rate for assisting over phone 2

[byrdj]

I would like some opinions, discussion, on how to determine a rate for providing guidance via telephone/email.

A little background. I am a Field Service Engineer for Power Generation equipment (turbine generator controls). A normal assignment would involve travel to site and several days while observing problem, then corrections, then verification. For the past 30 years, solving a problem over the phone was not a big concern since I was working for a company. Now I am working for myself, I can see the opportunity becoming more available, but see it as a grave loss of income.

A recent example would be to assist with the upgrade of a control system. Customer A requested me on site to be available during commission and thus about 80 hours billing in 7 days. During the period, several problems were identified and corrected. Customer B called yesterday during a similar commission and the problems that were solved were the same as those I corrected for customer A. Customer B’s billing was only 1 hour.

I recall once, my company billed a customer 24 hours for a similar phone call and the customer now has banned ME for their site.

BTW, my billing rate is only 50% of what my companies charged, thus I feel the onsite work is already heavily discounted.

Thanks for any comments

 

[GregLocock]

"the customer now has banned ME for their site." what does that mean?

You either charge by the hour or you charge for solutions. Your call.

A cynic might observe that if you know the answer already the latter makes more sense.

Cheers

Greg Locock

SIGlease see FAQ731-376 for tips on how to make the best use of Eng-Tips.

 

[byrdj]

"the customer now has banned ME from(sp) their site." what does that mean

while my self and the office felt due to to detail in which the phone assist envolved, that 24 hours was a fair charge. about 3 hours on the phone over three days of repairs. However, I latter learned when I called the customer months latter to see how things were going, he felt the charge was outragous and would not have me assist them again.

my antecdote is that when CP Steinmetz retired, he was called to assist with a new generator. Steinmetz listen to the unit run and gave instructions where to make the repairs by placing chalk marks on the stator. When the accountants got the $1000 invoice, they demanded a detail list of the charges. the reply was
placing chalk marks $1
knowing where to place marks $999

this phone call was the first work related contact I have had with this customer since going on my own. while I feel the value of the advice I gave them was worth the cost of a trip to site, I do not want to scare off making calls for non crital information which could lead to future on site work.

my hour on the phone did save at least 350MW X 12hours lost generation.

for this event the invoice has been submitted.

 

[GregLocock]

Ah ok, I thought ME might have meant something different.



Cheers

Greg Locock

SIGlease see FAQ731-376 for tips on how to make the best use of Eng-Tips.

 

[tygerdawg]

This is a trap consultants and freelancers fall into regularly. Your time is your time, regardless of the medium of communication for delivery of knowledge & expertise. Don't give it away for anything.

I modelled my response to this situation on the "on-call technician" policy of a previous 24x7 manufacturing plant employer. If a tech was called in the middle of the night to fix something, he was obligated to come in. But he also got a minimum of four hours' overtime pay. Everybody had an incentive for something, whether it be getting out of bed or really really REALLY needing to call that tech in.

Your failure was not to properly inform the potential customer of this, and to discuss charges in the event of a phone call. And of course they think "I'll just call him up" is a way of getting free advice and information.

I left a company abruptly once, and refused to burn the bridges behind me. I had exclusive knowledge of a machine and process for a critical customer. I had no intention of putting the company in bad situation, so I arranged a deal with them. I told them to have "Joe" call me whenever he needed help, and I would accumulate the phone time in blocks of 15 minutes minimum and send them an invoice monthly at my normal rates. They agreed, and I got it in writing. It all worked out.

TygerDawg
Blue Technik LLC
Virtuoso Robotics Engineering

http://www.bluetechnik.com

 

[zdas04]

I do this all the time. If I spend an hour on the phone, I charge an hour. If I spend an hour responding to an e-mail I charge an hour.

When I start feeling taken advantage of, I don't answer my phone when that particular person calls (caller ID is wonderful). I'll let it go to voice mail and reply the next day. If they ask why it took so long to reply, I just say that I was tied up. If someone asks me to be near a phone during a specified time period, I always say "I can do that, but that standby time is keeping me from billable work and I'll have to bill you for it". They either say yes or no.

