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I charge X as an hourly rate for development, and I will subcontract the support. My subcontractor charges X/2.

I am the one signing the agreements, so I am responsible should the contractor screw up, so there would be occasional supervision, but very little.

Should I charge the client the full X for on-going support hours provided fully by the contractor? I am somehow conflicted by earning the same as the contractor does when I am not doing the work.

  • Hi Gustavo - I like this question but I've edited the title to make it a little more search friendly – levelnis Oct 7 '13 at 19:37
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Well there are 2 scenarios that I am aware of.

Large companies charge support A LOT meaning that 1 annual contract allow them to cover yearly costs of the project. But those are large companies.

I personally charge my regular work hours + 50%. For example, a client and myself reach a retainer agreement where I promise that I will reserve X work hours just for him in one year and any bug which appears, I will fix asap (a day or two if not immediately). If the client finds it expensive, then I ask him to contact me in case of problems but I will fix them when I have time (and charge my regular work hours).

Now, regardless of the fact you're subcontracting, you subcontractor has a job because of your client and your reputation is on the line, not his. That is why, it's absolutely fair to charge "his rate x 2" i.e. you earn the same as himself. You will soon realize that there is no such thing as "not working anything" when you're subcontracting. I found myself managing subcontracted project 8 hours a day. Just like I am coding it.

Now, the next point is sustainability of your business. You should charge as much as you can because you must keep the business going. It does not matter is you're charging 3 or 10 times more because there will be many situations where you will not be able to charge your client, but will have to pay subcontractor from your own pocket just to preserve your reputation.

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This is effectively how an agency works. They charge an external rate to their clients, which translates into a (usually different) internal rate depending upon the salary/rate being paid to the individual(s) performing the service.

You are perfectly within your rights to charge a set fee to your clients and then subcontract certain elements to third parties, provided that the client get the level of service that you have both agreed. If your particular subcontractor was unavailable and the support work still needed to be done, then by the sound of things, you would need to undertake that yourself if you were unable to find another subcontractor. In that case, you would be out of pocket if you still charged X/2 to your client, and your relationship with them could become strained if you suddenly asked for X instead of X/2 because you were doing the work.

As far as your client is concerned they have an agreement with you at rate X for Y services. If you have managed to keep them happy, keep up ongoing support, and perform those services at a lower cost to you, then in my mind that is good business.

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I'll just provide a contracting model to this scenario. My view is my clients are paying for my time, and I don't want to add complexity to the equation, so I don't subcontract at all. I'd handle this by introducing another (perhaps junior) contractor to the client.

When I'm needed to supervise the 'subcontractor', I simply bill my time. When I'm not needed, I don't make money (I realize that), but on the other hand, the client attributes each of our work correctly.

Yes, this means I don't make money off of other developers / workers / etc - however, I'm not an agency (and I don't want to be), I'm a freelancer.

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Yes. If your time is worth $x per hour, that's what your time is worth.

Also makes invoicing easier.

I think if you're tempted to charge a different rate for a different service, maybe you're in the wrong business? Generally speaking, I think it's better to specialize. If you have different rates for different things, I think your clients could be confused--they may want a specialist that only does that one thing they want.

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