Charge-out Rates

For all the black magic voodoo of interpreting geophysical data, the practice of geoscience consulting can be a delightfully straightforward. When figuring out a charge-out rate, professional organizations publish annual fee guidelines depending on the responsibilities of the expected task. The trick is to pick the correct category for the job, and not get confused with the category the person who will be doing the job is capable of fulfilling.

But alas, that’s not everything. A job isn’t just the job; it’s also the overhead (office space, electricity, computers, software…) and the time spent actually finding the work to keep everybody busy. In California, this turns into a rule of thirds — each contribution gets to earn 1/3 of the total, so an employee with a $180 per hour charge-out rate working from the office of a consulting company with bosses who seek out and bid on contracts is only earning a third of the rate: $60 per hour.

The practice does get messier when working as an independent contractor, where full-time work is not guaranteed (and it’s often feast or famine) so the rate needs to amortize over all the days with no work at all. Luckily when subcontracting, it’s not all that unusual for the larger consulting company to accept a charge-out rate in line with the fee guidelines, then tack on a percentile markup (10%-15%) to their clients as their cut for arranging the project.

Of course, if you have specialized skills, or are working in unusual (or remote, or dangerous) environments, or are performing a job that doesn’t fit the fee guideline descriptions, or are otherwise unique at what you do, or are working on a contract as part of a salaried job, or countless other variables the whole system gets a lot more complicated! But hopefully by then, you’ve had enough experience to make your own judgement calls on how to charge for your time.

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3 Responses to Charge-out Rates

  1. get smart says:

    And people with regular jobs please note: out of these rates, freelance journalists have to meet our own bills for tax, National Insurance, days off sick, holidays, pensions, phones, cameras, computers, and internet connections – and we need to eat on all the days we’re doing general research and proposing projects, too.

  2. You can only charge so much when you charge hourly. Eventually, you’ll come to a point where the client says, “No way!” While project rates have a ceiling as well, it’s much higher.

  3. Mika says:

    It also matters what type of contractor you are — if you’re effectively a temporary employee (paid in regular intervals, covered by company insurance) or a fully-independent entity (paid at the end of the project, provide own insurance).

    It’s fascinating to me how many variables influence contractor rates. It’s complex, but the more you think about it, the more it makes sense.

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