On a related note, though orthogonal note, never assume anything overly logical about the customer's math. A lot of pricing issues come down to something psychological or presentation-related, rather than objective and quantitative.<p>I long ago noticed--as many consultants know--that there is only so high that hourly rates can go for an individual or a very small company, and it's not really that high. Beyond that, people start googling their eyes, making incredulous expressions and hyperventilating. They have a certain metric in their head of how much a glorified typist like yourself should be making, and if you exceed that metric, they start comparing your contract rate to (1) their own salary (which is obviously fallacious, since they are not contractors) or (2) other contract rates they've been exposed to lately, like when they tried to offshore the project they are now trying to get you to rescue after it flamed out spectacularly (<a href="http://en.wikipedia.org/wiki/Recency_effect#Recency_effect" rel="nofollow">http://en.wikipedia.org/wiki/Recency_effect#Recency_effect</a>), and (3) the billing rates of their attorneys and accountants.<p>"Obviously," in their mind, you can't be charging as much as attorneys and accountants. You're in a different sociological category from people whose very profession has always been defined by high costs and high-rolling swagger in popular imagination; you're just some kind of computer guy. And if you're charging 8x what the folks in Bangladesh quoted for a team of 10, are you really worth it? And $250/hr? Good heavens, that's almost 8x the ~$34/hr I make on my $70k salary as the lead IT guy! Who do you think you are?<p>The point is, once the impressive-sounding hourly rate has grabbed people by their egos, you aren't going to be able to re-center them and capture pricing based on value. You've lost to the dark side of dick size contests and pissing matches, and as often as not, you're up against some relatively pedestrian actor who is determined to put you in your place, not a key fiduciary stakeholder and/or decision-maker. There's really no way to recover from that nosedive.<p>So, in practical terms, you can't really get beyond $100-$200/hr rates in the small to medium contract IT and software development services sector without crossing a number of irrational psychological barriers. Obviously, this doesn't apply to the enterprise segment, and doesn't apply to any company that has successfully fostered the expectation of either elite expertise or high overhead--ideally both. If you're Accenture or IBM, you definitely don't have to worry about this, but if you're part of a well-known ninja specialist squad, you probably don't either.<p>Notwithstanding outliers, I was very surprised to discover that quoting a flat price has a good way of keeping the customer centered on the value they stand to gain and away from judging your swashbuckling billing. There are some ostensible reasons for this: it soothes the feelings of customers burned by open-ended enterprise-style darken-the-skies-with-people hourly billing, and demonstratively puts the risk the consultant. But it also gives them a fairly opaque number to work with instead of sizing up whether you're "the kind of person that ought to be charging that." Most importantly, and most relevantly, it completely disrupts their mathematical circuitry; it is amazing how many times I've run into customers that get in a tizzy when you quote them "10 hours at $250/hr" but happily sign on the dotted line when you tell them it's going to be $2500 flat and be done in two days. Even weirder, they'll still sign even if you _tell_ them it's "about 10 hours of implementation time." I don't think it's because they can't do division in their head; I think when the conversation starts out with a fixed-price premise, that computation just gets routed to a different psycho-social/emotional bucket. This is dissonant to the basic governing intuition of the hacker brain, but that's often how it goes.<p>So, I don't quote projects in hours anymore. I usually provide some idea of estimated implementation time so they can do the division themselves, being ethically reluctant about a price-support scheme that is reliant solely on opacity of cost basis and/or what the implementation actually involves, but it doesn't seem to matter. The results are undeniably and resoundingly positive. Something about human nature... I don't know what it is.<p>All this to say: If you're feeling shaky on quoting something "insane" in hourly terms, quote it as a fixed-price project. You might be surprised by the disparity in outcomes.