Consulting Market & Rates

How is the market looking out there for web consulting and development, on a freelance basis?

I was a freelance contractor/consultant a few years ago and couldn’t complain. Now I’m contemplating returning to my roots and I’m scared of what I see! Two local “web design” firms in nicer offices in my local area have folded in the past 12 months. And now, when I go online to research my competition with keywords such as “magento consultants”, I get back 3 pages of ads and organic listings of “expert magento consultants for $13 per hour”. It seems oDesk and Freelancer.com have taken over the programming markets - its gone mainstream now.

I do see some web consulting firms doing alright but they’re focusing on SEO and social marketing, not development and design.

I see some friends doing well at the top end of the market, offshore people doing well at the bottom end of the market (via oDesk, Freelancer, elance) but I get the distinct impression that everyone else is getting seriously squeezed!

Note - I see plenty of opportunity for developers and designers in SF for some reason, but in Southern Cali, it seems like a different world.

Are my impressions valid? Is it not as bad as I think it is out there? Should I be running for the hills, rather than setting up shop as a freelancer/consultant ?

Can’t afford or don’t want.

Again take that mid-sized etailer: they may have an agency do their creative day to day but agencies look at slices so if they want to increase their sales they have to engage with a SEM team, the media buying team, email marketing team and maybe an optimization team if one exists. It’s not that these people can’t do it all… it’s that their agency is efficient by dividing them up.

On the other hand a talented freelancer run all of these areas to a degree and keep doing so as a second arm. More of the perks of an employee without the cost.

Yup. I get calls all the time where I go out, have a meeting or two but there isn’t movement. Given how I work I expect a longer cycle but after the 2nd in person if there isn’t next steps I let them do the follow up.

There’s a lot of ways to slice it but for me this is like the 21 yearold who waits tables. 3 months ago they lived off student loans in a dorm; now they have 40k coming in and, aside from not having weekends, have a fairly relaxed world. Hard for them to leave and hard for someone with clients to do so as well.

My personal feeling is that you shouldn’t jump into the freelance world unless you have the clients to start up and the savings to cover a long period of building the brand of you.

> “My personal feeling is that you shouldn’t jump into the freelance world unless you have the clients to start up and the savings to cover a long period of building the brand of you.”

Hmm. How long do you think one should expect?

Depends on your risk tolerance and ability to find a job if things fall apart.

General rule I’ve always heard is you want to be able to go 6 months when leaving an income.

If you spend 3 trying to build and give up you’ll only have 3 left to find something new…

Thanks again - okay, replies below:

> “My point was more that there may be a gap”

Ah, I see. Hmm. So you mean maybe the mid-size/budget companies may have a need for these sorts of services that they’re not able to afford by going to a larger agency?In other words you’d seek these clients directly. I think a lot of freelancers just use act as the bench talent for the larger agencies and come off the bench as needed rather than seeking their own clients. It seems this is the easiest way to get starts as a freelancer - perhaps this is why not so many are versed in strategy then. So I guess the trick is to not get too spoiled by this easy money and stay focused on building one’s own brand, so that one is allowed to have thoughts, not just do (?). :wink:

> “I don’t think it’s the world conditions as much as their ability to drive business in an evolving market.” … “If you target companies that don’t want to spend money on their digital presence you’ll find exactly that and hate life.”

Hmm. Yeah, I can imagine what you’re saying is true - and it helps a lot to just hear that validated actually. And yeah, I can totally see what you’re saying here - don’t try to sell music to a deaf man, basically.

> “a freelancer who is eager to “win the sale” and quickly pushes his rate down to $55 an hour or the guy who can’t make their requested meeting time and wants $150.”

Yeah, that’s a tough one, especially in the beginning. I mean, I see what you’re saying but maybe its tough to act dignified when you really are “hungry”. Perhaps its a two-phased thing - get those initial clients with core “doing” work at “hungry” prices, then once you have those, completely shift your focus for getting new clients and begin to only seek and take on those higher minded engagements. Perhaps its even smart to change your companies name and basically phase in the new strategy focused company, while slowly phasing out the web production / doing company (?).

Threads like this make my day… :smiley:

My point was more that there may be a gap… Most freelancers focus on “I do X, Y and Z” but very few offer that they can help figure out if you need X or Z and not Y – as you point out, companies often want to hire someone to do a task; you have to decide if you want to deal with these projects, position yourself differently or just do it. :smiley:

I can think of several boutique agencies doing great now but I also know a few dying off. I don’t think it’s the world conditions as much as their ability to drive business in an evolving market.

Just like there’s more competition for freelancers, there’s more for agencies. Every print, media, and art related group now does some part of digital and that makes it vital to have an aggressive sales force but many smaller shops just have their principles go out and talk to prospects…

The other side of the coin is a lack of evolution. You mentioned design firms before, if they were truly limited that may be it. The web has matured for “clients” too. I’ve gone from managing 8 or 9 agencies at a job to managing at least that many in-house people with a few agencies doing more specialized things. Great design shops exist but they tend to be much more about the full experience, go to market concepts, etc than just building pages.

