Think about the value of your work when it comes to your consulting fees. There are a variety of factors that can affect the scope of your work and how much you should charge.
What’s the Scope of the Work
Your specialization will also affect the type of work that you’ll be handling. There are two general buckets that you can fall into when it comes to consulting fees.
- A strategy consultant focuses on developing high-level business strategies and tactics to beat the competition.
- A management consultant focuses on improving the performance of a company’s specific business strategies.
What’s your Experience Level
Your experience level will also affect how much you can charge. Conducting research is vital to ensure you aren’t undervalued or overvalued. Since different industries have varying rates, your specialization and scope of work can influence the model you use and your consultant arrangement.
Who’s Your Competition
Your physical location and the competitive landscape are the final factors that will affect how much you can charge. While you don’t need to follow your competitors’ prices, it’s essential to consider how much other firms charge. Urban or coastal consultants can typically charge more due to their location.
How to Structure Fees
Most consultants choose a fee structure or pricing model to remain transparent. There are a variety of different types of systems that most firms use. The goal is to ensure that you’re fairly compensated for your work.
- An hourly rate is a time-based arrangement where you bill based on the number of hours you’ve worked.
- A project-based fee is a fixed rate that’s agreed upon before the start of the project.
- A combination fee allows you and your client to set a fixed rate for the entire project while considering the time spent.
There are a variety of factors that you’ll need to consider when it comes to creating a fee structure. It can be hard to balance these factors, but there are a few steps that you can take to ensure that it’s an optimal deal for both you and your client.
One of the easiest ways to determine your current rate is to divide your previous salary by 52 weeks and divide that number by 40, which is the number of hours you work per week. This will give you an estimate of your current rate. It would help if you also researched the prices of other firms to see how they stack up. According to the Small Business Administration, you should ideally be at most 30 percent.
What are your costs
Before starting a project, estimate the time you’ll spend on it. Break it up into various tasks, such as research, client analysis, and drafting reports.
A retainer is a fee paid in advance to ensure all service promises are kept, and all financial obligations are met. Attorneys commonly use retainers as they need the services of an individual on an ongoing basis. A retainer might be appropriate for you and your client for certain types of projects.
You can also consider invoicing your client monthly or quarterly for hours worked on their behalf. Be sure to keep in mind how you’ll be paid when you make your contracts.