The highest margins were certainly on that 15%, but the volume was not nearly high enough to be able to make it work.
Would a scenario be something like:
Prospect wants work done. Instead of turning them down because my rate is too, subcontract that to someone who is maybe less experienced and can do it at less than the advertised rate and bake in a margin there?
This is how body-shops make the big bucks: squeeze production prices down so you can carve more profit.
The alternative, I believe, is to find niches with higher margins or that scale better (white-label products, saas, and so on). Facebook makes $640k for each worker they employ, and they certainly don’t skimp on salaries.
* 5% consulting (e.g. reports, audits, et al)
* 10% subcontracting to other devs
* 85% direct software development
The highest margins were certainly on that 15%, but the volume was not nearly high enough to be able to make it work.
Would a scenario be something like:
Prospect wants work done. Instead of turning them down because my rate is too, subcontract that to someone who is maybe less experienced and can do it at less than the advertised rate and bake in a margin there?