What’s in a consultant fee? If you’re wondering what to include in your consultant fee, you should consider the following, which come from setting consulting fees:
- working days
- billable hours
- bad debt
- rate of pay at a regular job
- overhead
- profit margin
That’s not everything you should consider, but it’s most of it.
"What’s in a fee? | Consultant fee" from Become a Consultant at ConsultantJournal.com.
I believe there is only one thing in the consultant’s fee. More accurately the one thing the fee ought to represent: The perceived value of the service the client receives.
Clients don’t pay for our time and deliverables. They pay for the improved conditions they perceive in the service we offer.
Absolutely, Tom. It’s just that I run into so many consultants who don’t consider a proper fee structure before establishing their business. Many people are competing in local markets where they may offer unique services and, initially, struggle with trying to figure out where to price their services. I often hear new consultants say that they’re making 10% or 20% more per hour than they did at their old jobs, but they’re forgetting to build in other costs.
Perceived value is incredibly important and I’ll be covering it in an upcoming post. I come from a background of solution selling, so perceived value is always foremost in my mind.