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We recently came to the end of a 6 month hourly contract (at about 25 hours per week).

The client and my company discussed renewal, but the sticking point became our hourly rate.

The client wanted us to lower our rate in exchange for a 12 month contract, but the initial price that we gave them was already, in my opinion, low.

Anything lower than our current rate would risk our company not making money, or having to cut our employees salaries.

This resulted in negotiations stalling, and the client has informed us that they will be reallocating our work to someone else, but have asked for transition of all work to whoever is taking over.

The project was a somewhat open-ended optics/systems/software engineering project. The product is currently in the design and implementation phase, so there is no final product from us. This is not a fixed price contract. There was no support agreement.

Our only termination obligation under the contract is to transfer all currently generated materials (including source code, documentation, design documents, etc.) and all of the client owned/purchased hardware to the client.

This will certainly involve discussions and training on the code that has been currently written (which hasn't been fully documented due to time pressure, part of the task list going forward if renewal occurred was for all code to be properly documented).

Because the relationship (other than the renewal disagreement) was quite amicable and we really enjoyed working with the people and we enjoyed the work technically, we are prepared to offer some level of free transition service.

For this level of contract (6 months, 25 hours per week) what is the appropriate level/amount of free transition/free training to give them?

We don't want to give too much, especially since they didn't renew...and the final product is about 2 years away...

Our question is similar to this question, but we want to determine upfront how much free time we want to provide, instead of negotiating after the fact.

Update

I informed the client that I will provide 1 hour of questions, etc. for transition and that any other support will require a new contract, and any contract less than 3 months in length will be billed at our full non-discounted rate.

  • Out of curiousity, how much of the code has been documented thus far? – Chris Forrence Jul 24 '14 at 18:01
  • About 1/3, perhaps a bit more...the code is well written, so the components are not that difficult to understand. They have the high level design details, but the mid-level design details and component interactions are not documented in a way that allows new technical people to come quickly up to speed. This documentation was slated to occur in the next 6 months. There is a lot of parallel processing and algorithms and some performance requirements so some of the currently undocumented interaction details are crucial. – daaxix Jul 24 '14 at 18:13
  • Also, most code is documented enough so that the current engineers working on it understand it, but the current batch of parallel (and GPU) code was in the testing/bug fix/design requirements fit iteration stage, so isn't ready yet for long term documentation. – daaxix Jul 24 '14 at 18:16
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Free??? No, no, no.

The client has already indicated that they're looking to save a buck. Now, pose this question: how does the work that you've already been doing suddenly become worth less money per hour??? Where I'm going with this is to point out that if the client needs the services you have to offer, they'll find some way to get the money to spend (or plan B is to manipulate you into working for much less).

Even if you are transitioning the work to someone else, you need to be paid your full rate, plain and simple. Come on, now. Just look around. Neither your physician, attorney, local utilities, cell phone provider, ISP or anyone else that you do business with is offering a "transition" rate. Your services are valuable, and though you might not be on the same standing as a large company, you are important to your clients or they wouldn't bother you in the first place.

Stick to your guns, and if the client balks, keep it pushin' and go on about your business!!!. Sometimes you have to close one door to open another.

  • We weren't going to offer them any transition rate...just a few courtesy hours to ask questions, etc. After that any work item that they have will be at our full non-discounted rate (6 months was long enough to discount our short term rate somewhat). I want to know what is typical for this kind of situation, I take your answer as no courtesy hours at all... – daaxix Jul 25 '14 at 1:27
  • Exactly. If you don't believe me, try getting a few "courtesy" hours from your local plumber or accountant, and see how fast you get laughed at. So why should you do any different? – Xavier J Jul 25 '14 at 15:07
  • Actually, our accountant has done just that, without anyone asking...she keeps us very happy however, and we would pay her even more than she charges if she asked... – daaxix Jul 25 '14 at 15:51
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    I gotta say, I agree 100% with the answer. I did the "discount exit", and kept getting shafted with more and more work requests. I told them (after the third day) that I can't offer a discount if I'm doing the same work anyways. Lost the client for a week, then they called me back and had a cheque ready to bring me back on when the "new" guy didn't work out. – Canadian Luke REINSTATE MONICA Jul 25 '14 at 16:45

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