Re: Consultant Fees Gregory K. Schmidt 09 Jun 2012 10:14 EST

I hear you.  Then you run into silly consultant caps on fed awards.  SAMHSA has $500 a day (up from $450).  $62.50 an hour is third rate.  So you end up playing games;  instead of T&E, it's FP, and instead of 5 days work, it's 10 days plus expenses.

Silly

"J. Michael Slocum" <xxxxxx@GMAIL.COM> wrote:

>That is the point.  The "employed" don't begin to understand the costs of
>doing business.  What seems like a quite reasonable sum is really barely
>enough to cover the costs of being in business.
>As a practicing attorney for the past 30+ years, I know the costs of
>operating only too well.
>The costs of an employee are also not understood.  Overhead and fringe
>needs to be applied first, then the costs of non-productive time have to be
>factored in for even a low-paid employee without the specialized skills
>needed from the consultant.
>
>On Sat, Jun 9, 2012 at 2:11 AM, Gregory K. Schmidt <xxxxxx@verizon.net>wrote:
>
>> First, my time costs when I travel.  Maybe not at full rate, but I charge.
>>  There is an opportunity cost.
>>
>> Second, you assume that I work 40 hrs a week billable.  Not always the
>> case.
>>
>> Next, the administration, marketing, networking, email time is taken at
>> night or on weekends, or if there is no billable time during normal working
>> hours.
>>
>> I have never worked a 40 hour week as a consultant.  Jobs are often capped
>> or fixed price (rate sheets).
>>
>> Costs of insurance (liability ins. can be a killer), health, auto,
>> memberships,equipment, software, supplies, rents, fed, state, city taxes,
>> licenses, rents, legal and accounting fees.........  everyone has their
>> hands in my pocket.
>>
>> Profit?  The charge rate is so diluted with hours worked that I'll earn
>> about what I did 15-20 yrs ago when I worked for the state.  That would be
>> south of next to nothing.
>>
>>
>>
>> "J. Michael Slocum" <xxxxxx@GMAIL.COM> wrote:
>>
>> >CONSULTANT "COSTS" TO OPERATE
>> >
>> >
>> >•   Take the $1600/Wk and the 40hrs/Wk
>> >
>> >•   Deduct 1.5 hrs for travelling per day between clients etc.
>> >
>> >•   = 7.5 hrs/Wk
>> >
>> >•   Deduct 1 hr per day for admin and paperwork
>> >
>> >•   = 5hrs/Wk
>> >
>> >•   Deduct 10 hrs/Wk for marketing, networking etc.
>> >
>> >•   = a total of 22.5 hours/Wk
>> >
>> >•   Thus 40-22.5=17.5
>> >
>> >•   Lets assume that a consultant has the ability to work 80% of the
>> >available hours every week of the year……………
>> >
>> >•        This would the equate to 14 hrs/Wk
>> >
>> >•        14 x 40 = $560/wk or  $2426/Mth
>> >
>> >•        From your current earnings of $6900 to $2426 per month
>> >
>> >•        Reality –$113.75/hr CHARGED TO CLIENT to equal an income of
>> >$6900.00/month
>> >
>> >GROSS INCOME TO CONSULTANT IS $82,800
>> >
>> >*NET IS LESS THAN $70k PER YEAR* AFTER SELF-EMPLOYMENT TAXES AND *NO COSTS
>> >OF BUSINESS HAVE BEEN RECOVERED*
>> >
>> >On Fri, Jun 8, 2012 at 8:54 PM, Gregory K. Schmidt <xxxxxx@verizon.net
>> >wrote:
>> >
>> >> A consultant fee is no different than salaries in concept.  A consultant
>> >> provides intellectual services specialized such that your institution
>> would
>> >> not normally retain on full time payroll.  Ask him if his paycheck is
>> >> profit to him.
>> >>
>> >> Gloria Greene <xxxxxx@UAH.EDU> wrote:
>> >>
>> >> >I have a dilemma and need some help/clarification with a situation.
>> >> >
>> >> >
>> >> >
>> >> >My CFO believes that a consultant’s fee is “profit.”  I disagree with
>> him.
>> >> >I believe that a fee for services is not a profit, and should therefore
>> >> not
>> >> >be classified as profit.  His position is a consultant and vendor are
>> one
>> >> >in the same and therefore any money made is “a profit.”
>> >> >
>> >> >
>> >> >
>> >> >I told him that comparing a vendor to a consultant are the same as
>> >> >comparing apples and oranges.  They are not the same.  The consultant
>> >> >provides a services the vendor provides a commodity (item, materials,
>> >> >etc).  These are not the same.
>> >> >
>> >> >
>> >> >
>> >> >Can someone help me!  If I am wrong, then please let me know that as
>> well.
>> >> >I view help as setting me straight and educating me.  If you can
>> provide
>> >> me
>> >> >with any written guidance on this matter to further make my case that
>> will
>> >> >be welcomed as well.
>> >> >
>> >> >
>> >> >
>> >> >I appreciate this group and its insight.
>> >> >
>> >> >
>> >> >
>> >> >Regards
>> >> >
>> >> >
>> >> >
>> >> >*Gloria Greene, MA, CRA*
>> >> >
>> >> >Director
>> >> >
>> >> >UAHuntsville, Office of Sponsored Programs
>> >> >
>> >> >SRA-Alabama Chapter, *Vice President-Elect*
>> >> >
>> >> >301 Sparkman Drive, VBRH E26
>> >> >
>> >> >Huntsville, AL  35899
>> >> >
>> >> >Voice: (256) 824-2657
>> >> >
>> >> >Fax: (256) 824-6677
>> >> >
>> >> >Email: xxxxxx@uah.edu
>> >> >
>> >> >
>> >> >
>> >> >*"The person who knows 'how' will always have a job. The person who
>> knows
>> >> >'why' will always be his boss."   -- Diane Ravitch*
>> >> >
>> >> >
>> >> >
>> >> >*Please do not print this email unless necessary.*
>> >> >*Take Charge,* *Go GREEN!*
>> >> >
>> >> >[image: yep]
>> >> >
>> >> >
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