In your practice, dealing with start-ups and turnarounds, I would expect this technique to be very effective. A start-up that is delayed 24 hours waiting on an Engineer would be a bit expensive. I don't think you would have to slow-play them very many times to get them to pay you to stand around on site.

One issue that some clients have is paying for travel time. I always say that if I'm on an airplane going to their job I'm not able to do work for other clients so if you want me at your site you'll pay travel time (and a "recovery day" on both ends of international travel). One client stopped using me because of this, a couple have complained but then paid, most see my point.

Your technique of billing them 24 hours for a 1 hour phone call is certain to cause hard feelings. Some may reject the invoice. Some may grudgingly pay it. No one will like it or believe that it is reasonable. The only way I would ever do it is a hard dollar bid. For example, they ask you to standby for a start-up and you say (up front), "I can do that for $2500" and they'll either say yes or no. If they say yes then there won't be any hard feelings, but then you had better pick up their call on the first ring (call forward to your cell when you go to the bathroom).

David Simpson, PE
MuleShoe Engineering

http://www.muleshoe-eng.com

Please see FAQ731-376 for tips on how to make the best use of Eng-Tips Fora.

"Life is nature's way of preserving meat" The Master on Dr. Who

 

[Ron]

You might start establishing a minimum consultation fee. Even if you only spend an hour, if the value of your consultation is high, you can charge more than an hourly rate and they'll feel OK with it.

As zdas04 stated, you can charge hour for hour, whether phone, email or other form of contact. We often get asked if we charge the same rate for travel that we charge for on-site time....yes...time is time and time is money.

 

[csd72]

Personally I feel that charging 24 hours for a one hour phone call is pushing it up too far. But I do agree that you have a case for charging more than the 1 hour.

This reminds me of a conversation I had in an interview once about the perils of charging by the hour - the more efficient you get the less you charge per job!

 

[dogtop]

One option is charging by the minute. Say, 1 min = $6 US Dollars.

HTH

 

[desnov74]

Since you are a service engineer, why not provide a service contract that would include phone/email tech support, on-site support, and mabey some preventative maintenance consulting. You could even set up a remote desktop and do some monitoring and trending?

 

[GTstartup]

I would do it this way,

Phone call that may result in future business - Free
Short call from major client - Free.
All others - Minimum billing 4 hours.

If you send an invoice and it gets rejected, then no more calls accepted unless it falls into category one.

 

[zdas04]

GTstartup,
Not a bad approach. If you had the four hour minimum in your rate sheet, then you could chose where to apply it. Some will see it and reject the company, others will see it and accept it. Either way, everyone knows up front and the biggest problem folks have with invoices is suprises. I've seen folks pay a million dollar invoice without blinking and fuss about whether someone really had their $35/day pickup on the job last Thursday. The key difference is managed expectations. If you word the minimum as "Billing will be on a half-hour basis with the minumum billing for a calendar month 4 hours" then 1 phone call is 4 hours, 9 phone calls is 4.5 hours.

David

 

[stanford94]

"............If you word the minimum as "Billing will be on a half-hour basis with the minumum billing for a calendar month 4 hours" then 1 phone call is 4 hours, 9 phone calls is 4.5 hours."

zdas, can you clarify this a bit.

 

[zdas04]

"A half-hour basis" means that you bill in 1/2 hour increments. 0+ to 30 min is 1/2 hour. 30+ to 60 min is 1 hour etc. The bit about 4 hours says that the minumum charge for the month is 4 hours so if you have 1-8 phone calls less than 30 minutes the charge is 4 hours. If you have 9+ calls then you charge at least 1/2 hour per call.

Did that clear it up any?

David

 

[byrdj]

thanks for all the replies.

