How to Calculate Consulting Rate
Do some market research to see what others are charging for similar services., Consider your past salary., Decide how you want to differentiate your service from your competitors., Include provisions to cover administrative costs when deciding your...
Step-by-Step Guide
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Step 1: Do some market research to see what others are charging for similar services.
Your clients will have shopped around different services, so they will generally have a good idea of what is reasonable. -
Step 2: Consider your past salary.
If you have worked for a consulting company doing similar work professionally, you can take your previous salary into account.
Presumably, you don't want to make less by working on your own than working for your former employer.
Divide your annual salary (plus employee benefits like health insurance) by the number of weeks per year (52) and then hours worked per week (40).
This is a good base hourly rate for you to start from
-- the minimum that you should charge per hour, in most cases. , You may want to offer the cheapest hourly rate, in which case you should set your fees below everyone else's.
You may be able to differentiate by location, if you are the only consultant who offers your type of service in the area.
Or you may believe that you provide a higher quality of service by operating independently, exhibiting extensive experience/past successes, etc., in which case you can get away with charging more.
Whatever your selling point to a prospective client is should determine how much you want your fees to deviate from the market average. , Make sure that given the hourly rate you charge and your expected number of clients, you can cover all typical expenses associated with running a business.
Examples include: professional membership dues, insurance, employee training, wages, office overhead, local, state and national taxes, etc. , For example, if you are a business consultant, you might be able to offer your clients the option of website design.
If you are a PR consultant, you might offer to design press kits for your clients.
Think of things that your clients are also likely to need if they are coming to you for consulting services.
You can simplify their lives and save them money by helping them take care of multiple issues from one service company.
You may need to partner with another organization or hire additional specialists to offer value-added services if you do not have the skills on your own. , Any changes to your base rate or the cost of additional services should be announced prominently.
That way, your clients can trust that you are charging everyone the same amount. , Let them know that although you cannot predict the exact cost of any project, you can estimate how long their project will take you and provide them with the projected cost.
The more details the client can provide upfront, the better your estimate will be. -
Step 3: Decide how you want to differentiate your service from your competitors.
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Step 4: Include provisions to cover administrative costs when deciding your hourly rate.
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Step 5: Once you have your base hourly rate
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Step 6: decide if you want to offer any extra value-added services.
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Step 7: Publish your rates online and in an official brochure so your clients are clear about your prices and services.
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Step 8: When you meet with clients
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Step 9: tell them your hourly base rate and the cost of additional value-added services.
Detailed Guide
Your clients will have shopped around different services, so they will generally have a good idea of what is reasonable.
If you have worked for a consulting company doing similar work professionally, you can take your previous salary into account.
Presumably, you don't want to make less by working on your own than working for your former employer.
Divide your annual salary (plus employee benefits like health insurance) by the number of weeks per year (52) and then hours worked per week (40).
This is a good base hourly rate for you to start from
-- the minimum that you should charge per hour, in most cases. , You may want to offer the cheapest hourly rate, in which case you should set your fees below everyone else's.
You may be able to differentiate by location, if you are the only consultant who offers your type of service in the area.
Or you may believe that you provide a higher quality of service by operating independently, exhibiting extensive experience/past successes, etc., in which case you can get away with charging more.
Whatever your selling point to a prospective client is should determine how much you want your fees to deviate from the market average. , Make sure that given the hourly rate you charge and your expected number of clients, you can cover all typical expenses associated with running a business.
Examples include: professional membership dues, insurance, employee training, wages, office overhead, local, state and national taxes, etc. , For example, if you are a business consultant, you might be able to offer your clients the option of website design.
If you are a PR consultant, you might offer to design press kits for your clients.
Think of things that your clients are also likely to need if they are coming to you for consulting services.
You can simplify their lives and save them money by helping them take care of multiple issues from one service company.
You may need to partner with another organization or hire additional specialists to offer value-added services if you do not have the skills on your own. , Any changes to your base rate or the cost of additional services should be announced prominently.
That way, your clients can trust that you are charging everyone the same amount. , Let them know that although you cannot predict the exact cost of any project, you can estimate how long their project will take you and provide them with the projected cost.
The more details the client can provide upfront, the better your estimate will be.
About the Author
Betty Butler
Specializes in breaking down complex DIY projects topics into simple steps.
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