In a world where it’s more about finding someone who gets your brand voice and can help you become more authentic, boutiques are actually the rage right now.

Interesting. Can you elaborate? You simply mean word-of-mouth and clients come to you?

There’s a lot on this idea so see links from the experts below but basically yes, build a reputation, and do active things that make you visible to the world to have business talk to you rather than having to go out and hustle for every lead.

It’s not that you just sit back and wait for the phone to ring [that takes an insanely wide reputation] but rather that you put your energy into getting found by those looking for your type of service rather than trying to create interest in someone who is not.

Inbound Marketing vs. Outbound Marketing [Hubspot wrote the book on the term]

Hmm , that resonates - I hear what you’re saying. I recall in fact a few years ago I was working on larger projects and having no problem making money while a friend was telling me “no one will pay more than $1000 for a website any more”. I told him he was crazy. Perhaps this is the same thing you’re telling me now? :slight_smile:

If you target companies that don’t want to spend money on their digital presence you’ll find exactly that and hate life.

Identify a market that has the type of opportunity you want, then figure out what you need to play in it.

For example, there are times when you need to increase your rate to get business. While this sounds backwards consider a 3-yearold etailer doing $50 MM a year and looking to grow towards 75 in the next year. What do you think sounds more likely to help them succeed: a freelancer who is eager to “win the sale” and quickly pushes his rate down to $55 an hour or the guy who can’t make their requested meeting time and wants $150.

Hi TedS, thanks - that’s a very insightful post.

> “there’s not many people running solo in the strategy to execution space”

Interesting. The strategy and planning stuff is really where I’d like to focus, but yeah I assume you need to be a larger consulting company for anyone to listen to you. Otherwise, I assume if you’re just a freelancer or a small shop, people just want you to “shut up and do it”. Is that about right? Honestly, I hate that antagonistic relationship I’ve seen with smaller freelancer relationships like that, but I guess its a necessary evil to brow beyond.

I’m still very curious though as to why (a) I don’t see any of the local web shops hiring and (b) two nearby shops that both had a decent reputation I thought, are now gone. Clearly something is amiss! If the market is indeed not to bad as you say, then how to explain this? Are agencies simply out of phase, except for the very high end, or something?

> “I believe in inbound marketing”

Interesting. Can you elaborate? You simply mean word-of-mouth and clients come to you?

> “you really have to be willing to sell yourself up a few notches and say no or you’ll get sucked in to the marginalized parts of the market that are also very visible out there.”

Hmm , that resonates - I hear what you’re saying. I recall in fact a few years ago I was working on larger projects and having no problem making money while a friend was telling me “no one will pay more than $1000 for a website any more”. I told him he was crazy. Perhaps this is the same thing you’re telling me now? :slight_smile:

Those don’t really sound like typical experiences to me at all. It sounds like you were exposed to some poorly managed situations. Your use of language like ‘tricks’, ‘off the record of course’ and ‘eye roll’ suggests that you are cynical towards the companies you were involved with. But, most companies aren’t all that sinister and technology skills are still enough of a free market so that basic supply and demand is what makes certain skills more valuable than others.

If I had to bet on which person would get a higher paying job faster, an pro SEO or J2EE developer/architect, I would bet on the developers in a heartbeat. And sure, an English speaking, US-based, local resource will always pay more than an equivalent resource from overseas.

I interpreted things differently, for example:

The reason so many Java developers are in the US from India on visas is not because outsourcing has ‘hit’ that area. It’s the reverse - US companies are happy to outsource a lot of development but they still want to domestic resources and there just aren’t enough local J2EE developers so they have to bring them in. That’s the opposite of being hit by outsourcing! Scare resources, and look at dice.com you’ll see that there are lots and lots of jobs for J2ee skils.

Also, don’t assume that because SEO is priced differently that SEO professionals are making more money. I doubt that is the case. A ‘consultation’ model (I think you mean a fixed price for performance’ usually results in the workers making less money rather than more.

That said, I don’t think I’ve ever seen more than 2 or 3 job listings for SEO professionals, and they dont’ pay much. SEO is a blip on the radar, career-wise.

@Sagewing - I use to see the tricks companies such as the financial company I was working on would play. I was on their Java dev team actually, at that time. They would post jobs that ungodly low rates and then require massive experience sets. Naturally no American was interested in the job. They would then take this as the “proof” required to apply for H1B status visa to apply for the job. Incedently, I was one of only two americans left on the team (out of 40) and despite having 6 years of experience, i was asked to assume the tech proj mgr role for the team… because I spoke English without an accent and the business stakeholders could communicate better with me (off the record of course). … I’m sure its different at different companies, but that was my experience.

