Archive for the ‘Consulting fees’ Category

Major update to Consulting Fees guide

Today, I’m excited to announce the launch of the second edition of Consulting Fees: A Guide for Independent Consultants. I’ve completely overhauled the original guide and expanded it to 124 pages. To help you move your businesses to the next level, I’ve added a major section on Solution-Based Fees, which includes help in overcoming any emotional blocks you may have in charging fees that represent the value of the solutions you offer. As you may already know, charging by the hour has limits in the long term and, to build true wealth and freedom, you need to charge for your solutions, not your time.

Help in moving to Solution-based Fees
The updated Consulting Fees guide still includes all the information on consulting fee formulae, models and methods, but now there’s more information to help you work toward a more sophisticated model, where your feels truly reflect your value. The problem with an hourly rate is that there’s a cap on how much you can earn. You can only work so many hours in a day! However, while some people out there urge you to simply start asking for fees that reflect your value, you may need to overcome some obstacles and even internal roadblocks before you can do so. The new guide goes into detail about some of the things you and your business need to do so that you can move to solution-based fees.
 
A realistic approach to consulting rates
I’ve always tried to approach my ebooks and the articles on this website with the idea that the information I provide has to be realistic. I’ve shied away from talking about Solution-based Fees up till now because, while I really think it’s the key to getting ahead in consulting, it’s an approach that really takes a certain mindset. Most of the books out there seem to think that all you have to do is change your mindset and start holding your ground. However, I really don’t think that’s realistic. You have to do some inner work — whether on yourself or your business — before you can jump to solution-based fees. If you’re not in a position of internal strength in yourself and your business, Solution-based Fees will be too far a leap. Many of the other proponents of making that move really do very little other than promote the idea — they don’t talk about the work you need to do to get ready. So that’s why I’ve gone into depth about some of those hurdles and focused on helping you prepare for Solution-based Fees.
 
The consulting fee model you choose is up to you
Really, setting your fees comes down to valuing yourself and your boundaries. If you have a strong sense of yourself and your business and you choose a model that reflects that, you’ll be in a much better position to run your business. Fees and contracts are all about setting boundaries and it can sometimes take some work to get to a point where you’re grounded in the value you offer and the wisdom of your own experience. However, you may not be ready to make the move to Solution-based Fees and that’s totally okay. Many successful consultants stick to solid models, such as charging by the hour. That’s why the first half of my Consulting Fees Guide talks about those models in depth. It’s your choice and your business. You’re the best one to make decisions.

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Independent consultant rates

Independent consultant rates are something that all consultants are curious about. What should your independent consultant rates be? How much are your peers and competition charging? Are your independent consultant rates to low or too high?

Setting your rates as a consultant is crucial. Charge too little, and you’re short-changing yourself and making it more difficult to succeed as a consultant. Charge too much, and you might find it difficult to get off the ground when you become an independent consultant.

If you’re charging independent consultant rates you want to feel confident in what you’re charging. And how do you gain confidence in your fee structure? Confidence and knowledge are intertwined. You want to understand the rationale behind your rates and understand what you offer your clients.

I’ve written countless articles on this topic, as well as a comprehensive book that will help you learn a system for setting consulting fees: Consulting Fees – A Guide for Independent Consultants.

Remember, as a consultant, there is almost nothing more important than your rate. Independent consultant rates send a message about your value and can mean the difference between success and financial freedom.

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Consulting fee formula models

Consulting fee formula calculations may feel daunting. But feeling confident about your consulting fee formula and model can make a huge difference to your business. When you feel certain about the approach you’re taking to setting fees, you’re in a better position to deal with clients who want you to knock off a few dollars, increase the scope or simply not pay at all.

Tips for your consulting fee formula

The following consulting fee formula article can help you work through various models for setting fees. But, more than anything, reviewing the entire way you build, market and deliver your business services may help you in the long run. As mentioned in Consulting Fees: A Guide for Independent Consultants, your emotions and self confidence tie into the money you make in the long run. Regardless of the formula you use to set your consulting rate, you have to feel secure.

Side jobs and second jobs

Side jobs and second jobs are more common than you think. Side jobs and second jobs aren’t just held by those struggling to make ends meet. No, side jobs and second jobs are held by people from all income brackets, including managers, teachers, and top-level executives.

Why would employed people want to take on side jobs and second jobs? For example, you may have a hobby that costs a lot of money. But what if, instead, you chose side jobs and second jobs as your hobby? You’d be eliminating the costs associated with your hobby and replacing the costs with an income!

There are many reasons to have side jobs and second jobs:

  • To earn extra income to pay down debt, go on vacations, etc.
  • To gain experience in an industry that interests you
  • To spend your free-time in a productive way
  • To offer you job satisfaction
  • To replace a hobby
  • To work towards a transition to a full-time career change

If you’re interested in making some extra income, building your own business and working from home, side jobs and second jobs may be perfect for you. Check out this list of ideas for second jobs.

Of course, you could always consider whether you want to become an independent consultant as your side job. Consulting is a common idea for side jobs and second jobs because as a consultant you can earn a very high hourly wage. If you want to find out more about what it takes to become a consultant, check out the becoming a consultant FAQs.

