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March 17, 2022

Should your consulting rates be charged by the hour or flat fee?

But in 2016, I had no idea how to run my consulting business. This is especially valid for consultants who don’t offer full-time consulting (at least charged by the hour) but run agencies, a course program, invest in other businesses, etc. Although this is not set in stone, high-priced consultants often provide external opportunities and benefits that low-cost consultants charge extra (or simply don’t offer). High-level consultants usually charge per project due to the demands of the job that includes strategic planning and management advisory.

average consulting fees per hour

Since consultants tend to round to the nearest $5, our example results in $115 per hour rate. Because I use contracts and am diligent about following up, my collection rate is almost 100%. However, the economy and how you set up your business may mean a less than perfect collection rate and it’s better to plan accordingly. Again, Customer Services come out at the bottom of the list, with the lowest ranking for remote positions (Administrative assistant – $16/h; Customer service representative – $15/h). However, this industry ranks better in the temporary jobs category, with Summer and Winter jobs taking last place (Resort staff member and Santa Clause – $10/h). The table shows that men outearn women for $3 on average across industries – the only two industries where the difference is minimal ($1) are Design & Multimedia and Writing & Translation.

Consulting Fees Calculator

The consulting industry is growing rapidly and there are loads of small business consultants and small niche firms that work fast and can work directly with growing businesses. My in-depth expertise in this field combined with my speaking background at WordCamps can be a lot more valuable for businesses who don’t understand the space. Several hours of my time would tap into over a decade of my work almost full-time in this environment, and this can literally save months in R&D for a business navigating the space. We consider these factors since we don’t want to compromise our company in the long run.

Every time you successfully complete a project, increase your hourly rate by $25. You set an hourly rate, track your hours, and then bill your client by the hour. With these factors in mind, you can start building the framework of the consulting rate you’d like to charge. Using a formula or fee calculator like the examples listed below is a good jumping-off point.

How Many Consultants Want To Raise Their Fees

The best model for you depends on how you deliver your consulting services (and your personal preference!). Maybe you create websites or develop marketing plans — no matter what you do, you’re bound to get better at it the more you do it. You could raise your hourly fee to compensate, but clients may have a hard time swallowing the higher hourly rate.

  • You may be far more experienced than others in the market, meaning you can double the market rate for your services.
  • Independent contractors aren’t the only experts who can be consultants, small businesses that operate like agencies can charge consultant fees, too.
  • Accounting consultants, who should also be CPAs, can charge between $150 and $450 an hour.
  • It can be tricky to balance all of the factors we’ve outlined above, but there are a few steps you can follow to ensure an optimal pricing structure for you and your client.

Hourly rates are simple and easy to understand, but they may not be the most profitable option for you. Project rates can be a good middle ground, but keep in mind that if a project takes longer than expected, you won’t make any extra money. Value-based pricing is more complex but can be more profitable if done correctly. If you’re ready to start a full-time business in consulting but want to keep your existing cost of living, figure out how much it costs to run your business.

Factors that impact hourly rates

For example, entry level developers earn $29/hour on average, while graphic designers just starting out earn about $15/hour on average. Analyzing the same survey, France is the country with the highest hourly rates, with United Kingdom as a close second; the country that has the lowest hourly rates for developers is Kenya, with $25/hour. Setting your rates is a major milestone in getting your consulting business off the ground. Take the next step towards building your business by protecting it with consultant insurance.

average consulting fees per hour

It’s one of the best ways for consultants to create leverage — and increase their earnings without working more. For example, since the successful completion of your project would result in $117K in new revenue for your client, you can calculate different ROI levels. With every value-based price, you want to create a 3-10x ROI for your client. Remember, you are charging based on the ROI you will create.

The Project-Based Formula For Setting Your Consulting Fees

Additionally, your pay is capped both by the number of hours you work, and clients’ hesitation to pay high hourly rates (many consultants or coaches struggle to get beyond $200-$300 per hour). We suggest moving on from this form of pricing fairly quickly. Typically, information-technology consultants will charge by the hour, while more high-level consultants like strategic planners or management coaches will charge per project. Lawyers, accountants and wealth managers tend to nab those retainers. Brian Conners, president of the Association of Professional Consultants (APC), says charging an hourly or daily rate is easier for first-time consultants. “People just starting out don’t know how to sell a $10,000 project,” he says.

average consulting fees per hour

The services the consultants render are tied to some expectations in terms of return on investment. Across my network, the average consulting fee is between $150 and $1,000 per hour. Check out my lengthy guide on how to find and evaluate a consultant that would help you scale your business.

How Many Consultants Have Used Value-Based Pricing

Management consultants, IT consultants, marketing consultants, and more — B12 has all of the functionality needed to make life easier for both you and your clients. When you negotiate with a potential client, make them understand how your consulting services will affect their bottom line. Explain how your consulting rate will get them a return on investment. Independent contractors aren’t the only experts who can be consultants, small businesses that operate like agencies can charge consultant fees, too. In this case, a small business consulting fee may look a little different than it would for an individual consultant.

But consultants who work with businesses — especially large corporations — usually need to adapt their payment terms for this industry. It’s hard to charge a retainer fee from the get-go since you’ll average consulting fees per hour only have an estimate of the scope of work. It’s best to switch from a per-project or per-hour basis to a retainer fee once you have nailed down expectations for both you and the client.

Marketing & Sales – $20

But this method can be difficult because of scope creep and natural human imperfection. These consulting rate methods are great but to ensure maximum value for you and your clients, consider value-based pricing. Based on data, we can determine the compensation range of consultants from some of the top consulting firms in the U.S.

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