As a consultant, you take a risk and run a business. It's reasonable to expect a profit margin on your fees, which usually range from 10% to 33%. Calculating the price per hour or per project can be difficult, as the time and effort required for different tasks can vary greatly. For instance, writing a 2,000-word article might be quicker than producing a 5-minute podcast episode.
When it comes to pricing, it's essential to consider the true value of your work. Take the example of the Declaration of Independence: it took Thomas Jefferson several weeks to write it, but its value is priceless. If you're doing business-disrupting work, that also comes at a financial price. When customers ask: “How much do you charge for consulting?” try to guide the conversation to the details of the project. You may have to make concessions if the customer's budget doesn't allow for your usual rates.
Your general location will also influence pricing; advisors who live in coastal or urban cities often charge higher consulting fees. It's important to remember that average consultant rates are not standard prices. If your clients have regularly hired consultants or freelancers, they'll be familiar with the average rates in the consulting market. Some small business consultants meet with clients in person and others work with organizations remotely to assess their objectives and needs to create a strategic plan for business growth. Some small business consulting companies charge fixed rates for specific consulting services or packages, and others charge a fixed hourly rate for services. Teleigha Peavy, from Peavy and Associates Business Services in Duluth, Georgia, says that consulting encompasses a wide variety of services, such as creating a business plan for new companies, helping to seek initial funding, advice on organization and structure, assistance in managing operations, business development and improving existing business processes. To decide how much to charge for your consulting services and develop a pricing guide for consulting companies, consider the following tips:
- Analyze the scope of work.
Consider how much time and effort is required for each task.
- Consider the true value of your work. Don't underestimate yourself.
- Guide the conversation. When customers ask about rates, try to focus on the details of the project.
- Take location into account. Advisors who live in coastal or urban cities often charge higher consulting fees.
- Be aware of average consultant rates.
If your clients have regularly hired consultants or freelancers, they'll be familiar with the average rates in the consulting market.