How to set rate for first-ever independent tech consulting gig

Apr 11, 2021 3 Comments

A company just reached out to me for consulting help based on some of my online portfolio. I’m interesting in getting into independent consulting, but I’m at a loss how to ramp up and look professional really quickly. I’d really appreciate anyone’s advice on:

- how to set rates (particularly outside of my own industry) in terms of amount (per project? billable hours? Long term duration?)
- how to invoice / accept payment
- the pros/cons of setting up an LLC (if any)
- any major legal or tax concerns I should have (this is also an out of state company)

Thank you all for any thoughts you have!

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TOP 3 Comments
  • take your TC / 2000 * 1.5. That should give you your hourly rate.

    Bill time and materials (aka hourly) unless you really have a high level of confidence in your ability to walk into an org, understand all the bullshit you’ll deal with that will slow you down, to then calculate a project rate. If you go project rate, calculate how long you’ll think it will take, multiply that by your hourly rate, mark that down as your project rate. Add a line item in your invoice for 20% additional to cover variance / scope creep / unknowns.

    Invoice using gusto. Super easy.

    You’ll almost certainly need an LLC if you’re planning on doing this for any length. Many companies will require it, along with general liability and E&O insurance (errors and omissions). Those are the cons. The pros are your ability to expense everything. New laptop. iPads. Some percentage of your mortgage and phone bill and the like. I’ve had cars through Llc’s. Most of my travel can be written off ... want to go visit a buddy in Austin? Attend an event there for one night and you write off the trip. Or maybe you’re meeting with him to possibly recruit him. Or check out his company to see if they could be a good fit. As long as you have a reasonable business justification for the write off (contrived or real) - write off. Learn to play the game. Write offs are your friend.

    Check with your state and your clients states. *most* states tax you if you do the work there. So if you’re in your home state, you’ll pay taxes there. Some states will tax you if the company that you are doing work for is based in their state (looking at you CA). Almost all cases will be you pay taxes where you live, provided the work is being done there.

    No major legal concerns. Pretty straight forward.

    Website optional. I’ve landed large gigs with no website. With a wix website. With a homemade one ripped off from another consulting firm who I thought had a nice website.
    Apr 11, 2021 1
  • Following. About to embark on the same journey...
    Apr 11, 2021 0