Why do people try to lowball web developers?

I blogged about this, but wanted to post it here to generate some discussion around it

This post is the result of a private message I received. I guess he had seen that I have experience with Joomla, that I've created a few popular modules, so decided to see if I'd be interested in building him a customized Joomla site. Here are the details of his request:

So this is quite a large project. With a quick scan, I would estimate a minimum of 45 hours of work, as the following major time-consuming components are required:

1. A custom designed theme.
2. Setting up site architecture.
3. Custom flash design for the header.
4. Locating, installing and configuring various extensions, including a forum, SEF, e-commerce, etc
5. Creation of some completely custom extensions

So naturally a proper estimate will include time not only for development but also for debugging. So let's say for the sake of argument that the total project would be 50 man-hours of work.

How much do you suppose this person was willing to pay? Unfortunately the global market for web developers brings down the expected rate of a good programmer. On rentacoder or elance, one can easily pick up a PHP coder's time for a measly $20/hr. That means they could get this project done for about $1000.

With that in mind, I asked the buyer what their budget was. Would it be more? Less? This was their reply:

I practically choked when I read that. Two hundred and fifty dollars! That means that to this person, a developer's time is worth about $5/hour, or less valuable than someone serving hamburgers at a local burger joint. Now I admit that burger joint employees are incredibly valuable, but come on!

Now that sad part is that I guarantee that some desperate young developer will accept this offer, and slave for nothing as the site owner adds "just two more things" I thought of. Then the site owner will have a fully developed site in a profitable niche, and will soon be making decent money on something that cost virtually nothing.

This has to stop. I don't care where you live. I don't care if your cost-of-living is lower. Developers are intelligence workers. They not only have a skill, but they have an unteachable aptitude. This is priceless. And if they place very little value (hourly or otherwise) on that aptitude, so will others.

Developers need to start properly valuing their time. I met a .Net Development Manager on a plane last year. He doesn't do web development himself, he contracts out his guys to larger companies, and manages the projects. He charges $285 USD/hour for his guys.

Now I don't expect that any of us could charge that much. But we do have the right to set an acceptable rate, which won't lower the bar for the rest of the developers in the world. We are the ones that do the work. We are the ones that know how to do the work. It's a specialized work, and we need to view it as such.

So set your rate. Don't accept less. And when people come to you offering $5/hour, send them to McDonald's.
Original blog post: http://www.justin-cook.com/wp/2007/01/19/why-do-people-try-to-lowball-web-developers/

 

this happens so often, there are people who have low budget and also developers who seek for low budget work, but it never helps none of them.

 

nice post.

his "budget" sounds more like beer money he's been stashing for 4 months.

that would be like going into your Chevy dealer and offering him $12K for a $45K Corvette.

 

Thanks. When I told him that he needed to significantly raise his budget, he told me I'd never find work. I told him my demanding clients would argue against that.

He threatened me that I'd never get work from him or any of his acquaintances.

Thank goodness!!!

 

Happens everywhere, we have had plenty of threads like this in content, though not with the same script

 

Honestly though, because it truly is a global job market, it would be wonderful to establish global standards for skills and rates

 

We do not have perfect competition markets much as one would like them. Maybe a law with a minimum wage should come.

 

You know, before the Internet (yes I'm old enough to remember) I did a lot of work for a few customers who did not understand the value of my services. Time and time again I undervalued my own work. Time and time again I felt a bit resentful for being treated like that (realistically, it was treating myself like that).

Then one day after years of working for very little per hour (when I calculated it out), they asked me for a quote on a new product. Instead of pricing for what I thought they would pay, I decided I would price for what it was worth for me to do.

Well, they hit the roof. After years of a good business relationship, they started razzing me...telling me I was trying to gouge them on the price. On and on it went.

For reasons unknown, I held my ground. I calmly told them that perhaps they could get the work done cheaper by someone else...and that was fine. I was only telling them what it was worth TO ME to do the work.

Well, they finally made a remark that a company officer had an 8th grader child that could write the software and do it for a small amount of money. I told them that if that was the case then they would be fools to hire me and that they should let the 8th grader do the work. They dropped the project and gave it (presumably) to the 8th grader.

Funny...three months later, just before they needed to release it, they called me up out of the blue and asked me if I would still be willing to do the work at the price I quoted. I told them that I would have to raise the price because now it had become a "rush" job.

In the end they did contract me to write the software, and I did deliver it, and they did pay me for it.

The moral? Figure out what it is worth TO YOU to do the work. Unless you are starving and need the work, walk away from jobs that are not worth your time. You'll like yourself more and enjoy your life a lot more.

Oh, and I should mention, I see this type of thing all the time. I do work in my day job for Fortune 500 companies. They make it a habit of screaming about even the most generous pricing. I cannot count the number of times I have heard the customer make a remark like "well...it's only software...how hard can it be?" There *IS* such a thing as an "unprofitable customer." You should RUN from such customers...do NOT walk. Your time would be better spent studying a new technology than undervaluing your skillset.

DO NOT take a job that is not worth your time unless you truly have a good reason to do so (you are starving, you are trying to break into a new market, etc.) If over time you find you are not getting any work, then you will have to re-evalute your pricing...and/or your customer base.

Just some thoughts...worth everything you paid for them.

