How are consulting fees set?

One of the most frequent questions I get
of those who are trying to start or grow
his own consulting business is: “How and
how much you charge clients for your consulting
services?”

The ways of billing 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 to collect your
consulting services. Which is the best?

Let’s consider some ways of billing 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 on marketing and
administrative and other functions, so
time is not at the customer’s expense. As well as,
vacation time, holidays, sick days, etc.
The customer cannot be billed directly.

Consultants, like other companies, must charge
enough to cover your overhead and also
make a profit. If a consultant wants to win
twenty-five dollars an hour of work time,
he (or she) might have to charge a hundred
dollars an hour to the customer. This assumes
billable half hour and fifty percent
overhead and profit.

Your daily or hourly 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 may charge three
one hundred dollars to prepare a tax return
you and your spouse, including a
income statement of your business from information
supplied by you. If the consultant takes only one
time to do this, the big 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 it alone
fifteen dollars an hour.

Of course, consultants can make a profit too
the work of your employees or subcontractors.

Many consultants claim to earn more with a flat fee
than for hours. Advantages include being
able to give a quote to the client in advance and
less disputes about the price (since the total bill was
agreed in advance).

To protect yourself on flat rate assignments,
always limit the scope of your commitment to
something you can easily calculate.

For example, if you are asked to give a quote
to set up a website for a business,
you could break this project down into smaller assignments.

First, you can give a preliminary quote
research and recommendations. Estimate time
necessary to meet with the client, know
your business and goals, develop strategies and a
budget and prepare recommendations on how
Continue. Then give the customer a quote (maybe
in the form of a one page letter agreement or
proposal). Upon acceptance of the offer by the
customer in writing, you can continue with this
project phase.

Some consultants charge half their fee
in advance and half at the end of the task for
each phase of the consulting project.

If the customer doesn’t like your recommendations,
at least you get paid for the work you did.
Maybe you can entrust him to prepare
alternative suggestions.

If your website project was not split
smaller steps or assignments, 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
you do not pay, either because you are not satisfied
with the results or because you can’t or
not willing to pay.

Divide a project into smaller assignments
helps you estimate with greater precision and limits
your financial exposure.

3. Contingency or performance provisions

Sometimes clients will ask you to become their
couple. If it does, it is no longer a
target consultant.

What if your client asks you to take care of the management?
consulting for twenty-five percent of the network
Profits? Will there be any benefit from
time you write in your car, home office,
entertainment, travel, salary for oneself and
family members and other expenses?

On the other hand, if you are a marketer
consultant who is absolutely sure
that can increase a customer’s sales,
you can feel safe charging a fee based on the
increased customer sales volume. Are you
make sure your customer will cooperate with you in
achieving this goal?

Some consultants charge a flat fee plus a
percentage of ownership or earnings from your
services.

Rates based on contingency or performance
arrangements are risky. Most consultants are
better charge a fair price for your
services and leaving the customer’s risk
customer business.

4 value-based fees

Consultants can sometimes justify fees based on
its value to the customer. For example, if you
save a customer a million dollars in taxes, your
The fee may be higher than normal to reflect the
value of the services provided.

You can pay an accountant or lawyer a fee of
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
consulting practice? Are there some particularly
valuable service you can provide that
justify premium rates?

However and whatever you charge, make sure you
your rate is a good value for your customer
and it also compensates you fairly.

For more information and resources on
consulting, visit:
http://www.yenommarketinginc.com/consulting.html