Contractor in Republic of Ireland

PiotrIr

I work for one company as full time employee with quite good salary. Unfortunately during recession business is not going well so it may be closed soon.

Today I meet manager of one company with 150 users, who gave me kind of offer which I need to think about. Basically as self employer I would move their systems to cloud and provide support what will take around one year. After this period I will support only users and develop my business to provide similar services for other companies.

My problem is, he hasn’t given me any financial details and asked to calculate everything instead. As I don’t have experience I would like to ask you about advice:

1. What is market price for this kind of service?
2. What should I consider when open own business in ROI.
3. How to cut taxes
4. What should be included in contract to make sure I’m not left only with costs (maybe example of such)
5. Any other things which I would need to think about?

Thank you

MiikeB

If you really want to go down this road I would discuss with him doing a cost + fixed fee contract.

Basically he pays for all the equipment you need to provide him the services he wants as well as a fixed fee for the year which would be your salary. After the first year he would only be responsible for the fixed fee.

Forsaken_GA

If you go the fixed fee route, make certain you get paid up front. Get at least half the fee up front, with the other half due in something like 30 days. If he misses a payment, stop working. Under no circumstances do you accept a contract that stipulates you get paid at the completion of the work. Having accounts receivable as an independent contractor is a bad idea, unless you're financially secure enough to be able to eat the loss.

If he wants you to calculate everything (price it out, get quotes, etc), then you have a couple options.

If you've already got enough information to be able to piece that together (quotes from vendors if necessary, costs of materials, etc), great. Provide him with a quote as to what it will cost in terms of hardware and software, plus what your fee is to actually perform the migration. However, this method is predicated that he can provide you with enough information about what systems he has, and what the business needs are. Without that information, you can't properly make a recommendation. You absolutely must be crystal clear on what the present situation is, and what he wants it migrated to.

If he doesn't have enough information for you to be able to start planning a migration and get quotes, then you're going to have to go figure that out for yourself, and that situation I would run as a separate contract, since you've basically got to audit his business, and advise him on what the needs of the business are. Quote a separate fee for that (your time is valuable, do NOT work for free, once you've done that, you'll have a devil of a time getting your market value out of a company), and then once that's complete, you can do the assessment and present a proposal for the migration.

If you're going to do this, it absolutely must be a collaborative effort. If he's expecting to just **** everything on you and then write a check or two, I'd be wary. If you're comfortable with that situation, however, make sure to capitalize on it. If you're taking on added responsibility, make sure to get compensated for it.

As far as costs go, when I work contracts, I quote my fee up front and then stipulate that I expect to be reimbursed for reasonable costs. If I have to travel, I expect them to pay for the travel costs plus lodging while I'm on site (and you have to keep it reasonable - you don't charge the client for first class airfare unless they've said they're willing to pay for it, or a 5 star hotel penthouse suite. The more you keep your costs modest and reasonable, the more likely they are to just be paid without any sort of argument). Some folks like to include a per diem for their meals in their costs. I personally do not, as I have to eat whether I'm on site or at home, and I can afford to feed myself.

When I'm quoting a fee, I look at the project as an entirety and state what I'm willing to do the work for. Do not undersell yourself, especially your first time out. Chances are, you're going to underestimate the amount of time and effort it will take to bring this out, and you don't want to quote say $50k (pulling random numbers out of the air for example purposes) for what you think will be a six month project, that ends up becoming an 18 month monkey around your neck. It all depends on the type of work. If all I'm doing is migrating 150 users from an internal Exchange infrastructure to a cloud email/calendering solution, that's a pretty quick project, and a pretty low fee. If I'm going to migrate an entire infrastructure of hardware and all the services running on them to a cloud infrastructure, like say Amazon EC instances, and be expected to actually support and train users over the course of a year, that's going to be a six figure fee, easily, and there's going to be a limitation on the number of hours I'm willing to support the users (I will, of course, provide the option to refresh the support hours pool... for an additional fee. This approach keeps them from contacting you needlessly, as your support hours become a limited commodity rather than something they do on an idle whim)

