You need to be vary careful with this approach Roman.
What's the point unless you make a profit.=20

I agree that 'sometimes' you take a loss leader when you believe that =
there's more work in it for you in the future, but I'm more a fan of =
value added.
Sure, I charge more for my developments, but you get the source code, =
documentation and I don't mind if you ring me once or twice on a holiday =
if it's really important. Most of these things a reputable developer =
should provide anyway (except for the holiday support) but often don't. =
I personally don't mind because it gives me the chance to show the =
customer what a really nice guy I am, AND a change to talk to the =
customer about projects they might have in the future.
Whenever your talking to your customer and he's the one who called you, =
your in a very strong position.

The trick is to make a reasonable profit so your client feels he's had a =
good deal and you do as well.

There's always somebody who will undercut you BUT threes nothing worse =
for a client finding out you vary the amount you charge depending on =
what you think they can afford.
You have to make a reputation of charging a fair price for a fair days =
work.

I also agree that you shouldn't give up you day job until you are, or =
believe you can, earn enough from your new venture. But it looks bad if =
your rates keep going up and up for each job you receive. It's a small =
world out there and you never know if some of your customers talk to =
each other. Also remember that as time goes buy, your develop new skills =
and build a library of useful routines so there's a good chance that =
your development time for projects will go down and you should adjust =
your estimates accordingly.

If your are a manufacturing business, I agree that you probably can't =
make a profit for the first couple of years. Buying buildings, =
machinery, people etc.
But, software development is different. You probably have most of what =
you need already. You should be able to turn a profit on the first job. =
Your only restriction is how much business you can generate and handle.

Be honest to yourself and your customers - nobody can ask more.
If after that you decide you can't earn enough, then walk away - or try =
a new business plan.




-----Original Message-----
From: Roman Black [mailto:fastvid@EZY.NET.AU]

Hi Jesse, I will take the opposite stance to John above
and suggest that since your consulting business is a
start-up venture you should be working as cheap as possible
(ie NO profit!) until the business has built some type of
customer base.

I completely disagree with the advice to charge the "full"
rate with any startup business. When you start a business
you should be fully prepared to run the business at a LOSS
for the first 12 months minimum, with very low prices to
establish a customer base and assure future income. When you
get to the point when you have TOO MUCH incoming work, then
gradually increase prices etc until you reach the status
quo you desire. And for that reason I suggest NOT giving up
your day job, you will need some income over that first 12
months while you get the business established.

NEVER start a busines with the expectation of making money,
at least not straight away. Always ask, "how many hours and
how many $$ can I sink into this business over the first 12
months??" and if the answer is less than 20 hours per week
(while you are still working full time elesewhere) and less
than $100 USD per week (the reason you are still working
full time elsewhere) than you are destined to fail.

So my suggestion, if you are really interested in making
this new busines work, is quote very low (ie UN-profitable)
and do the job while still working full-time. If you do a
decent job you will reap rewards later when sales occur.
Do the same for all jobs in the first 12 months. If you
make it that far then consider giving up full time
employment, provided you have saved a decent ($10G?)
buffer. :o)
-Roman

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