Quoting and providing rates 2

[Wiseel]

Hi all,

I'm currently planning my start-up as a sole proprietor structural design engineer. I have a query about quotes and rates and wonder if anyone could help with your own experiences and opinions?

So, I've calculated my start-up costs and regular outgoings, including paying myself a basic salary. I've calculated hourly rates for the services I will offer which I am happy with, and think are reasonable. I worked them out based mainly on a combination of hourly rates from other engineering contractors (albeit other disciplines so not directly comparable) and from fixed price quotes from other designers who would be future competitors (although not knowing how many hours they had considered in their quotes for various jobs).

My question is about quoting jobs and whether or not to disclose my rates, or to try and keep them under wraps. For example, for some clients which I will be doing design jobs, I would quote a fixed price for a design, which is fine, no disclosure of rates required. However, what I'm wondering is how to go about it for other clients for whom I will be doing more site-based work, such as site visits and inspections etc, as this could be ongoing work where it would be more difficult to allocate expected hours in advance of a project starting. So I see here the benefit/necessity of providing rates and charging against them on a monthly basis. Or maybe the way to do this would be to provide a quote based on expected hours on such a job, but then provide rates for extra work above and beyond that quoted?

Could anyone offer advice as to how they quote for ongoing and variable jobs and whether anyone has any issues with disclosing rates? Is it a problem? I suppose, the risk is that my rates end up in the hands of a competitor and they could possibly use them to guess my price and undercut me. But how else would you quote for ongoing or variable jobs?

I should mention that it's most likely that fixed price jobs and ongoing jobs would be for different clients anyway, so maybe the risk isn't too great, but is enough to make me question it.

Any help would be appreciated,

Thanks

 

[rowingengineer]

I always include my rate in every quote even if fixed price. I see no reason to hide it.

http://www.nceng.com.au/

"Programming today is a race between software engineers striving to build bigger and better idiot-proof programs, and the Universe trying to produce bigger and better idiots. So far, the Universe is winning."

 

[NorthCivil]

You are going to hang your own shingle. Do you have any experience pricing jobs and putting together fee estimates at your previous employer?

I always include the hourly rate with the quote noting any work additional to the services listed below, based on the drawings titled X and dated Y will be billed at X per hour

 

[dauwerda]

Coming from a heavy industrial background, I am used to seeing most clients request and require the billing rates for anyone that will be working on the job to be submitted with the quote. I have never seen it be an issue.

 

[glass99]

Hourly rates are usually set by the market less so than your calculation of what they should be. Proposals usually have hourly rates for additional services.

Also a note of caution about calculating rates: its very easy to miss costs. For example, you don't know what your utilization will be, and your E+O will go up over time quite substantially.

 

[Wiseel]

Thanks for taking the time to respond all, sounds like a clear consensus.

I have experience in estimating and preparing quotes for my previous employer, however, the company was a contractor, I'll be setting up as a design-only consultancy.

What strikes me is that vast majority of contractors I've worked with have provided rates with their quotes for various site services, whereas I've never actually seen rates from any of 3 or 4 other designer companies I've worked with over the years (who would be directly comparable to my own start-up company).

Could I ask, for clarity, whether you guys are contractors or design-only consultants?

 

[gte447f]

I am an engineering design consultant. In my experience, whether I quote lump sum fees or hourly rates is usually determined by client preference, although I may try to steer them one way or the other with varying degrees of success. Either way, you need to determine your own hourly rates and be prepared to provide them at times. I see no reason to try to keep them a secret from your clients. Your competitors, that's maybe a different story, although, it is usually pretty common knowledge among engineers what the going rates in the area are.

 

[MotorCity]

I would not disclose my hourly rates because it would give competitors an advantage if they know how you priced jobs. Provide a lump sum, take it or leave it.

 

[TheDW]

I'm a design consultant.

We show lump sum fees for designs, and hourly CA with our rates shown. We also have a flat fee for site visits equal to about 3 hours of our billable rate, and show office work after site visits as hourly, unless its design-intensive enough to warrant a lump sum proposal.

 

[Wiseel]

Thanks for the advice all