I was reading over Raven Zachary‘s O’Reilly post about turning ideas into execution and found the comments as interesting as the main post. In a nutshell, Raven mentioned that there are a lot of people with ideas for iPhone apps, but that building an iPhone application is too expensive (i.e. $125/hour) for many to capitalize on their ideas, and that the demand for iPhone developer talent far outstrips the supply. In the comments, however, were a number of apparently-experienced iPhone developers without enough work and expressing frustration that they’re struggling to find clients willing to pay them even $50/hour.
This gaps between supply and demand is nothing new in any service industry, including the IT/software development world. Varying rates aren’t just common in the iPhone world — for example, I have have met US-based sysadmins and web programmers, some of whom charge $125/hour and some who charge $25/hour. Normally the $125/hour people are far more experienced than the $25/hour people, but not always. I suspect that iPhone rates are already drifting down into a varying range (instead of everyone getting $125/hour), and as others have noted, the fact that you can build an iPhone app already doesn’t mean you can instantly charge anyone $125/hour. I have come across a number of clients who turned us down because they found someone willing to build them an iPhone app for $3000 flat. Did they end up with a crappy, late app? Possibly, but maybe not.
Even in our experience building mobile & social apps, we’ve found clients who have healthy budgets for whom we’re a true bargain, while also finding clients with no capital looking for a $500 application. We’ve even gotten a few calls from offshore firms looking to outsource mobile development to us (we’re in Portland, OR).
It’s my belief that you can charge a lot per hour if 1) you are good, and 2) you can find clients willing and able to afford decent rates in exchange for reliable quality development.
#1 isn’t always required, although if you can explain to your client that paying an experienced developer $100/hour for 10 hours of work is more effective than paying a junior developer $30/hour for 40 hours of work, then you’re halfway there. Just like if you have an important or critical plumbing problem in your house, are you going to hire the seasoned veteran for $90/hour or the CraigsList special for $25/hour? Unfortunately, some clients only see the hourly rate (and not the total cost), while others have a certain budget or rate expectation already built in.
#2 is about networking, advertising, sales, careful client selection, and offering something worth the extra fee (because you’re seen as an “expert” or have specialized skills). Getting a decent influx of clients and finding the ones that fit your offering is important. For us, we try to find clients that have established budgets and for whom on-time, quality, experienced, creative execution is worth the extra expense (although honestly we’re more affordable than a lot of other development shops). It’s no surprise that a few of our clients found us after being “burned” by other developers who were cheaper but either didn’t deliver or went AWOL. Sometimes you can find someone very cheap who’s also very good, but many times you’re just gambing. Plus, hiring a developer at a super-low rate opens you up to the huge risk of that developer finding a better-paying contract halfway through your project. And if that happens, guess where he’s going to focus more of his/her energy?
Also, I think #2 is sometimes difficult for developers, as it’s full of soft skills, so a lot of excellent coders find themselves struggling to find clients willing to pay $50/hour while reading with some amazement about other programmers turning away work at $125/hour.