More Reading / References about project rates, costs and estimating
Prepare a Plan, and Execute the Plan
Take the necessary time to get the required information about the project upfront. Then manage the project.
Clients may get upset, and rightly so, when initial estimates start as low as $4,000 and end up costing $100,000. Such huge differences in pricing occur when little or no planning goes into the project and little to no project management occurs during the process.
Hourly Billing
By and large, firms continue to bill by the hour, similar to lawyers or CPA’s. Large creative agencies in New York typically average over $600+ per hour while $300+ per hour is considered standard in most other regions (according to the American Association of Advertising Agencies). In smaller regions or markets, you can expect to pay anywhere from $95-$225 per hour depending on the service and the skill of the person supplying that service. More and more agencies have gone to a “blended rate” — a rough average rate for all services and skill levels. This keeps the accounting simple, and with smaller agencies, it can work in favor of the client since they will get even senior level staff involvement at an average rate.
Formula
Most service professionals simply take the hourly rate of a full-time employee and multiply that by a factor of 3 to arrive at a consulting rate. So, for example, if a DevOps Engineer would earn an average of $112,188/yr in Boston [1] as a full-time employee, then a consulting rate would be ( 112,188 / ( 52 weeks - 3 weeks paid vacation - 10 holidays ) * 40 hrs/week ) * 3 = 59 * 3 = $180/hr.
Predictable projects are rare. But in the textbook example of a predictable project, with defined requirements and staffing needs, you might use a flat rate card (where you will see separate rates for each role in the project) like illustrated at the hubspot article How to Calculate Your Agency Fees Structure
Most agencies do not use a flat rate card. Instead, a large majority of agencies use a blended rate that takes into consideration all the staff positions in the company, and the amount of work on a typical project for each role, and combine it into a single blended rate for the customer. The average blended rate for a full-service agency in today’s market is $150 an hour to $200 an hour in most markets. In the bigger markets, it runs closer to $250 an hour. [2]
Contracts can help relieve the upfront cost pressures. In the hubspot article, they describe a fee structure over two months of up-front work, followed by several months of ongoing work. The client is allowed to pay the costs amortized over 12 months which helps them, and the contract allows for early termination after 30 days, with 30 days notice reverting to an unamortized fee schedule to protect the agency's ability to recoup their up-front costs.
Benchmarking
By surveying and knowing what the market charges for similar services, you can be sure that you are pricing your services appropriately. See the File:Devops hiring guide v1 0.pdf by RedHat
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45 Incredibly Useful Web Design Checklists and Questionnaires It's got examples like the OWASP PHP Security Cheat Sheet which is still a good resource, but unfortunately has not been updated since 2016.