quantifying the value they offer, not least because they might be working as part of a team whose results are only measured in aggregate, I don't think the real problem is a lack of recognition from smart management (those wonderful people that consultants like to call "good clients") of the contributions made. That is usually only a factor if you're working for someone who really is a bad employer/client, in which case there are many employers/clients you could work with instead who would acknowledge your contribution more honestly.

But even in a positive environment, it is not easy to stand out and change how you are viewed. You can't just raise your rates dramatically above most other people's rates if you're working in a competitive market, which freelance/contract software development certainly is. So you have to create a new market, where the rules are different. But at that point, you're not really doing anything like freelance/contract work any more, you're building a complete new business, with all the pros and cons that come with that.

Now, I don't think anyone would disagree that running your own independent business is by far the most lucrative way to make money in a field like software development. I certainly wouldn't, and on HN of all places I don't have to tell anyone about the potential returns of entrepreneurialism. All I'm saying is that it's a completely different job to being a freelancer/contractor who happens to charge much higher rates and put "Senior Consultant" on their business card, and I dispute any general claim that the transition is necessarily either possible or in the best interests of most people who work successfully as freelance contractors today.

[infinite8s]

Not in this post, but a quick search on HN shows patio11 saying that ("don't be a commodity") many times:

http://news.ycombinator.com/item?id=3261769

http://news.ycombinator.com/item?id=4555558

http://news.ycombinator.com/item?id=4556091

Those are only the most recent.