A colleague who manages a small GIS group for a national non-profit organization wrote me recently with an intriguing request.
"Our GIS program has grown and we are exploring the feasibility of doing GIS-for-hire for partner conservation organizations.While we are pretty clear about what services would likely be needed, and what our workload capabilities are, we know absolutely nothing about how to price GIS services.
"Any guidance you could offer me on this topic would be greatly appreciated."
Although I have owned and run several consulting businesses, the special nature of working as a non-profit for other non-profits is outside my experience.So I turned to the best resource I could think of: the Internet GIS community.After getting permission from my colleague to forward this request, I posted it on GISList, founded by the energetic Glenn Letham, editor of Spatial News (www.spatialnews.com).To obtain valid responses, I promised anonymity.
Answers soon came back from all over the world.They tended to focus on hourly billing rates.These covered a full order of magnitude: $25 to $250 per hour.However, I never supposed that mere numbers would answer the question, because there is so much involved in billing one's work: who you are, who the client is, what kind of work you perform, your evident (or claimed) skill, your experience, local costs of living, what kind of competition you have, and many more things pointed out below.
My experience in a career of consulting for companies of all sizes is that in information technologies, two people with identical qualifications can vary dramatically in efficiency and effectiveness.Some talented people are three times better than you expect, others mystifyingly are three times worse: a factor of nine difference.And these are the people you keep.(I have also seen this factor of three in print, but cannot recollect where.)
It is interesting that the same range-one order of magnitude-describes the variation in both billing rates and effectiveness of consulting labor, but I think that's a bit of a red herring.There's not a real strong correlation between talent and billing rate, as far as I can tell.There is definitely a correlation between marketing capabilities and billing rates.
Enough said about that.Before we get to the responses from GISList, however, let's review the premises of hourly billing rate calculations.
Consultants usually bill their time as a "multiplier" of salary.There are many variations on this formula, but they all work roughly like this.Take your annual income in thousands and divide by two.That, more or less, is your hourly salary cost.The billing rate is the multiplier times the salary cost.
For long-term, low-margin government construction projects, the multiplier will be from 1.9 to 2.1.For example, a $30,000 a year person will cost about $30/2 = $15 an hour and therefore bill at about 1.9 * $15 = $29.This is the very low end.You can't make money with consistently smaller multipliers, because you have to pay various taxes, insurance, overhead, vacations, sick leave, and so on.
The high-end "management" consultants and the like can achieve multipliers of 4, 5, or higher.Take someone with a $100,000 annual salary and multiplier of 5.They will bill out at $100/2 * 5 = $250/hour.It's hard to get this rate for pure GIS work, though.
Governments usually get substantial discounts.The same high-end consultants may have to stoop to a 2.8 or even a 2.5 multiplier.Your $100K guy or gal is now billing at a less stratospheric $125/hour.
Most consultants are quite happy with multipliers in the low to high 3's.If you think your position is worth $35,000 a year, then a 3.5 multiplier would bill your work at about $60 per hour.
In the consulting business we often know our competitors by their multipliers more than by any other aspect of their operations.
One other thing: it is possible to charge based on what you produce, rather than on how long it takes you to do it.But that's getting away from the topic.
All that being said, I think most of us will recognize ourselves somewhere in the responses and will enjoy comparing those rates with what our work is fetching now.
Many thanks to the kind respondents whose contributions are anonymously summarized here.Where I could ascertain their business, I include that information in parentheses.
1. (A consulting engineer, surveyor, and mapper.) "We bill out at 50 [dollars] an hour."
2. (Civil engineering, land surveying, environmental.) "We charge $65/hr for technician work and $75/hr for analyst work."
3. ("Diversified technology" company.) This respondent provided a copy of proposed labor rates for consulting to a state government agency.The rates were broken down by position (application development or cartographer/analyst), level of expertise (junior, journey, senior), rate (regular or overtime), and work location (at consultant's office or client's office).
I can summarize these 24 rates like this.The base hourly rate for either position is $45-50 (junior level, regular rate, at own office).Add 10-15 percent for journey level and 75-100 percent for senior level.Add 5-15 percent for working at client's own office.Overtime is 50 percent more.For example, a journey level person working overtime at the client's office would get about $50 * 1.10 * 1.50 = $80-$85.The rates top out near $90 (regular) and $140 (overtime).
These rates are consistent with rates I have seen in bidding consulting work and in helping clients evaluate competitive bids.They are also quite a bit lower than consulting rates proposed by certain large GIS software vendors who also field application development teams.
4. (Four independent GIS consultants, as reported by one of them.) This respondent listed some of the bases for a consultant to establish prices ("what they want to bring home, and ...what the market will bear.") Your skills and who your client is matter a lot, too.Location influences rates, depending on cost of living.He cited $65 to $150 per hour for "programmers," presumably of the GIS variety.
5. (Drafting, cartography, graphic design, GIS tech.) "Depending on the client, budget and the guarantee of being reimbursed for my services I charge between $25.00 to $35.00/hour.I have been told I should charge more..."
6. (Company not identified.) Note the "should be able tos" in the following, which is nevertheless full of good advice.
"A real good GIS consultant (executive consultant) should be able to demand $250/hour.A decent consultant (senior consultant) should be able to get $150/hr and a starting consultant should request $75/hr.This all depends on the market and the type of work.
"Local governments usually pay less than industry.So a consultant should have a rate schedule for both government and another for industry.If the consultant is targeting nonprofit organizations, he/she should probably reduce their rates by half and have a good mix of nonprofit and industry clients to average out their rates to the local government level.
"Consulting rates also depend on the client.A large metropolitan local government agency will pay more than a small local government client.A small nonprofit can pay more than a large well-funded nonprofit.The better the consultant is known in the area or industry, the more they can charge."
7. (Foreign GIS services company.) Here is a fascinating perspective that may sound familiar even to many in the US:
"I run probably the only GIS services company in [my country].My focus is on services, while my GIS-focused competitors resell software and hardware.We even have to work for competitors when they receive service-based requests.As a pioneer in a field that practically does not exist, I bill clients on the fly.There are no indices or competitors most of the time for them to cross check prices.I have to compete at times with graphic artists (since printed maps are mostly my selling end for now) who do not use hardware, software and expertise as expensive as I use.I still propose core GIS services and applications to clients I identify, and go through very ridiculous financial negotiations with clients who have already identified the benefits and value my work will add to their organisations."
8. (A conservation organization.) Finally, advice from someone actually in the same position as the colleague who asked the original question! As with many not-for-profit organizations, there is evidence of a lot of creativity compensating for limitations on how they may do business.
"Our conservation organization has a GIS lab, the only one within [many] miles.We use it for our projects, but also are asked to do GIS for other groups and some private work.As we are a non-profit, we didn't want to get into retail sales, or even services for hire.(Too complicated tax-wise, and may endanger our non-profit status)
"What we came up with is letting the GIS Analyst rent the lab to do GIS support service as a business.S/He then donates a percentage to the GIS program of our organization.
"This helps keep our lab running and provides a way to help other organizations.Other non-profit groups get a reduced rate ($40/hr standard, $30/hr for non-profit).It also helps our GIS Analyst get wide experience and an income to supplement what we can pay."