Consulting Fees Guide

However, if you spend 5 hours a week on non-billable tasks, you’ll want to determine your hourly rate out of 140 hours. Now you need to identify the number of hours you’re going to work each month. Keep in mind that you should only be counting billable hours. You can’t charge certain tasks, such as bookkeeping or prospecting, to a client, so you don’t want to include them in determining your hourly rate. Although it is similar to the rate-based fee structure, it offers more concrete targets and milestones than the bill-rate model.

• A 2018 consulting fee study by Consulting Success found approximately 41% or respondents used either hourly or daily rate billing, while 31% used a project based/fixed fee structure.
• Although it is similar to the rate-based fee structure, it offers more concrete targets and milestones than the bill-rate model.
• We always ask our list of consultants to tell us about other aspects of their business.
• Once you’ve put together consulting fees for one client, you should be able to easily adapt the fee and fee structure for new clients.
• I challenge you to take what you’ve learned here to make your consulting business better.

Your consulting fees should be based on the value of your work. A number of factors influence that, including the scope of your work, your experience, and the competitive landscape. 48.67% of consultants lowered their fees to win clients in the past, but don’t do it anymore. One of the best ways to build a more resilient consulting business is to use monthly retainers. 17.30% of consultants use value-based fees to price their projects.

Fixed Rate

This is your cash-in-hand, after paying all your business expenses, taxes, and contributing to any retirement goals you may have. If you only serve a particular region, focus your rate research on just that area. However, if you can offer services to clients regardless of physical location, collect responses from consultants from all over. ROI for the consultant or consulting firm is the predictable margin on asset-overhead, such as salary or hourly pay. Q&A was part of Next Level Practice, the most supportive community for therapists starting a private practice. In this video, Joe answers the question based on what rate to charge as a consultant.

Most people will be in the low to mid ranges and very few will be at the high end. I ALWAYS price myself to be the BEST and the best costs more. I’d say package your prices into a high end rate and a mid tier rate. https://globalcloudteam.com/ This way you can give options and say I recommend this package which do you want. Then you can let them sell themselves on what they want or even use your lower price as a down sell to your higher price.

Management Consulting

Always keep in mind that you should be fair and base your price on the quality and value of your services. Being fair will encourage your clients to do business with you in the future, and will generate referrals. If you’re confident in your abilities and know for certain that the project will be successful, you can end up making far more than you would with an hourly or fixed rate.

Yes, your lack of confidence could make it more difficult for another consultant to make a fair living. 2.42% have employees, and the same percentage have 100+ employees. 12.55% have a profit margin of 60%+, and 12.17% have a profit margin of 50%+. Consulting is known to be a high profit-margin business — and the data supports that. They are another fantastic way to create greater leverage in your business.

Finally, it’s best if you present your 3 options over a call. Notice how we lead with Option 3, the highest-priced option. Ask the prospect if $117K in revenue would mean the project was a success.

Travel expenses include, but are not limited to airfare, car rental, mileage, parking, tolls, hotel, and meals. Mileage rates are per IRS standard currently .58 cents per mile. Travel Rates are calculated from the time service engineer departs to the time service engineer returns.

As you might expect, the majority of consultants (80.23%) want to increase their fees. 41.44% of consultants don’t have any retainer-based work, but would like to. Consultants who price their services based on value and ROI are 86% more likely to offer productized services. 42% of consultants have never tried value-based pricing because they don’t know how.

Consulting Rate

ROI is Return on Investment but COI is Cost of Inaction. What’s it costing them to NOT hire you now at those rates. I coach people on this all the time and it’s just a fear they have. Fear of the unknown is what keeps people where they are undercharging and undervaluing their services. The best pricing strategy that works well is an “a la carte” proposal where you provide as many services for your clients as you think they need, but let them choose what they need.

If you don’t believe that you have the qualifications, skills, and talents to live up to the promises you’re making, clients will smell your insecurity a mile away. It may take some time to build up that confidence, but be wary of undervaluing your services as you build that belief in yourself. Determining the value of your services is often tied up in your own self-worth, making this conversation even trickier for most people. For example, if you’ve worked as an employee for the last 30 years and never made more than $50 an hour, it might seem inconceivable that your services are worth $100 an hour. If you ask any consultant, freelancer, or other “gig” worker what the hardest part of their job is, most will likely say “pricing my services.” 75.15% of consultants we polled are male, and 25.8% are female.

Over the past few years he has grown his skills, income, and ability to lead others, while still maintaining an active private practice in Traverse City, MI. To link to Joe’s Google+ . Professional services companies, such as accountants, lawyers, human resources, IT services, and others often provide their services at an hourly consulting rate. But even product companies can add to their revenue stream by offering consulting. Retainer Fee$3,500.00To be paid prior to starting work for a new client, or on a new case. The first 10 hours of services provided @ $365.00 per hour, will be deducted from the retainer. An invoice for services and expenses will be sent on a regular monthly basis.

