Fair price for consulting services?

I’ve been having exchanges with one of our colleagues. I will quote from a recent email:

"Unless it’s something that I can purchase at an arms-length transaction, say Accuterm, and install myself, then I do not want any part of involving another MV consultant with my clients. Technically, I don’t want my clients to know about that consultant nor that consultant knowing about my clients. I fight long and hard to acquire and keep my clients. I’ve lost a few clients for these very reasons years ago, both by the hand of the client and the offending consultant. Therefore, I strongly hesitate to involve outside situations that I can’t appear to represent myself."

What we’re seeing here is no small amount of paranoia, justified or not, that has caused a developer to not only shun interaction with other developers, but he also isolates his users from external solutions. If he can’t control it, it doesn’t exist. My argument is that this sort of thinking is exactly what opens end-users to an open market, and that demand only fosters a supply of people who are eager to provide cheap labor. Our colleague here is concerned about other people stealing his clients. Of course there are exceptions but I know of few legitimate contractors in our industry who have "taken" business away from colleagues. And yet I know that most outsourced agencies have absolutely no concern for preserving relationships between consultant/VARs and end-users. If you’re afraid of losing your business to someone who works in your own business community, consider that someone on the other side of the world may not give a flyin hoot about "community" and no vision or delusions about relationships that they are building for years to come.

So where is all this going? I’m thinking that this $35/hour gig is just the first of a series. Kevin is going to get someone to sell themselves for $35/hour, whether their time is worth more or less is up to the individual. But there will be more developers offering themselves at this new "going rate", and it will be harder for the rest of us to compete. I have to say that when I first started independent consulting/development in about 1987, my opening and negotiable rate to new clients was $35/hour. Even at that time I distinctly recall my first client’s reaction. With raised eyebrows and a look of confusion he said "OK, but don’t yourself too short." The implication was that even at that time the rate was far below what he was expecting and willing to pay. If MV developers don’t assert in specific terms why they deserve more, we will continue to see competitors offering 1987 rates in 2008. Consultants need to be real full-service providers in order to survive – in order to charge higher rates that allow them to survive in a tough economy. The issue isn’t about keeping rates "up", it’s about charging a fair rate for skills that allow us to maintain some reasonable lifestyle in our local economy, and to maintain or build reasonable businesses. If you want to accomplish these goals and not succomb to the $35/hour individual who doesn’t have your expenses and isn’t interested in building a real business, then you need to make sure your business offers clients and prospects something more. Differentiation is the key. Earn the rate or deal with the change. Simply complaining about competition isn’t a legitimate option, especially after it has already destroyed your business or way of life.

As always, thanks for your valuable time. I hope this has been time well spent.