Establishing rates
Establishing rates
(OP)
I am courting my first customer. I am going with a hourly rate (I have a rate in mind).
The job is to review their manufacturing process and increase the efficiency. I will renew quarterly. This business is located in Michigan with an annual gross 80-90 million.
Any ideas out there as far as a fair rate for this type of work?
Thanks
The job is to review their manufacturing process and increase the efficiency. I will renew quarterly. This business is located in Michigan with an annual gross 80-90 million.
Any ideas out there as far as a fair rate for this type of work?
Thanks





RE: Establishing rates
David
RE: Establishing rates
To avoid scaring them off, make your fees one tenth of that.
So your cost for the whole project should be 90 million*5%*0.1= Half a million dollars.
There, that was easy.
Cheers
Greg Locock
SIG:Please see FAQ731-376: Eng-Tips.com Forum Policies for tips on how to make the best use of Eng-Tips.
RE: Establishing rates
Not sure what the going rate is in Michigan, but for short term consulting I kind of have a slding scale depending on how much work there is. It's not set in stone and will vary slightly with the client, but my last one went something like this:
• USD $200 per hour for aggregate consultations of 10 hours or less per calendar month
• USD $150 per hour for aggregate consultations of between 10 hours and 40 hours per calendar month
• USD $125 per hour for aggregate consultations of more than 40 hours per calendar month
What you may want to do is set up in your agreement that you get a percentage of any increase in effeciency (i.e. reduction in costs or increase in profits), on a quarterly basis.
Greg Lamberson, BS, MBA
Consultant - Upstream Energy
Website: www.oil-gas-consulting.com
RE: Establishing rates
Jeff
RE: Establishing rates
I am located in Michigan and do mechanical design. I would be willing to contribute to your efforts if you need them
Norb
RE: Establishing rates
Using your 10% of the savings 5% formula, the customer should be getting design drawings and specifications to implement your proposed solution, plus engineering support for construction. 10% is a rough, ballpark estimate of a project engineering cost.
If you are just delivering a report with proposals, you should expect a small fraction of that. If you anticipate receiving the potential design contract, you might want to discount that even further, or credit the proposal fee toward design services.