50% of consultants do not offer productized consulting but are interested in doing so. 14.26% of consultants have not done a performance deal and are not interested in this pricing strategy. 41.63% of consultants have never priced their services based on value because they don’t know how. Whether you’re a new consultant or you’ve been in the game for years, pricing your consulting services is one of the most challenging aspects. As you gain more experience, cost-of-living increases, or you just become more familiar with the clients you’re working with, raise your rates.

You also have no control or insight into the ROI, meaning an untrustworthy client could downplay their return to pay you less than you deserve. However, if negotiations consulting fee rates should happen with a client, you’ll know just how low you can go without digging into your own pocket. Make a list of each business expense––no matter how small.

You cannot answer that question by asking a forum like this. List out the top companies in your field that serve the same market you are targeting and check out what they charge and how their services are bundled. Test out your findings with as many people in your target market as you can and carefully record the feedback you are getting. Adjust when required and keep reviewing your market and competition.

Consulting Business Financials

Other work-related factors include the size of your IT environment, the scope of work, and your level of involvement. Your IT consulting company will determine if any of these drive the price up or down. Hourly costs vary among IT consultants and are usually commensurate with the firm’s overall expertise and experience as well as their location. Fees must be paid promptly and in full regardless of a third partyʼs failure to pay the client, opinions expressed, or outcome of litigation. Clients are asked to provide valid credit card information. If payment is not received within 60 days of receipt of invoice, the outstanding charges will be billed to the credit card.

Pricing comes down to two parties agreeing to a specific number. If you offer to do a job for less than you’d like, you will end up resenting the client, the project, and yourself. Our Momentum program is for newer consultants who want to follow a step-by-step system to predictably and reliably get to 6-figures per year or more. 42.02% use contractors, but don’t employ anyone full-time.

I’d say have like a $10k package as your low end and then a $25k or $50k package as your high end. Then position yourself as the best in front of your ideal audience. I suggest dividing your services into transactional services and consultative or strategic services . For me, $90 per hour has worked wonders, because some clients think anything with 3 digits like $100 and up per hour is too expensive.

How To Set Consulting Fees Per Hour

Next, determine the percentage of the day the consultant expects to work for. For example, in this problem, the consultant expects to be able to bill for 3 hours a day on average. Enter the desired annual salary and your expected percentage of the day you expect to bill to calculate your consulting fee.

Establishing Your Consulting Fees

From expert advice on designing or implementing the latest technology to taking on the responsibility of your IT infrastructure, our team is ready to help. While that is the base rate, you should consider many other factors to get the best estimate. Here is where the price of IT consulting can quickly escalate. All contracts or agreements with Aquatic Consulting Services are entered into in the judicial district of Avalon, California . Client submits to such jurisdiction and waives any objection to venue and / or claim of inconvenient forum. Tracking down invoices can be an added nuisance to running a business, try these tips to make managing overdue invoices as easy as possible.

However, these calculators use your net income––meaning they don’t become useful until after you’ve already been paid. You may also want to check out some other consultants’ websites. We have reviewed an overview of how a client and consultant will work with each other before, during and after a project, but. Make sure you or your firm is listed in our directory, so you are visible to the highest propensity clients. For this example, the consultant would like to make approximately $150,000.00 per year. Once you sign a contract, the consultant takes on the role of a managed service provider .

And if you’re looking for hands-on coaching to implement value-based pricing in your consulting business, check out our Clarity Coaching Program. For example, helping your client generate 3 clients per month will generate $18K in monthly recurring revenue. One of the issues with the hourly method is that your client feels uncertainty around how much they’ll end up paying you. And uncertainty around a project will stop your client from moving forward. The Hourly Formula is when you charge by the hour for your consulting services. In an ideal world, all your consulting clients would pay the same rate and follow the same payment schedule.

2.47% earn $45K-$100K per month — and 1.52% are earning $100K-$250K per month. Recurring revenue can provide a higher sense of security because you know you have predictable income coming in each month. Value-based pricing is a hot topic in the consulting world — and for good reason.

Let the demand level determine how much work you do, and at what cost. B% is the percentage of the work day you expect to be able to bill for. For example, if you expect you can bill for 4 hours of an 8 hour day, that would be a 50% bill percentage. However, as a managed services customer, you qualify for a rate lower than the base amount. For a monthly fee, you’ll have IT support and a back-tested software suite.

Should I Charge By Roi?

However, regardless of how you end up choosing to charge the client, it’s easiest to start with an hourly rate. Once you’ve determined what you’d like to make each hour, you can do some quick calculations to find the rate you should charge regardless of fee type . This is more common when the consultant acts in an advisory role at the strategy level. With a set bill rate, the client pays a set rate per hour, day, week, or month for each consulting resource for a set amount of time. In other words, the consultant bills the client based on the amount of time spent at an agreed upon rate. Consultants have more of an advantage when the consulting fees charged to their clients are flexible based on preference.