Ok, let's do a concrete example. All of this seems very hand-wavy to me.
Scenario: A client asks me to do support and maintenance on an internal accounts receivables tracking app. How do I justify asking 300/hour or whatever you guys are suggesting? How do I give them substantial business value from that?
How much time is wasted on accounts receivable every month? What's the average fully-loaded cost of their employees tasked with AR? What's the percentage of uncollected invoices?
What happens if we cut the time wasted by 10% and bring in one or two extra invoices a month? Oh, we just made you several hundred thousand dollars in the first year? Interesting. What is that worth to you?
"I'll write up a document explaining the plan, but in broad strokes, we're going to work on the user experience so the team spends less time fighting this tool and more time being effective in chasing receivables. Also, we'll build a new workflow which automates the early stage of receivables collection." (I would start thinking "Automated emails or Twilio replacing a human employee doing either is pure win in the early stages of collection" but you're the guy in the client's office, figure out what they'll except.)
So if their system is already highly optimized, or it's a small company so any gains wouldn't translate into large amounts of money, you'd suggest to pass on the opportunity?
Also, what happens if you improve the UX and make new workflows but the profits don't materialize for some reason? Would you not get paid?
I prefer working with companies where I can create value versus in companies where I can't. If your small company thinks their internal one-off AR system is important enough to hire a dev for, that should be worth Serious Money (TM) to the company. If it isn't, tell them "Look, you trust me to deliver wins for the business. This engagement isn't a win for you. If you absolutely need that system worked on, I can recommend someone for it. But let's talk about somewhere where I can make you a couple hundred thousand dollars: ..."
Would you not get paid?
No, of course you get paid. The client bears all execution risk. That's why, when you make them 10 million, they get the vast majority of that 10 million. If clients expect you to shoulder downside risk then they should expect you to capture much of the upside. (Here's words I like: "Well, if you expect me to bear the risk for this project, I want to share equitably in the rewards, too. My sense of equitable is that if I'm responsible for doubling the company's sales I should end up owning half the company. Or, you know, you could just pay my rates.")
>>> Well, if you expect me to bear the risk for this project, I want to share equitably in the rewards, too. My sense of equitable is that if I'm responsible for doubling the company's sales I should end up owning half the company. Or, you know, you could just pay my rates.
That's pretty awesome. Have you ever had to use a line like that?
Also, what happens if you improve the UX and make new workflows but the profits don't materialize for some reason? Would you not get paid?
You could not talk in terms of profits (which could be eaten up by something else), but percentage reduction in unpaid invoices. Maybe look at reduction in overtime for AR staff, or number of invoices handled per staff member ("1.5 times as effective now!")
Scenario: A client asks me to do support and maintenance on an internal accounts receivables tracking app. How do I justify asking 300/hour or whatever you guys are suggesting? How do I give them substantial business value from that?