Some thoughts from employer's point of view

[shoes]

Analogy is correct in a sense that taxi driver is not working 100% of the time - the reason it is more expensive than bus/train, is because he has to waste time waiting for clients. I don't have hard data at hand to say how much time average black cab driver is not billing, but that's certainly more than 25% of the time, probably 50%.

This sounds backwards to me, the reason a taxi costs what it costs is because that is the amount the market will bear, they charge the most they can get away with, not the amount they need to keep going. If a taxi is busy 100% of the time it makes more money, it doesn't reduce the price to compensate.

[suityou01]

This sounds backwards to me, the reason a taxi costs what it costs is because that is the amount the market will bear, they charge the most they can get away with, not the amount they need to keep going. If a taxi is busy 100% of the time it makes more money, it doesn't reduce the price to compensate.

So it is an open market?

[shoes]

So it is an open market?

In so far as the analogy is relevant to the discussion, yes. I don't know much about taxis, im just following the analogy to make the point.

[AtW]

This sounds backwards to me, the reason a taxi costs what it costs is because that is the amount the market will bear, they charge the most they can get away with, not the amount they need to keep going. If a taxi is busy 100% of the time it makes more money, it doesn't reduce the price to compensate.

Taxi is not busy 100% of the time, do you agree with that? Exact %-tage of billable hours can be debated, but it's well below 100%.

What this means is that they HAVE to charge more those who use them in order to make up for this occasional work.

That's fundemental model. On top of this you have (in this country) councils having effective monopoly on black cabs, that's on TOP - this only makes final cost higher on top of fundamentals.

[AtW]

You can hire contractors for short term assignments, you know, and contractors charge even more then. Consultancies provide clients with certain things which permies and contractors can't supply:-

Anything short term is true contracting, ie: a supply teacher sent out to cover for a sick permie. This can be true of IT guy who was sent to deal with specific problem, ie install properly some stuff, configure expensive network etc, that's all fine - fits "taxi model".

The problem is with IT contractors who stay long time - over 6 months, or even years. That's not contracting - it's permie job. This does not mean you are bad person, no - if you stay you are probably good, it just means you are not really doing contracting (in my view).

1. The consultancy's reputation i.e. because a lot of company's have used the consultancy before, the CIO is less likely to lose his job if they screw up, so has covered his ass.

2. Consultancies often have people immediately available.

3. Some consultancies build up a library of knowledge.

4. A companies reputation may be improved by using a consultancy. For example, if the consultancy were to use a project with your company as a case study, you'll get publicity which would be hard and expensive to generate on your own.

I'd say consultancies are irrelevant, even though in my "taxi model" we do have analogy of consultancies - phone only taxies who can manage their staff/contractors more effectively so that they have less not-billing time, and thus they can have lower prices.

[shoes]

Taxi is not busy 100% of the time, do you agree with that? Exact %-tage of billable hours can be debated, but it's well below 100%.

What this means is that they HAVE to charge more those who use them in order to make up for this occasional work.

That's fundemental model. On top of this you have (in this country) councils having effective monopoly on black cabs, that's on TOP - this only makes final cost higher on top of fundamentals.

Ok fine but my point is the price is set by what the market can bear, not what the costs are. When costs > chargeable price the business isn't viable.

A business should charge as much as it can get away with for it's service/product, regardless of production/service cost to that business. That's all my point is.

[AtW]

A business should charge as much as it can get away with for it's service/product, regardless of production/service cost to that business. That's all my point is.

Wrong point of view - business should price such as to maximise profits over long term. You can take the piss and charge a lot to get Y2K sorted, but then you get backlash - smart business won't do it, McDonalds I think still charges the same money in DisneyWorld and on Oxford street, even though you'd think they could charge more there since rent is more expensive? They don't do it because they take long term point of view.

[shoes]

you'd think they could charge more there since rent is more expensive?

No, they could charge more there because the punters would pay it. This is my point. I think I've made it enough times now!

[AtW]

No, they could charge more there because the punters would pay it. This is my point. I think I've made it enough times now!

No - black cab prices are capped by council. There are some allowed increases if it is night driving and such, but it is all controlled.

Are IT contract rates controlled in the same way? No - it is actually free market for contractors, unlike taxies, though this is not really the point here.

[TykeMerc]

Wrong point of view - business should price such as to maximise profits over long term. You can take the piss and charge a lot to get Y2K sorted, but then you get backlash - smart business won't do it, McDonalds I think still charges the same money in DisneyWorld and on Oxford street, even though you'd think they could charge more there since rent is more expensive? They don't do it because they take long term point of view.

Utter rubbish, to take your analogy re McNoxious they charge different prices for the same junk depending on where their outlet is located.

Please stop this feeble trolling, it's not funny.