Here are three action items for you if you’re serious about raising your rates and increasing your revenue. There are many different reasons why consultants aren’t raising their fees despite wishing to do so. As you might expect, the majority of consultants (79%) want to increase their fees. Productized consulting is when you strip one of your offers down to its essentials. They’re fixed (non-changing) in terms of both scope and price. It’s one of the best ways for consultants to create leverage — and increase their earnings without working more.
Then, it gives you an actual consulting rate to reach your goals and cover expenses. The experienced/MBA consultant makes $215,000 annually, working 40 hours. However, if they wanted to make the same compensation, only working 20 hours, that’s $206 per hour. And the average compensation range for an experienced/MBA consultant at the same companies is between $215,000 to $230,000. Long-term projects provide consistent cash flow and reduce revenue variance. So, to win the project, you could consider slightly reducing your rate when calculating the project fee.
Factors that impact hourly rates
Their annual fee income can range from anywhere below $50,000 a year (for operational support) to above $400,000 (for executive consultancy/interim). Typically, information-technology consultants will charge by the hour, while more high-level consultants like strategic planners or management coaches will charge per project. Lawyers, accountants and wealth managers tend to nab those retainers. Brian Conners, president of the Association of Professional Consultants (APC), says charging an hourly or daily rate is easier for first-time consultants.
Monthly retainers guarantee a consultant a regular stream of income without having to spend on additional sales and marketing costs for securing a project with you. The first step to calculating your hourly consulting rate is to find the median of what you currently earn compared to the current market rate. This means if you currently earn $65 per hour and the current market rate is $45 per hour, the median rate would be $55. The purpose of various consulting fee structures is to ensure you are rewarded fairly for the services you offer and that your clients feel comfortable paying for the value you’ll be delivering.
How many people are willing to pay for your time?
As we’ve seen, a fixed rate or project-based rate is more applicable when you’ve gained expertise in what you do, which means you spend less time completing projects. Since most clients have a budget for projects, it’s a good idea to start by asking them their budget for the task in question. Time is money in any consulting business and there are two ways you can determine what your time is https://www.globalcloudteam.com/ worth. The first is to divide your weekly pay by the total hours you work per week. The other way is to determine the value you place on your time and the minimum hourly payment you’d accept for a job similar to your current or previous job. When pricing your consulting services, be sure to keep these factors in mind so you can find the sweet spot that works for both you and your clients.
- One of the most important things you can do when setting your consulting rates is to communicate your value to potential clients.
- They also spend a huge portion of their time looking for consulting clients.
- They interact with the government and work with Fortune Global 500 companies that can afford their rates that start from $500,000 to $100 million and up for the project.
- Working “at scale” and impacting a larger number of people or directly supporting the revenue goals of a business tends to generate a lot more, which justifies a high consulting rate too.
- We’re still using some of them for our lead generation initiatives.
- In fact, the market is slowly becoming oversaturated, which affects the mean hourly rate.
It’s time to create the business you want, delivering value while making a good living. This might suggest that you have priced your services too low and need to increase them. Let’s take a look at the different methods you can use to create your pricing structure. 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.
Double/triple your hourly salary-based wage as basis for consulting fees
You can take advantage of this kind of deal once you have tested a consultant after a month or two, or once you have already covered the entire scope of the project. That said, some consultants are only available for retainer arrangements – given the fact there is the initial investment average consulting fee per hour in exploring the business and its needs, a long-term commitment may be necessary. Often, when consultants charge by the hour, they base their pay on how much they were getting from the company they used to work for or still work for on an hourly basis, with a little markup.
Your consulting fee will be different than my consulting fee. Trusted by over 145,000 businesses, InvoiceOwl is the best small business invoicing app on the market with easily customizable templates and simple workflows. All business owners are grateful for the help from their friends and family. If a client can’t afford your bottom fee, it’s best to move on to the next prospect. Almost invariably, the output is a series of data driven recommendations centering around the problem at hand.
Consulting Fees Action Plan
Small businesses need to make sure their price point reflects all the overhead of having a multi-person team. Determining how much you should charge as a consultant is often tied up in your own self-worth, making this conversation even trickier. 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. The consultants who charge the highest fees are lawyers, finance, and tax professionals. Because they have unique and specific expertise that is rare.
Some examples of consultants who render services on a recurring basis are the legal consultants, IT consultants, and even financial consultants. You pay a retainer fee in advance to ensure that your consultant will be available anytime you need advisory or assistance. Most consultants prefer to charge this way since clients are usually used to hiring services on a daily basis to avoid limitations on the scope of work which usually happens if you charge by the hour. The daily rate is basically derived from a consultant’s hourly rate multiplied by the number of hours per day that a consultant is expected to be available for work.
How to Charge Luring Consulting Fees
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. I am available for WordPress consulting and business growth strategies via Clarity so you can schedule a 15-minute call to unblock the challenges you’ve been struggling with. To stay competitive and turn technologies into a growth driver, companies of all sizes resort to software consulting.
So it’s important to raise your rates to reflect that reality. Project managers charge average consulting fees of $70 to $150 per hour. You can also add a clause to your contract stating that this project rate is based on the items outlined in the statement of work. Anything that comes up that’s out of scope will either be renegotiated or charged at your hourly rate.
Consulting Fees By Project
The mid-market fee range is populated with three large types of consulting firms. The Big Four – Deloitte, PwC, EY and KPMG – compete in the same range yet in some services areas also offer lower fees. The Big Four – Deloitte, PwC, EY and KPMG – compete in the same range, but also offer lower fees in some services areas. When you become a consultant and throughout scaling or rebooting, you’ll need to set consulting fees.