As for SEO, I managed two different vendor relationships on various other teams for SEO companies. The first was for a $200k contract to merely advise the company on how to optimize their site. They did very little actually and I can only imagine their effective hourly rate turned out to be sky high. The other company was a $50k project. We used them comparatively more but I have a background in SEO and was rather curious to watch what they were doing and I must say, I think we ended up paying them the equiv of $300 per hour for their efforts. They staffed their team mostly (seemingly) with guys straight out of college, after the initial handoff from the guru sales guy, naturally (eye roll). Anyway, their out-of-scope hourly rate was $150 per hour. I haven’t seen any contractors or small programming companies charging those kind of rates in some time (eg. since 2001 roughly).

So those are my experiences. Its interesting to see how much our experiences have differed.

I’m sure there’s a good quote on this out there somewhere but to say it less than eloquently: it’s all about how you go to market.

What I mean is that you can do very well in the market today or crash and burn just depending on your pedigree, ability to hustle and of course what you want.

Social Media is booming – it’s the buzz topic and that makes it a killer field to get into, but people know this and there’s more “experts” than there are companies. Just hanging a sign won’t work; if you don’t have the experience, people are going to move on to someone who does… or just has more hot air than you [and sometimes even with the experience they get fooled by these guys too].

Other parts of digital marketing are also doing well although the natural expansion of talent from a decade and a half of history does make it harder. Still there’s not many people running solo in the strategy to execution space… It’s mostly full stop shops or very tactical executors. Heck, I’ve got two past clients looking for mid-level ecomm expertise right now and drawing dead.

The business is out there, but as much as I believe in inbound marketing, it takes time to get to that point which is something you have to really consider. Just as importantly, you really have to be willing to sell yourself up a few notches and say no or you’ll get sucked in to the marginalized parts of the market that are also very visible out there.

p.s. I’m located in SoCal myself… and while freelancing is just something I do on the side while running my own venture, I’d say we have our own pros & cons but we have companies around and that’s really all that’s required to have a shot.

@Sagewing - Thanks for the input. Yes when I say starting a consultancy, I do mean starting essentially as a freelancer to get things going … but long term I don’t believe its great to be a freelancer. You’re not building something you can walk away from later, or sell, or scale.

> “There is plenty of work in SoCal, for sure.”

Cool - good to hear!

Regarding SEO and Java etc - well, SEO jobs pay a lot less, but actually I see overall that consulting rates are higher for SEO companies, than they for small development shops. Perhaps its the effect of a decade of offshoring upon the programming field.

> “The absolute hottest skill right now is simply J2EE developers that can deliver the goods.”

Yes, it should be based on complexity and difficulty, but the last time I worked at a fortune 500 company, the entire team except a couple core guys, was from India. Seems that’s the area hardest hit by outsourcing. SEO on the otherhand is often executed as consultation not the actual doing, which is usually less hours and thus a higher hourly rate, I guess.

Rather than build a consulting company, do engineering, do SEO, build a team of developers, lead a production team, and build a brand…

why not just pick your best skill and start out as a freelancer? It’s not that easy to do all of those things, and you need to start at the beginning.

Also, there is really no such thing as a ‘boutique’ company. To clients, that just sounds like a small company that doesn’t want to sound like one. Just be a freelancer and take it from there.

There is plenty of work in SoCal, for sure.

Also, I wouldn’t be too surprised that SEO is a much lower paying skill than actual programming/development. SEO is a drop in the bucket compared to the ‘real’ development world, which goes far beyond websites and gets into massive systems for massive organizations with massive requirements. Web developers forget that for each website there is a webserver and hardware, and network, etc. If you want to swim in the biggest pool, definitely go for programming.

The absolute hottest skill right now is simply J2EE developers that can deliver the goods.

Thanks for the thoughts - very much appreciated. I’ve decided to proceed with starting a boutique consulting company. I will probably do all of the work at first but want to quickly find the opportunity to grow to a small team so I can focus on building the business.

My question is this: Over the past decade I’ve had one foot in web development and the other in Internet marketing. I’m perhaps most skills in engineering, but I also am not bad with the optimization stuff (SEO, LPO, Conversion optimization, analytics, etc). So I guess the question is where to focus.

It seems it would be very easy to build a small team of developers (part offshore) to get started and lead a production team; those optimization topics are rather more difficult to staff. I worry though about a quote I recently came across by the researcher Nicholas Carr - that technology inevitably becomes commoditized in any industry, at which point its more important what you do with it. So perhaps SEO and optimization is more the future of what people will seek consulting for (and for which they’ll be willing to pay consulting rates)? Ironically though, when I look at average salaries on salary.com, those optimization topics seem to fall more under the marketing umbrella and generally see incomes 40-50% LESS than the hard-skills of engineering and programming. Weird!

So I’m curious what you see as the better market to be focused on? Naturally I could offer a bit of both, but I’ll need to build a brand and a focus around one of them.

I got in the door right before “seo” was a buzzword. 6 or 7 years ago and I’m appalled at all the junk seo services out there with their watered down gimmicks. $59.99 for 1,000 links sounds ridiculous. $200/m for SEO Service sounds like you won’t make very much money. It’s hard to compete with numbers like that so I don’t. You have to be creative these days at offering your service. I think internet marketing consulting is a growing market because people are always gonna need help fixing their starting up their online business and fixing their seo service disasters.