[thelist] Financial Situation

Martin Burns martin at easyweb.co.uk
Thu Dec 11 18:58:36 CST 2008

On 11 Dec 2008, at 19:34, UIT DEV wrote:

> Absolutely not.  My worth to a client is the same no matter what the
> "economic situation".

>  Anyone who lowers rates is perpetuating a problem within the
> software developer profession where we already give too much advice  
> and work
> away for nothing as it is!

Well yes and no.

I do think that the vast majority of freelancers dramatically  
undercharge (and give away far more than they should), but that's not  
the same as your worth (in economic terms) being the same.

Your worth to a client I'm afraid is bounded at the top end by what  
incremental profit (ie more revenue/less cost) your work will produce  
for them. And right now, the margin between those is being squeezed  
all round. So unless you can produce something that will  
*dramatically* take out costs, your worth is going down. And *every*  
business client knows that they have to cut their costs wherever they  
can; spending less on your services will be no different from anyone  
else. Pretty much every astute client will be trying to negotiate you  
downwards (and I've seen that even at the very top end of the business).

The end result is that you do still increase or hold your rates, but  
in other circumstances, they could have gone up (more).

> Those who do, who will, or who agree - you have to ask yourself this
> question:  Would you INCREASE your rates in times of prosperity?    
> If so,
> isnt that gouging?    I havent seen electricians, plumbers, home
> renovation/repair workers, lawyers or doctors lower their rates yet.

You've not been paying attention then. Pretty much all trades in  
construction are slashing their rates right now, to get work in the  
door. Why? Because - like you, like all service businesses - nearly  
all their costs are fixed costs; it costs the same to be open whether  
or not they're busy. It's usually more viable to keep business coming  
in, even if it's at lower rates, rather than have the team sit idle.

> I take my cue from those professionals.  I will never lower my  
> rates.  If my
> client wants lower rates then they can go elsewhere - outsource to  
> India if
> they want.  And they run the risk of others who have done so -- the  
> quality
> of the work suffers tremendously.

Depends on how you do it, and at least 75% depends on the client's  
approach to it. Given that I'm currently running a 40 person team in  
India, and the quality of what we're producing is actually pretty  
damned good - in some of our projects significantly outstripping teams  
that are local - I think you're operating on hearsay rather than  

> If I have to match those outsourced
> rates then I may as well work at Target or Home Depot  and *not*  
> have the
> level of responsibility that a software developer has.

If what you're doing is simple coding to well documented requirements,  
sure. But the value of a local team is in analysis and design. And  
when you need the level of interactivity when you're literally sitting  
next to your client while coding (if you're in an office on the other  
side of town, you might as well be 6000 miles away).

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