Check out my book on Side Jobs:

 Side Jobs - Second Jobs, Side Gigs & Part-time Businesses Ebook

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Average consulting rates

 

Average consulting rates vary from industry to industry. If you’re pondering average consulting rates, you probably need to finetune your search.

Six things to ask about average consulting rates

  1. What do you need the information for? Are you putting together a report, budget, proposal, project plan or setting fees of your own?
  2. Are you a client looking to hire a consultant or are you setting consulting fees? Are you in the process of becoming an independent consultant?
  3. What industry are you in?
  4. What field is the consultant in?
  5. Does the consultant have very specialized information? Is there a glut of consultants in this field?
  6. What is the value of the consulting to the client that hires the consultant?

Related to average consulting rates

Average consultant fees

Average consultant rates tend to be, well, typical. If you’re hiring or working as an average consultant rates should be lacklustre – because, well, they’re average! What’s more important is the value provided by the consultant. It’s not so much about the cost of hiring the consultant as it is about the value of the consultant’s solution.

For example, say you hire a graphic design consultant for $200 to come up with a design for a new logo. Another consultant charges $7,500, but includes presentation of three concepts, mock ups of three concepts, a trademark review, exploration of one of those concepts, and three rounds of revisions to the chosen concept, plus unlimited follow up for 30 days, a presentation to help you launch the logo to your organization, and a customized style guide to help you manage your new intellectual property. Sure, the second consultant “costs” more up front, but the value and cost savings from the solution are tremendous.
 
So, when looking at average consultant rates, ask yourself: is this an average consultant? If you’re hiring a consultant, do you want average results? If you are a consultant, do you provide average results? Look at the value of the solution, not the dollar amount.
 

Related to average consultant rates

 

Work out your hourly rate

Work out your hourly rate considering all the important factors and it could mean the difference between just scraping by versus making a sizable income.

In order to work out your hourly rate you have to consider more than the going rate. Really, you should be thinking about your overall fee structure and the way you want to charge for your expertise. Rather than try to work out your hourly rate, first consider all the options:

  • Set fees based on the project;
  • Set fees based on performance;
  • Work out your hourly rate and charge by the hour;
  • Set consulting fees by using real-life data.
  • Among other options.

Instead of wondering how to work out your hourly rate, consider other methods of charging for your time and expertise. Which method will work best for you? Which method works best for your industry? How do other consultants in your niche bill?

Even if you do work out an hourly rate, be sure you’re considering all the relevant costs that consultants occur.

If it’s time to work out your hourly rate, first consider purchasing my guidebook to make sure you’re covering all the bases: Consulting Fees: A Guide for Independent Consultants. Remember, you’re worth it, and your rates should reflect that.

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Average IT consulting rates – tips and tricks

Average IT consulting rates may be part of doing your due diligence. If you’re looking for average IT consulting rates, you have to first identify your goals in seeking it.

Rates if you’re an IT consultant

Identifying average IT consulting rates if you’re a consultant can help you find out what others in your field charge. But it’s not particularly useful for setting your own consulting fees. Really, all you’re finding out is the average. And averages don’t tell much. You need to figure out what’s behind the fees – competitive enviroment, market situations, price elasticity, marketing efforts, experience and so on. If you just look at the average, you’re not getting a clear idea of what rates go with what consultants either. Be sure to take a broader and deeper view, so that you know whether you’re talking about computer consulting fees for recent grads doing work on eLance or senior IT consultants doing work for Fortune  500 firms.

Rates if you want to hire an IT consultant

Knowing average IT consulting rates only tells you the average. It doesn’t tell you what you’re getting for your money. In fact, looking at an hourly rate tells you nothing about the final bill or the quality of the work done. It doesn’t tell you what’s included in the services or even whether the consultant shows up when you call. So, if you’re looking to hire an IT consultant, be sure to get proposals from at least three or four consultants — and interview more than that.

Want more detailed information? Check out Consulting Fees: A Guide for Independent Consultants.

Related to average IT consulting fees

 

When you should subcontract?

Dear Consultant Journal:

I’ve been running my consulting business for a few years now. I have established a network and I get a lot of leads. And sometimes I’m working on project teams where I know that, if I was in the lead, I could be managing some of the vendors. How do you know when you should start subcontracting?

- A.L.

Dear A.L.:

Ultimately, it’s up to you and the amount of measured risk you’re willing to take. But learning to subcontract can be very rewarding. For example, the founder of this site, Andrea Coutu, grew her freelance writing business into a strategic management consulting firm, which means she doesn’t have to be there 24/7 to be making money. The great thing about involving other people is that you don’t have to do EVERYTHING yourself, you don’t have to know everything and you don’t have to be be working on that project to be making money from it. It’s unfortunate that many freelancers and consultants feel compelled to do all the work themselves and then end up working MORE than they ever wanted to. If you start subcontracting, you might find that "risk" gives you more control!

Check out seven signs that tell it’s time to start subcontracting.

What to charge for consulting – 5 starting points

Knowing what to charge for consulting can be tricky if you haven’t got a plan. But, with a little research and planning, you’ll be able to work out what to charge for consuting fees — and say it with confidence. Our Consulting Fee Guide goes into detail, but the following articles can help you get a sense of how to maximize your rate.

Consider:

For more information, search this site, visit the archives or check out Consulting Fees: A 

Guide for Independent Consultants.