How are consulting fees set?
One of the most frequent questions I receive.
of those who are trying to start or grow
your own consulting business is: “How and
How much do you charge clients for your consultancy?
services?”
The ways to bill customers are numerous.
There are hourly rates, fixed rates for work,
contingency or performance arrangements,
flat rate plus expenses, daily rate plus expenses,
and many other methods of charging for your
consulting services. Which is the best?
Let’s consider some forms of billing for your
weather.
1. Rate per hour or per day
Many consultants charge by the hour or by the day.
To set an hourly or daily rate, they try
to calculate the number of billable hours in a
year. Many hours will be spent marketing and in
administrative and other functions, so this
time is not the responsibility of the client. Also,
vacation time, holidays, sick days, etc.
the customer cannot be billed directly.
Consultants, like other businesses, must charge
enough to cover your general expenses and also
make a profit. If a consultant wants to earn
twenty-five dollars per hour of working time,
he (or she) might have to charge a hundred
dollars per hour to the customer. This supposes
billable half hour and fifty percent
overhead and profit.
Your hourly or daily rate may be limited by
what your competition charges, especially if
you have not positioned yourself as different
from them.
2. Fixed or Flat Rate
Some consultants charge per job or a flat fee.
For example, a tax advisor might charge three
one hundred dollars to prepare a tax return for
you and your spouse, including an unaudited report
income statement for your business from information
supplied by you. If the consultant takes only one
hour to do this, he grosses three hundred dollars
per hour. However, if the tax advisor
miscalculates the time required, it could take
twenty hours to complete the job and do only
fifteen dollars an hour.
Of course, consultants can also make a profit on
the work of its employees or subcontractors.
Many consultants claim to earn more with a flat fee
that on a happy basis. Advantages include being
able to give a quote to the customer in advance and
fewer price disputes (since the total bill was
agreed in advance).
To protect yourself on flat fee assignments,
Always limit the scope of your commitment to
something that can be easily calculated.
For example, if you are asked to provide a quote
to set up a website for a company, you
you could break this project into smaller tasks.
Firstly, could you give a preliminary quotation
research and recommendations. estimate time
necessary to meet with the client, meet
your business and goals, develop strategies and a
budget, and prepare recommendations on how
Continue. Then give the customer a quote (perhaps
in the form of a one page letter of agreement or
proposal). Once the offer is accepted by the
client in writing, you can proceed with this
project phase.
Some consultants charge half of their fees
in advance and half upon completion of the task for
each phase of the consulting project.
If the client does not like your recommendations,
at least you get paid for the work you did.
Maybe you can ask him to prepare
alternative suggestions.
If your website project was not split into
smaller tasks or steps, you may find
that you spent much more time on the project
than expected.
Also, you may not find out until you file
your invoice for the entire project that your client
will not pay, either because you are not satisfied
with the results or because he is unable or
not willing to pay.
Break a project into smaller tasks
helps you estimate more accurately and limits
your financial exposure.
3. Contingency or Performance Arrangements
Sometimes clients will ask you to become their
co-worker. If you do, you are no longer a
objective consulting.
What happens if your client asks you to do a management?
consultancy for twenty-five percent of the network
Profits? Will there even be any benefit from the
time you cancel your car, home office,
entertainment, travel, wages for oneself and
family members and other expenses?
On the other hand, if you are a marketing
consultant who is absolutely sure
that can increase a customer’s sales, you
you can feel safe charging a rate based on the
increased customer sales volume. Are you
confident that your client will cooperate with you in
the achievement of this goal?
Some consultants charge a flat fee plus a
percentage of ownership or profits for their
services.
Fees based on contingency or performance
arrangements are risky. Most consultants are
better by charging a fair price for their
services and leaving the customer’s risk
customer business.
4. Value-Based Fees
Sometimes consultants can justify fees based on
its value to the customer. For example, if you
save a customer a million dollars in taxes, your
the rate may be higher than normal to reflect the
value of services provided.
You can pay an accountant or lawyer a fee for
fifteen hundred dollars based on time for certain
tax related services. that you would be willing
pay to legally save an extra million dollars
in taxes? ten thousand dollars one hundred
thousand dollars or more?
Can you apply this information to your own
consulting practice? Are there any particularly
valuable service that you can provide that
justify the premium rates?
However, no matter what you charge, make sure that
your fee is a good value for your customer
and also compensates you fairly.
For more information and resources on
query, visit:
http://www.yenommarketinginc.com/consulting.html