Pricing
How do we charge clients?
Bottom Line
We offer clients 40 hours of pro-bono work for free, and charge at a rate of $85/hr after that. We typically try to create product requirements and lump-sum contracts, rather than hourly billing, but we still use the $85/hr figure to estimate costs.
Free period
We offer clients 40 hours of free work.
For many use cases (automating tasks, connecting systems, building small applications), this can cover the full implementation of a small project.
For larger projects, this time period serves as a way that we can work with the client to establish clear and specific product requirements, a technical project design, and a potential timeline for implementation. In the past, these artifacts have been used by clients to seek funding for the project with their donors, and have been used to get competing quotes from for-profit software shops.
Hourly Rate
If the client has used 40 hours of time and wishes to continue working with us, we bill at $85 USD / hour as of 2024Q1, see how we calculate it below. Organizations are grandfathered into our advertised rate at the time a collaboration started. For engagements prior to 2023Q1, our rate was $75 / hour.
This rate may sound high, but it is very low relative to industry rates, which can range from $100-800/hour, and the relative experience of our engineers (all have been senior software engineers at Google prior to joining Silicon Ally).
Two facts should set your mind at ease about costs: the first is that we’re a nonprofit organization—our structure limits the utility of padding our margins—we’re just trying to cover our operational costs. The second is that you can see what we pay our employees; our first employees took 80%+ pay cuts because we love this work.
If you’re concerned about costs, we’re more than happy to set a cap on the number of hours, or set up contracts where we charge pre-specified amounts for the delivery of pre-defined units of work, rather than charging on an hourly basis. We’re open to various pricing structures, but generally expect this level of financial commitment from clients.
If this is prohibitive, please don’t hesitate to reach out. We still want to help brainstorm and design with your organization about software in the 40 free hours, and have recommendations on how to secure funding after that point.
Calculation
At Silicon Ally, our goal is to help nonprofits use software—when it makes sense—to better achieve their mission. The reality of this is that every dollar an organization spends on us is a dollar less they have to put towards their mission, which to us means two things:
- We only want to build and deploy software solutions that will pay dividends for the client organization, and
- We want to charge as little as realistically possible.
We do #1 by carefully selecting our clients and projects. We do #2 by tying our hourly rate to what we pay our employees, which is by far our largest expense.
The hourly rate we charge clients necessarily needs to be higher than the rate we pay ourselves, to account for the fact that not all of our working hours are billable. Aside from the pro-bono work we do, we also have general organizational housekeeping to attend to (payroll, finances, taxes, etc), interally driven initiatives (like our open-source projects and internal infra), and general business development (blog posts, outreach, etc).
To comfortably do all these activities, the hourly rate we charge is approximately double the hourly rate we pay ourselves, meaning that roughly 50% of our working hours need to be billable for us to continue existing as an organization.
Since our hourly rate is based on our compensation, and our compensation based on the seasonally adjusted median weekly earnings from the Usual Weekly Earnings of Wage and Salary Workers report from the Current Population Survey administered by the Bureau of Labor Statistics, our hourly rate can also be expressed as Median Weekly Earnings / 13.46 rounded up to the nearest dollar, which is currently $85 / hour as of 2024Q1.
Lump-Sum Contracts
When working on larger or longer-term projects for clients, we typically prefer working on a ‘pay-for-delivery’ model, rather than an hourly one. Under this model, we work with clients to establish a set of product requirements, and then get paid only when those requirements are met. When designing a lump-sum contract, we first estimate the volume of work required for the project, and then multiply that by our hourly rate.
Lump-sum contracts enable both client and developer to minimize risk, and remove anxiety all too common when folks use other pay-by-the-hour professionals.
Finally, we recommend lump-sum contracts because it enables you, the client, to shop around for implementation. We’re happy to help you design a set of product requirements (usually in the free period), and then you have a document you can take to any other software-shop and get a quote from them on it. If someone else can implement what you want at a lower cost, that’s a win-win-win.
Questions?
Anything we failed to address? Just ask!