Be very careful to define the scope of what your work will entail, as scope creep invariably happens in the course of a contract. When your scope is requested to be expanded, it's going to be a judgement call. For myself, if it's something small that can be added in without too much effort, or it's something that should have been obvious in retrospect, I'll usually assume it without any issue. If I'm requested to do work that is waay out of scope of the original proposal, I'll tell them I'm happy to do it, but it will require a separate proposal with a separate fee. In your case, this is something that I would be *very* careful to define ahead of time, since you mention continuing support for the users. Support is a sufficiently generic term that, if not defined ahead of time, can quickly make the work less worthwhile than it might otherwise have been.

Market rate and tax issues, I can't speak on, as market rate differs from area to area, and I have no knowledge of going rates in the Irish market. The only advice I can give you is to seek out others doing the same type of work and get an idea of what rates they charge. I have no idea of Irish tax law, so again, I can't give any advice, nor would I seek to, even in my local market, I always refer folks to an accountant or a tax attorney when it comes to those matters, and I'd recommend the same to you. Taking the advice of people you don't know from the internet who are not professionals in those areas is a bad idea.

PiotrIr

Thank you very much for excellent advices.

As I don’t know how long it will take because they have huge mess in their logical and physical infrastructure, first I have to prepare project plan. Of course there is also support part of my work so I will probably decide to go with daily rate and estimate time for 1 year with extension option.
I just wonder what daily rate for this kind of service is and what additional costs (apart of obvious), if any, do I need to calculate to don’t miss something important.

xbuzz

Wow, nice post Forsaken.

Forsaken_GA

PiotrIr wrote: »

Thank you very much for excellent advices.

As I don’t know how long it will take because they have huge mess in their logical and physical infrastructure, first I have to prepare project plan. Of course there is also support part of my work so I will probably decide to go with daily rate and estimate time for 1 year with extension option.
I just wonder what daily rate for this kind of service is and what additional costs (apart of obvious), if any, do I need to calculate to don’t miss something important.

It sounds like you don't know the scope of the project, and like I said, if they can't tell you... run that audit/evaluation as a separate contract, and quote that fee up front. That way if they decide they don't like your price for the migration and decide to go with someone else (but still use the audit you've performed) you haven't given your services away for free.

I personally dislike hourly rates. They bind me unnecessarily to a project. I would much rather quote a fee up front and get paid up front. Hourly rates encourage the contractor to be less efficient. For example, if I'm doing what I would charge six figures for a migration, and it would normally take a year, but I'm good enough to finish it in six months, what have I accomplished? By being good at my job and efficient, I actually have the potential to cost myself some money. Not a smart business move.

In your case what I would is run three separate proposals/contracts. The first, as I said, for the evaluation. The second, for the migration. Make these projects fixed fees. For the continued support, that would be ok to put an hourly rate on, since you've got no idea of what the support needs will entail. However, what I would sincerely recommend is that instead of offering to provide support, recommend to the owner that you spend that time training one of their employees to provide the support instead of it going outside to you. This adds value to the company, and keeps you from getting stuck with a long term monkey on your back. This is, of course, assuming you want to make a career out of contracting/consulting. Getting stuck with long term commitments vs. getting return customers is tricky to balance. If you're going to maintain a full time job and just do a little contracting on the side, then having the long term commitment isn't necessarily a bad thing, just be aware that at some point, the guys you're supporting as a contractor *will* have an issue that would interfere with your full time job and you'll have to make a choice, or indulge in a little dishonesty by working for someone else on your regular employers dime.

In all honesty, if I couldn't get them to go for the training idea in place of continuing support, I'd sub-contract the support role out.

PiotrIr

Forsaken,

That is very good point. Thank you so much – I need to think now how to develop my carrier for longer term.
Only thing is, when all businesses will be migrated to cloud, what will be my job?

Best Regards