Oh...and try not to take it personally. Most likely they are:

1) Completely clueless about what it should really cost
2) Well aware of what it should cost but are trying to get a lower price
3) Sometimes they truley are trying to make it personal (not so often though). In this case...don't engage...just separate yourself from them, pray they see the error of their ways, and look for the many, many profitable customers that exist out there.

 

Wow, well said! We should make this one a sticky!

 

This thread remind me when I began doing web design in 1995. It was almost all html with a bit of Java to spice things up.
There were no software for that. We had to "study" html and Java. And today, I still code by hand with notepad my sites and Java.
However, with the venue of different web design software, as frontpage and later dreamwaver, lot of kiddies were doing website for cents on the dollar if not for free.
As our future, it was only to "correct" the kiddies' mistakes. As a lot of webmasters at that time, I quited...to get a job

 

Yes. I know what you are talking about here. I work with a lot of kids just out of college. These cyber-kids can code circles around me with respect to speed. However, I have found that my experience allows me to see far down the road to potential problems typically more so than they can. They will acquire this in time.

It seems to me that both types of developers are needed in business. Too bad I run into a lot of "fools" who only understand the "billing rate per hour" and have no understanding of the impact to a project if:

1) The developer barely speaks the language
2) The developer lives in a country 12-hours shifted from the company
3) the developer doesn't understand the problem domain (automotive, medical, etc.)
4) the project is new devlopment with "fluid" requirements and the developer is unable to communicate with the development team (due to things like poor english skills, physical distance, time zones, etc.)
5) it is a large project and the developer either does not know or does not embrace sound software development processes
6) the developer only does EXACTLY what they are told

Do not get me wrong...I am also a business man. I understand the value of minimizing your costs and its impact to the bottom line. All I am saying is that dumping your experienced developers for youngsters or off-shoring is not good for all kinds of projects or project positions. It makes sense on some things, just not on "everything".

But alas, experience versus youth discussions and situations have been around for a long time...and no doubt will continue to be for a long time as well.

 

I'm glad I found a thread to express the exact copy of just another thread I started in my mind long ago. I have gained pretty good experience in being literally forced to put people away because of their 100 bucks I would have to work 2 days for to complete their projects. If not for my dedication towards web development, I'd go ahead and file my CV at McDonald's, honestly. Less stress, a lot less time required for thinking, more time for sleep, bigger opportunity to meet new people and be part of the real world, yet earn the same money..

 

$20/hr on rent-a-coder? My company hires developers on rent-a-coder for under $5/hr all the time, and rarely pays over $20/hr for full-time staff (we're not in a high income market). Sad really.

 

People lowball all the time, including those that complain about people lowballing.

 

As the saying goes: "You reap what you sew."

At my company they have a really high turn-over rate of developers. They recently started asking other developers why people kept on leaving.

Umm..well...let's see:

1) You don't value developers
2) You make it clear you dont' value developers
3) You hire kids out of school and pay them dirt
4) You give them two years experience and then they find someone else that will pay them twice what you do (now that they have two years experience).

If the job is really just "coding" from a well-defined specification or domain that does not require a lot of domain knowledge (meaning, any coder could walk in and immediately be productive because they don't need specific information in a particular field), then they can get away with $5 rent-a-coders. In fact, these are precisely the types of jobs where off-shoring is a good idea, from a business perspective...at least, in my opinion.

I would advise serious coders to try to move into a different field of programming...one that requires more domain-specific knowledge.

 

I think it's actually 'what you sow', but you are right regardless

Either find a specialized type of programming, like SAS, or learn to specialize a general programming language, like PHP

 

Yeah...a rather annoying looking typo...and the system won't let me edit the post for some reason....ah well...

 

Frank Cow,
Let it go. I PM'ed you what I wanted done and what my budget was. If it was too low, you could have just said that you were'nt interested. Instead of being a wisea**, you could have given me a list of what you could do for that price, and explained why, instead of insulting me and what I could afford. Im not in the business so I dont know what you charge or what the going rate is. I went buy replies for the job I got at freelance sites. The average was about $250 to $500 tops. I figured before I gave them the business, I would offer it here, that was all. Wasnt trying to lowball anyone. Get off your high horse. I could have been enticed to go higher if you would have used some business sense. I explained all this to you already. Now move on. Have a nice day

 

Wow, I didn't expect you to 'show' yourself in this thread! (how nice of you to drop by)

I was making no effort to insult you, but when I did give you an idea of what a reasonable budget was, you told me that I could expect no business.

I made no mention of your username, there's no need to take personal offense.

I am having a nice day by the way, thank you for extending the thought.

 

Hey your welcome. Came across the thread by accident searching for a shout box. Couldnt believe someone as busy as yourself made time to post something so meaningless. I have nothing to hide. I told you to expect no business after you gave me your wise*ss cocky attitude. Short memory for such a young guy.
You told me dont expect to get that job done for less than "10 times my budget". Yea sure, over $2500 for that amount of work. So for 45 hours of work, you want almost $60 an hour??? Trust me, I had no problem finding others to do it for much, much less that are well qualified, with no attitude. Like I said, your qoute was by far the highest I received. Nothing personal but your not the only game in town, but you are definitely one of the most expensvie I came across. And thanks, Im having a great day.