I’ve done a lot of work on consulting fees, including writing Consulting Fees: A Guide for Independent Consultants and helping numerous new consultants set their consulting fees. When discussing consulting fees with clients and new consultants, I’ve noticed common misconceptions about consulting fees.
I’ve compiled these common misconceptions into this article to help set the record straight when it comes to consulting fees.
4 things you never knew about consulting fees:
1. Consulting fees are not necessarily correlated with the amount of time it takes to accomplish a project.
The time it takes to perform a service is sometimes irrelevant to the cost of the fees. Remember, the focus of your services should be about the value the client is receiving in exchange for your services. For a concrete example of how this works, check out the story in Section 3 of this article.
2. What other consultants are charging for "similar work" can be irrelevant.
Don’t set your consulting fees based on others’ rates, and don’t cave if a client balks at your rate and suggests that another consultant offers a much lower rate for "similar services." Keep your focus on value and the services that you offer. You can get a website designed and developed for $200 or for $20,000(+) depending on the consultant or firm. As you can imagine, services and results will differ. The key is to match the clients needs with a service that will fulfill those needs at the appropriate level.
3. Consultants charge far more than regular employees in the same industry.
Did you know that consultants’ fees are much higher than the wages of salaried workers doing similar work? Find out why.
4.Your consulting fees can vary and that’s okay.
One of the beatiful things about being a consultant is that you can use your own judgment when it comes to setting your fees.
- Getting a bad feeling about the pickiness of a potential client? Set your rate higher than normal.
- Or want to help a non-profit with your services and get personal satisfaction in return? Offer a discounted rate because you want the work (but be sure to display the full price and the discounted rate in your quote).
Allowing yourself some flexibility with your pricing structure is one of the many reasons not to post your rates on your website or in your marketing material (unless you’re offering a package of services for a set price).
How many of these four items did you already know about setting consulting rates? What secrets do you have to share about consulting fees?
- Setting consulting fees
- Finance for consultants FAQ
- Billing travel time rates
- Sample consulting invoice
- New business line of credit
- Consulting Fees: A Guide for Independent Consultants
- Discover Your Inner Consultant
- Discover Your Inner Entrepreneur (for moms)