Project-based pricing models are the most popular, but they’re not the only viable option.7 A decent number of consultants also charge by the hour, by the day, or on a monthly retainer basis. If you’re ready to make the leap to consulting full time, but you’d like to maintain your current cost of living, you need to determine the cost of doing business. To do that, the colloquial advice is to charge roughly three times what your current hourly rate is. Knowing how much to charge for your consulting fees is just half the battle.
If, on the other hand, you’ve been working for five or more years, and have a wealth of industry-specific experience and happy client testimonials, you can charge on the higher end. Maybe you create websites or develop marketing plans — no matter what you do, you’re bound to get better at it the more you do it. You could raise your hourly fee to https://www.globalcloudteam.com/ compensate, but clients may have a hard time swallowing the higher hourly rate. It’s natural to dislike the process of setting your consulting rates, but you shouldn’t have to give up money or sleep because of it. With a bit of know-how and practice, you can become confident in your value as a consultant and ensure your pricing reflects that.
Factors that impact hourly rates
To attract better clients and grow your business, you need to value yourself properly. Remember that your consulting rates aren’t just your price of doing business; they’re a representation of the value you bring to clients. Price your services too low, and you’re underselling your talent and experience. We don’t necessarily recommend charging by the hour, but you may want to structure your pricing this way if your consulting work involves meetings and a lot of in-person work. Determining an hourly rate is also an important part of calculating per-project or retainer rates, allowing you a baseline to work from. So whether you want to use the 3 x hourly method for like-for-like rates or the more complicated 52 week, your starting rate is critical to the long-term viability of your consultancy.
If you fall in line by charging the same as everyone else, you’re signalling that you’re a worthy (qualified) consultant who plays fairly. You’re also making sure you get the base line rate for consulting in your market. However, some consultants set their project fees using the value the client derives from the consultant’s advice. There’s an old joke about physicist Niels Bohr that illustrate this principle. To charge a daily rate, simply multiply the hours you work in a day by the hourly rate from the above example.
Common Consulting Fee Models
This may include other factors like commuting or conducting video training for in-house departments. Some of my peers sell one-time consulting calls and then upsell their other services through their agencies or partners. There are cases wherein a consultant’s services are needed on an ongoing basis.
It’s only a 1,458-word document, which is almost half the length of this article. Yet, as much as we love this piece, we’d argue the Declaration of Independence is worth approximately 2.5 billion times more. The end value is different from the input—and your consulting fees should reflect that. 80% of consultant are actively looking to increase their rate. 33% of consultants will lower their fees in order to win clients. This article, Consulting Fees and Rates – How Much Should I Charge?
How to estimate your monthly retainer for consulting services
Or are you offering something unique that only you can provide? If you are, this can be your unique selling point and allow you to charge more based on value and scarcity. Some consultants will mystery shop their competitors to get an idea of pricing or join groups with other consultants and coaches to have open discussions online. It’s good practice to check-in often on your competitors and not just when you’re first deciding on your pricing model, especially if your industry evolves frequently.
Some clients will start the conversation by proposing their standard rates, while others will ask what you charge. What rate do you need to set to cover your costs, make a profit, and live the life you want to live? This answer varies for everyone, so you’re not going to find a golden number anywhere. You’re most likely transitioning to a consultant career from a previous job, business, or corporation. How much you made there might contribute to going off on your own, but it can help provide a baseline of what you need to hit. Ask these questions to ensure your aspirational salary can pay your bills and be realistic.
What if the Client Wants to Negotiate Your Hourly Rate?
For example, I charge $350/hr for one-off consulting sessions and $300/hr for monthly plans or larger packages. As a fractional CXO, this could go as low as $180/hr for ongoing engagements that also retain DevriX as a vendor. Check out my lengthy guide on how to find and evaluate a consultant that would help you scale your business. The best option you have is to pay based on the value that the consultant brings your business, not just the time he spares or the materials he gives you. Notice that you might be working 40 hour weeks, but you’re not necessarily available for all that time.
Even the best consultants can occasionally experience a lull in business and may need to lower their rate temporarily. However, you don’t want to price yourself out of potential work. If a client requests an hourly rate that’s below your normal fee, it’s important to be flexible and negotiate. Consulting fees vary drastically by industry, and it would be impossible to list an average hourly rate for every industry. The table below lists the average consulting hourly rate by industry.
Believe in Your Value and the Right Price Will Follow
Competitor research will help you come up with a fair consulting fees estimate. It is important to remember that you are not just competing on price, but also the quality of service. You may want to consider what services you offer that your competitors do not, and highlight those in your proposal. Charging too much or too little can hurt your business, so it is important to find the right balance.
For instance, if you know a certain project takes seven hours, you can charge a set rate that’s closer to ten hours.
They have a better work-life balance, and they earn more money than they would in similar “regular” jobs.
Fixed charges make it simpler to charge for your work because you don’t have to worry about keeping track of hours.
The challenging part of this model is that you need to provide tangible value that helps businesses win clients.
For example, an accountant might offer consulting services around tax season.
Consulting fees are the fees charged by freelancers or consultants who provide expert knowledge and services to businesses.
Instead, you’ll spend time networking, writing blogs, crunching finances, paying bills, etc.
A reliable consultant will assure you that there will be no hidden charges from start to finish. New consultants undercharge to build a portfolio so you would expect to get great deals from working with one. Although the fees could vary primarily depending on the location among other factors. According to SBA, the hourly rate is taken from dividing the former salary by 52 work weeks and then dividing that number by 40 or the number of regular work hours in a week. As a consultant, you’re taking a risk and running a business. On average, nonprofit consultants charge between $85 to $150 per hour.
How Consultants Set Their Fees
By that point, you’ll have a better idea of their monthly needs, and they’ll trust you and your work. A flat rate gives them a defined amount of money they can expect to spend. Consultants enjoy this pricing average consulting fees per hour model because they can earn more than they would with a traditional hourly rate. For instance, if you know a certain project takes seven hours, you can charge a set rate that’s closer to ten hours.