So there’s been some buzz on the blogosphere, and the twitter, about ADA Winner Mike Lee’s rate ($1,000 / hour). (Three articles: original, follow up from Mike, and a response.

(There’s also an excellent point by point rebuttal to the response article on the comments of the same, which is essentially a blueprint of how to make a rational argument on the Internet. Read this article first, then go read that comment by lgerbarg for a totally different perspective on Mike’s blog post. But we’re not here to talk, directly, about Mike.)

So, a fundamental assumption of my business has been that the customer should be very worried about their money. I’ve assumed this because of past experiences with clients: where they are worried about where every hour is going, and worried about how they’re going to pay for it all. I also acknowledge that programmer time is very expensive, even at rates much lower than $1,000 an hour.

So I’ve always been very respectful with my clients money and time, assuming that they had the same expectations as I: my time is very expensive (at least in comparison to the guy who pulled your latte a few hours ago) so you should make sure you don’t waste my time.

Transparency is a big thing with me, a core value of my company. If you want to see exactly what I have done every time I sit down at the computer and work on your project, just wait until my invoice comes in. My invoice lists, in painful detail, everything I have done. My invoices, for one month of work, typically are eight+ pages long. I value my clients money, and time, so much that they can refuse to pay for certain hours if I’ve gone “off the plantation” on something. It’s my reputation on the line, every time I submit an invoice, and I think this level of absolutely transparency is important. Again, to the normal person (that kid at Starbucks), programmers make outrageously large sums of money per hour, so I believe that this is important.

Lately, I’ve been feeling a little… undervalued. I’ve put up with stuff that I shouldn’t have had to if the client involved respected my time like I respect their money.

Certainly, at $1000 per hour, Mike will have a very focused client.

For example, I spent the last two weeks in estimation meetings. If I was charging $1000 per hour, certainly the client would have done better homework (prioritizing scenarios, having us estimate just the 20% of the requirements that gave 80% of the functionality). I’m certain they respect his time, because it’ll quickly blow out their budget if they don’t.

So this brings to mind a point about hourly rate that I had, never really thought about: that your rate informs the respect you’re given, by management that’s being careful with money.

As another example, on Monday I was on a conference call with seven people. The first 5 minutes of this phone call was two of the managers discussing plans for a new member of the team. Even assuming everyone on the call charges say $50 an hour, an hour conference call would cost $350. Five minutes of wasted time is lattes for the entire group, or a half a day’s pay for that baresta.

Now, add one person charging $1000 per hour, just 6 minutes of idle conversation would cost $135. (or $22 per minute).

I’m pretty sure there is no idle conversation when Mike Lee is in the room, on the clock.

Mike can charge these rates because he is a good engineer, passionate about what he does, has won a few Apple design awards, is known in the community, and doesn’t want to take bullshit.

The trick to charging sky high rates is two fold:

• On the developer side: you have to know your stuff and you have to convince the team level management, by actions, that they want you to impart your wisdom on the project. Household name in your community (Rails rockstar? Have your name on a Java Community Process Paper? Write half the software stack that your community uses every day?) You’ve got the respect from the engineering side.
• On the management side, if your rates are high enough, then everything should fall into place. Management will move heaven and are because they know that having you sit around a conference room for 30 minutes, while they’re running late, has cost them $500.

Of course, coming to that level of expertise is no easy task. Myself? I have risen to decent heights in two (relatively small) communities:

1. Data storing and retrieval with Helix RADE, via Applescript or other means.
2. Developing with wxWidgets on the Macintosh

I’m not as active in either community as I used to be, which is a shame, but I still know more than most people dreamt of in either of these topics.

But you also have to get yourself out there: I was active on both of these communities mailing lists for many years.

There’s a third community that I’ve achieved technical excellence in: I’m one of the (probably) half dozen people in the world who know about using Ruby with Quickbase. I know that I’m at this level because I’ve found crippling bugs in the Ruby QuickBase integration library that, by the simple fact that they weren’t fixed when I got there, means that nobody’s tried to do the stuff I’ve tried to do with that system.

If you have serious data needs in this department, contact me. We can help. If you want to know ways we’ve helped others in this situation, and you don’t frighten easy, shoot me an email.

But nobody in that community knows I exist. I don’t post on blogs, I don’t contribute to the community forums, I don’t care much at all about the QuickBase community. If I demanded sky high rates for my Quickbase work, I would be laughed out of (big companies that use Quickbase): they don’t know me from Adam.

Business people in that community don’t know me, and engineers don’t know me either. Developers (where it all starts) won’t respect me because they’ve never heard of me. They can’t say “we really need help, and we really need to talk to Ryan if we want this project to succeed.”

With this reputation, if the business people are serious, they’ll hire you. If they’re not serious about shipping software, well, if you’re good enough you don’t want them as clients anyway.

So, the four take-away points of my ramble:

1. Get really good at something. It doesn’t even have to be something big (“the whole Ruby on Rails stack”), it could be some niche area. Heck, even modding a game you love.
2. While you’re getting really good at something, get hooked into the community. Start a blog, hang out in IRC, learn everything you can. In two or three years you’ll become a fixture, a respected member of the community.
3. Put your time in, learn, get good, learn from your betters, get experiance. You’ll have your time in the bullshit, and then you’ll realize it’s not worth it at your current rate.
4. Increase rate, rinse, repeat. Hopefully gain respect from business when your consulting rate gets high enough to notice

Doing one without the other won’t get you respect from your peers. You might be able to edge your way into the door just on a high consulting rate, but I can’t imagine that that business model is sustainable over the long haul. At the very least, it’s neither honorable nor reputation building.

Then again, it might not work that way at all. Still learning on that front.