Establishing Rates - Protect Yourself

[Tom Johnson <johnsont -at- STARCUTTER -dot- COM>]

One frequent topic on this list is setting rates for contract work. I've
been a firm believer in a free-market approach. I think I still am, but we
had an unfortunate incident with a company we contracted for a translation
project. In short, they have failed miserably in meeting deadlines. Now we
are looking at the prospect of hiring another company to start from scratch
for a portion of the project. After talking with an attorney, I found out
we could hold the first company liable for whatever additional costs to get
the project finished. That got me thinking about what my liability would be
if I were working on a project and some unforseen crisis put me weeks or
months behind schedule. Any disparity between what I was charging and what
someone else would charge to finish the project could really come back to
haunt me.

For instance, imagine charged $1000 for a project. My bid was intentionally
low because I wanted to get the experience and get my name known. Halfway
through I got in a bind and couldn't finish my job. I let the client know
and they hired someone else to finish the job. This person, who may have
previously bid on the job, charges $2000. Their initial bid may have been
$1500, but they added 33% because it is now a rush job. Now, I would be
liable for the extra $1000 because I told the client they could get the job
done for $1000. If my original bid were for $1400, I would only be liable
for $600.

So, if I get into the contractor market, I'll be setting my rates with this
is mind. I don't want to underbid by too much. Stuff does happen. By the
way, I really do believe there were some very extenuating circumstances
that caused our translation company to drop the ball. It still is hard to
get our customer to understand why we're late delivering the translated
manuals. We had a substantial buffer of "contingency time" built into our
contract with the translators, but we've burned that up and then some.

Tom Johnson
Elk Rapids, Michigan - On the freshwater coast

johnsont -at- starcutter -dot- com     work
thomasj -at- freeway -dot- net          personal

PS Does anybody know Portuguese? :)


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