Want to start work as a consultant – what should I watch out for?

[shazam]

I'm potentially going to start work on my first independent consultant job, but I was hoping to hear from others experienced in this area about what to expect in terms of standard agreements.

Do most pay all at the end or can I ask for half upfront? What is a standard rate per hour? Finally, should I agree to this: http://pastebin.com/7m2xBjLg

[tptacek]

Don't bill hourly.

Incorporate.

Never reduce your rate; cut project scope instead.

Every project worth doing is worth writing a statement of work.

A good SOW includes acceptance criteria.

Don't expect to work on your own paper; clients will require you to sign their contracts.

Get a lawyer, have them review every contract you sign. (This is why there are MSAs and SOWs.)

The lawyer advises, they don't decide.

If a lawyer is too expensive, your rates are too low.

Also, your rates are too low.

Don't position yourself based on tech stacks. "Node.js consultant" is a crappy differentiator.

Don't set your rates based on your previous full-time salary. Your rate is barely even related to your salary.

Get health insurance.

Do not fuck around on taxes. You owe them quarterly.

Serious consultancies don't demand up-front payment. Do what you need to until you get serious, though.

Finally: you need a lawyer to evaluate that clause. It could be a boilerplate IP assignment, or it could be a blanket concession that your client can file a difficult-to-dismiss lawsuit against you any time for all time.

If this project isn't worth the $200 that will cost you, it's not worth doing at all.

[yellow_and_gray]

This is useful advice. Thank you.

How important are references or building a portfolio? And what do you tell clients to convince them to pick you and your rates?

[saluki]

I would watch out for . . . prior to or during the term of this Agreement . . . the prior language doesn't sound quite right . . .

I typically work with multiple clients not a single client so I include in my contract that I retain the right use portions of the code provide as a deliverable for previous, current and future clients but will not re-use their code in it's entirety. Typically projects have some portions that are standard and re-used over and over . . . occasionally a client will request I agree not to re-use their business logic specific code and that's fair . . .

I would recommend asking them to change the wording to they only own the code/patents of work developed specifically during working hours for their company and projects and that you hold the rights to any code and IP developed on your own time and all work prior to your agreement. Using a more modern standard agreement would probably be a better starting point . . .and having an attorney review it would be recommended before signing anything.

As far as a rate . . . I would google similar job listings . . . without much knowledge of your position I would expect $100 to $200/hr . . . but I would get the IP agreement worked out at the same time as your salary . . .

[pbnjay]

For small contracts, I usually ask for half up-front and half at delivery. Medium-size might be in thirds with the second payment invoiced when they get the prototype. For large contracts I tend to do monthly payments with a little bit of front-loading (ex: for a 100k project over 6 mos, 20k x 2 months and then 15k x 4 months).

Your hourly rate is entirely dependent on the project, skillset, and experience. A small PHP-only developer cannot command the same rate that a full-stack backend, frontend, and iOS developer might. Delivery timelines also play in - if they want it next week there's a premium.

I'd avoid that agreement, it's overly broad. I try to make mine assign on full payment / completion of project and cover only the work performed for the contract. If I can swing it, I try a non-exclusive license instead of full assignment as well, which allows me to reuse code.

[redtexture]

The contract specifies that any knowlege or work you did prior to the contract that you used to fulfill the contract is owned by the company. This is a method to become impoverished, and have all of your related prior knowledge and work owned by the company, causing you to be unable to do similar work for anyone else. There is no future to any of your knowledge and work related to work you did for the company, except by the permission and whim of the company.

Do not agree to this contract.

  "Consultant agrees that all...conceived, discovered, 
  authored, invented, developed or reduced to practice by 
  Consultant...prior to or during the term of this
  Agreement...and arising out of, or in connection with..."

[MalcolmDiggs]

If I've never worked with the client before I always ask for 50% up front. No exceptions. Once we have a relationship I may lower that, but it's not guaranteed.

Price yourself so that: if that 50% turns out to be the only money you ever receive from them, the job will still have been worth your time.

Keep your clients at arms-length. They are not your friends. Never allow the scope of a project to be changed based on a conversation or a phone call, anything that could get you sued needs to be in writing. Be very strict about this.

[JSeymourATL]

Look up Consulting Guru Alan Weiss, brilliant advice applicable to general consulting, tons of content, sign-up for his e-newsletter> http://www.summitconsulting.com/

Also, suggest reading his recent release on launching a consulting practice> http://www.amazon.com/Million-Dollar-Launch-Kick-start-Succe...

[CyberFonic]

Read: https://news.ycombinator.com/item?id=8395422

You could encounter such problems locally as well. I certainly have. Do not let such issues deter you. Just be aware that not all clients conduct themselves ethically. You need to protect yourself.

[aob]

It would be helpful to know what area you will be consulting in. That will help us to give pointers, suggest rates, and determine if that agreement makes sense for what you will be doing.

For example, that agreement may be ground for a company to claim rights to software you develop on your free time while you are in their pay.

[shazam]

That's what I'm worried about. I'd be acting in a data analysis/software dev role. What can I do to change the language?

[vishalchandra]

1. Well defined tangible deliverables (project requirements) are a must for any fixed cost projects.

2. Either the client prepares the requirements document and you review it or you bill the client to prepare a requirements document.

[subdane]

Search for "consulting agreement" on Docracy, that will get you started https://www.docracy.com/

[shazam]

Thank you. I see that most agreements have the same sort of language about the company maintaining ownership of all work...

[virtue3]

you are being contracted out to perform a service that will be entirely owned by the entity you do the work for.

That's the essence of contracting. It's not really any different than working at a company that also owns everything you do on the companies time.