fees for subcontracting engineers

[tdstructural]

This post spawns from an earlier one but I don't want to take over another post and it is still a different topic.

I'm a licensed PE with 18 years of experience. All of my experience is in structures. I work on the west coast so high seismic is the norm for me. The typical bill rate (+/- $5 or $10 per hour) for structural engineering work in my area of the United States is as follows:

EIT $85/hr
Eng I $125/hr
Eng II $165/hr
Senior Engineer $180/hr
Principal Engineer $210/hr - $250/hr
Senior Principal Engineer $350/hr

I am the subcontractor that the small engineering firms hire when they need immediate short term help. They don't have to hire a full time employee with benefits/tax concerns. My clients occasionally need my expertise but more often than not they just need help for a short period of time.

I received feed back (from an earlier comment on this site) that I wasn't charging enough for my services which is a big problem for me. Not so much because I can't pay my bills but because I think that in general we as engineers tend to 'give away the farm'. I don't want to make it more difficult for engineers and we should be getting paid appropriately considering our liability, education and skills.

I set my fees based on my desire to earn money but also keep my clients profitable. I figured if they have to 'win' the project based on fees they need to bill at the appropriate rate. If the work I am providing is at the EIT level and they need to make money - their bill rate at $85 is more than my bill rate at $75. Therefore we both make money.

But the more I think about this - and having read your posts - I complete my work in less time than an EIT. Therefore, my hourly rate can be higher than their EIT rate and my client still makes money. Plus - if I was their full time employee I would still only cost (with benefits) about $85/hour and they bill me out at $180/hour.

Finally - my questions:

Is it OK to ask for different rates based on the work I'm performing?
I am open to lump sum fees so maybe I should be doing more of that - yes/no?
If you were my client - does my argument above make sense to you or would you drop me as a subcontractor?

I appreciate any and all feedback. Thanks!

 

[IRstuff]

Kind of depends on what you think you are. Are you a PE with 18 yrs of experience? If so, you should charge accordingly, UNLESS you're desperate for work, in which case, you can and should try to be competitive with less experienced engineers to take that work away from them.

TTFN
I can do absolutely anything. I'm an expert!
faq731-376 forum1529

 

[MacGyverS2000]

No one is going to hire me at my current salary to sweep the floor... but if I'm salaried (or on a minimum hour for a project and light on work/hours), you better believe I'll pick up that broom, if asked to.

Just because you're doing the work of the floor sweeper doesn't mean your hourly worth has decreased. I charge at my maximum rate regardless if it's me doing the work. If it makes economical sense to have someone else do the work, then I charge their rate plus overhead. The fact that you're able to accomplish the sweeper's job in half of the time is all the point you need to charging at your max rate, not the floor sweeper's.

If a client wants my quality of work, they pay for it. If they're bidding a project, they know what I cost and will budget accordingly. If another bid comes in less, they may have been able to do so because they used a sub-par engineer in their bid... but that's a problem with the project, not me, and I won't short-change myself so someone else can work without thinking.

Dan - Owner

http://www.Hi-TecDesigns.com

 

[Ron]

tdstructural....now you're thinking!

If you use lump sum pricing, it doesn't give the appearance of working at a lower rate. Further, it doesn't expose your hourly rate to scrutiny by the client. I've had client complain about my hourly rate, so I came back to them with my lump sum (which was my hourly rate x my estimate of time + a small contingency)......no complaint.

There will be times when you can use lump sum pricing and times for hourly rates. Sometimes tough to read the client as to which will work. For very short term projects, lump sum is usually a win-win. For long term, you can't afford to be wrong on the time estimate so hourly will usually work better.

If you give a client a lower rate, they will always expect it.....forever.