A policy like GTStartup mentions sounds like the approach I will take

Phone call that may result in future business - Free
Short call from major client - Free.
All others - Minimum billing 4 hours.

for me, the definition of major client would be one where I have been onsite during the last two years.
and the minimun billing of 4 hours per day

I just heard from the site that was reason for this question and they agreed the above policy would be good for them.

 

[ajack1]

Transparency is all important here. If you know what you are going to get charged then it is your choice if you take it or leave it, to charge 24 hours for one hour is just robbery in my opinion.

Whilst I can fully understand a minimum charge even four hours seems excessive to me. For example I am dealing with a patent attorney who charges out at £200/ hour in 30 minute blocks. If every time I needed fifteen minutes on the phone it cost £800 I would be looking else where.

Perhaps money is easier come by to other people.

 

[GTstartup]

Ajack1,

If you had a client that asked you to come to site to fix a problem and when you got there you saw immediately that there was a doohicky installed upside down. Would you be happy if they said "well thanks a lot, here's your ten minutes worth of pay". I would assume not.

There's no difference with a phone call (Ok no travel). I am not saying that every 5 minute call should be charged 4 hours, but at least you should have the option to charge or not to charge, use common sense. Not charging when you could have, also goes a long way.

4 hours minimum. Use wisely.

What some people don't realise is that two or three 20 minute calls can take up your whole day. Let's say that a client calls you and says "we are going to turn on this motor at 11.30am, we will call you if there is a problem". Now you have to wait and if he calls, you might have to say "do this and call me back" now you are waiting for an hour an so on. Ok, so maybe the calls add up to 1 or two hours but your whole day is shot.

 

[byrdj]

GTStarup has the concept of the type of service I'm envolved with.

just to clear up, the 24 hour charge for phone assistance was for a round the clock trouble shooting and repair effort over a 3 day period. I would estaimated the total phone time was less than 3 hours. ie 20 minute of discussion with instruction, wait 4 to 8 hours for a reply, continued till repair completed

If they wanted to wait a day, the same information and direction they got over the phone would have been 16 hours travel, 24st and 24ot with me standing around ( which is the normal FSE service)

 

[photoengineer]

Byrdj,

Whether the client likes it or not, if you were sitting around on-call 24 hours a day for 3 days, it's probably not unreasonable to charge them 24 hours. If they don't like it, I suppose they can find someone else to work with in the future (good luck).

At my employer, I frequently am in our factory sitting around waiting for my turn to come up. It only takes me 20 minutes to do my part, but I might have to wait 8 hours for my turn to come up. They pay me for the entire time I'm there, not just the 20 minutes I worked.

One alternative you can do in the future is charge two rates. One is on call time (say 1/4 or 1/2 your regular rate) for the entire 72 hours and the your full rate for each 20 minute phone call. You can work the numbers so you come out the same in the end, but the customer doesn't feel ripped off.

 

[kepharda]

I think you need to take a measure of your client.

If this is a company that has been a good client and you have worked for them repeatedly in the last few year(s) and they call up and tie me up for an hour, I might only charge then 1-1.5 hours.

But, I know everytime a field a technical phone call my work, plus the distraction is usually 2x. Meaning it takes away from whatever else I am doing and it takes a little while to get back into that.

So for a company that hasn't been a consistant or good client I would anything over a 15 min conversation would probably result in a minimum of 2 hour charge. And that is another issue is the rate.

We have several rates for Engineers. There is the rate we quote you for a large project, say over $100,000 and there is a rate for midsized stuff, say over $50,000. Then their is the out of the blue, but I need you right now rate (Emergency Tech Assistance Rate).

That number is $130/hr (US) for sketchy clients. For good clients (or ones we want) it is $100. Hours outside of 7-6 M-F is time and a half.

I agree with most people here that the most anger comes from surprises, I know it is hard when someone is on the other line and panicked because things are not going well, but send them an email detailing your "Emergency Technical Assistance Rates" and follow up to ensure they read it.

this message has been approved for citizen to elect kepharda 2008