How to Charge w/o Experience

Recently a business aquaintance came up with the notion to build a midgrade hotel. He asked me to compile the data. I started immediately. I started the research off with the questions he asked and then more.

Upon more indepth research, I found that the Feasability Study, Franshise fee, appraisal, the land, the verbal communication (long distance) and the land will yield everyone thousands and even millions, in the end.

The market analysis is 9-13k alone. Since I'm the one pulling this project together, at least the initial stages/first stage, how do I charge since I am not an agency?

My experience is the combined education through out the years, peers, and technical skills.

At first I was charging a very minimal fee out of desperation/need. Now I feel like I'm underselling myself. He hasn't been noble enough, despite the other high fees he's encountering, to voluntarily pay me more. We have a verbal agreement only, thus far.

He's never spoken with any one. I've communicated with everyone from the first stage that is now going into the next, aquiring the contracts, the land and the contingent agreements, the lawyers, the franchize headquarters/VPs. Since I've been doing this from home, I have to stay here when documents are overnighted, research the acronyms unfamiliar to us both, then highlight what to sign and where. I've done enough research to narrow down which brand from the franchize to build.

How do I define my fee or what do I base this eclectic experience I'm lending on?

Sugaree, I'm so glad you've found something that appears to ignite your passion to work. You sound like a jack of all trades and should be paid as one.

Can you charge a steep hourly wage? Also,try to get something in writing that includes your involvment throughout the building and grand opening. It would be perfect if you could get a small percentage of the business once it's up and running.

Well you can take this in one of two directions. Number one ask for, in writing 2% to 4% of the total cost of the endeavor, yep the entire project. If the project is $200,000. then 2% would be $4000. and 4%,$8000., and so on, thats fair....Now you could also ask for a piece of the operating pie but thats very difficult to compute and to get. They always cry that their losing money...Now if you've already made a handshake deal you're stuck with it but you might be able to get a bonus by crying more work than you thought it would be. Hey, good luck...

Great idea, Chatty. Thank you. I will also see a career counselor at the university where I'm employed as well as put my own research skills to work since I have a bit more direction and definition of what my skills will offer this project.

I received several proposals from Market Analysis groups the last few days. I see how they itemize each study, travel expense, time and print material/professional opinions/communication.

One company even sent a sample market study. The presentation is extremely professional. The paper stock, glossy pics, the medium in which the company has presented and will present in, the detailed study...all worth the 9-13k. One company sent me a two page contract that need some major revisions with a much lower cost of 3k.

I'm basically doing these same things but from another angle. The very angle that will be dependant upon him getting the franshise contract or not. Although he has the $$, I have to present/sell him with my representation.

Yes, I do need proper compensation.

Watch out! A Boomer on the road 2 success here!

[ April 01, 2005, 09:38 PM: Message edited by: Sugaree ]

YOU GO GIRL!!!!!!!!!

I'm sitting here very sick right now. First of all, I really didn't take the great advice I was given on this latest endeavor very well. Since I was already in a financial bind, I took the offerings the business aquaintance suggested w/o further research into what this project would entail.

Now, two months into stage one, I realize how much work, time...ect. Now I've computed the amount of hours times the days for the flat fee I'm getting and coming up with pennies.

Since then, I've found a consultant that does similar work. He says that he charges $750 per day! Well, since I don't have his years of experience and knowlege, I don't feel like I've lost 750 per day but my calcs don't even come close.

What is a tactful way to re-negotiate finances w/o jeopardizing the entire project? I really like it and wanto to see it to the end.

Chatty's suggested calculations would have been ideal had I recalled them when he propositioned me with this again.

Verbal agreements can make the best of friends enemies very quickly. If it is a true business person on the other end, they will respect having a written contract.

As to your fees, do a comparative analysis of the market, subtract 15 - 20% off of the average (obtained by tossing out the highest and lowest and averaging the rest) to compensate for your lack of "title".

In the future, since you have experience, if you plan to do this again, do not undercut your fees, simply charge on the low end until you have done 5 - 10 jobs, at which point, begin to steady increase your fees per project until you reach the amount competitive with the top 25%.

Congratulations on such a rewarding project!

DallasGirl, I think my calculator can measure this equation. I have revised a contract from a semi-partner (granted that's a term here). I'm working the details now. I'm glad my addiction to BWS made me visit tonight. My plans are speak to him re: this in the very near future. I really want/need to do this job well so that I can make it to the 5-10 job in position. If not, someone that's noted my dedication has yet another offer that may not be as good, but at least it will be fair.

Sheree

Sheree,

=) Good Luck! Keep us posted on your progress - and what happens.

I am late weighing in on this issue (as usual) but my opinion is that you should charge by the hour, especially when you don't know how much time a project will eat up. My experience is that everything takes longer than I thought it would on the front end, so charging by the hour is a safe way to ensure you won't end up doing work you don't get paid for, especially in a project of this magnitude.

If you already have a written contract, I don't see how you can legally get out of that, but if it's just verbal at this point then you need to get something in writing. I'm not a lawyer so I don't know about how the verbal agreement plays into that, although I believe verbal agreements can hold up in court.

Kelly