The finest and worst aspects of owning a consulting business are determining your rates for consultations. The best part is that you get to decide your worth, not management or HR, and the worst part is that you probably detest discussing money with clients.
We comprehend. It’s not simple.
However, deciding on your consulting prices doesn’t have to be a stressful process that keeps you up at night. If done properly, it ought to be a very satisfying experience for both you and the customer. Let us demonstrate how it’s done.
5 Must-Know Tips on Pricing
You may be thinking “How much should I charge for my services,” whether you’re new to consulting or considering taking on a new client.
It depends, really.
The cost is relative. We’re sorry to disappoint you if you came seeking for a magic number, but pricing is merely a person’s sense of what something is worth, not a precise figure.
These are merely averages; we’ll discuss average consultant salaries and consulting fees by industry later. Although they may have an impact on your choice, you are ultimately responsible for setting the price.
We won’t abandon you there, so don’t worry. Let’s take a look at some pointers to assist you fine-tune your price.
1. Estimate Your Value
Comparing your worth to others is not quite like playing The Price Is Right. Your worth is far more than just an output like an article, podcast episode, research insights, or one-on-one training.
Your worth is long-term financial gain, the removal of irksome obstacles, the dissemination of game-changing information, the generation of steady traffic, and more. It’s not only how much time you spend consulting; it’s also how well the consulting works out.
Imagine, for instance, the US Declaration of Independence. It only has 1,458 words, which is less than half of this article’s word count. Even while we adore this text, we contend that the Declaration of Independence is around 2.5 billion times more valuable. Your consultation fees should reflect the fact that the final value differs from the input.
Consider the reasons your client might be hiring you. There could be a number of causes, however the following are the most likely
- You possess the knowledge or experience that your clients require.
- It will cost less money if you do the work.
- Your client lacks the time to complete it.
All of these factors are valuable in and of itself, and your price should reflect that. Here are a few more things to think about when calculating your value:
- How big client is
- Knowledge
- Bandwidth
- time limitations
- Resources on hand
- Existence of backup consultants
2. Predict the Amount of Work
Your prices should be mostly based on the nature of the work, but it can be difficult to estimate how much you should charge per hour or per project. For instance, you could find it more efficient to create a 2,000-word post for a business than to contribute to the creation of a 5-minute podcast episode.
All of it is relative. Avoid being forced to work excessively hard for less money than you are worth because this will affect your productivity, happiness, and the future expectations of your clients.
Make sure you comprehend every aspect of the assignment before deciding on a pricing. If you’re giving a 1-hour consulting session, think about the preparation required and whether your client will be able to send any follow-up questions after the meeting. Even while they can appear like insignificant contributions, they soon start to pile up.
3. Establish Your Client’s Perceptions
Whatever you pay for, you get. It has nothing to do with the cuisine or cooking, but a free steak at a friend’s house will never taste nearly as nice as the $60 steak you paid for at a renowned restaurant.
Clients may see your work as amateurish or low-quality before they even see it if you set your prices too cheap.
Low consulting prices don’t inevitably result in work or respect because your charge is an indication of value. Your clients will be familiar with typical consulting market pricing if they frequently employ consultants or independent contractors. It’s not always a good idea to price yourself low just to beat out rivals.
However, if you set your prices too high, you risk losing the client’s trust and being priced out of the project. Clients might view you as the pinnacle of the consulting or freelance industry and opt for a less qualified but more reasonable substitute.
Finding the ideal pricing can be challenging when you first start out. Find your first client, offer to work for a reduced rate or for free if you don’t have much experience. Don’t strive to attract more clients; instead, concentrate on providing the finest results you can. Make a case study from your first client after you’ve demonstrated the results. Afterward, increase your rates gradually until you reach a comfortable level.
4. Manage Your Cash Flow
Set reasonable fees for both your professional and personal expenses. This advice extends beyond value, the extent of the job, and client impressions; you must set rates that will result in an sufficient standard of living and business profitability.
Analyze your spending. What price must you set in order to pay your bills, turn a profit, and lead the life you desire? You won’t discover a magic number anyplace because everyone’s response is different.
Consider your future while you’re at it. What objectives do you have for both your company and yourself? Don’t undervalue your goals for yourself as a consultant and company owner. You also have a right to a comfortable standard of living and financial success.
5. Find Baseline Expectations
This advice is tough. Be careful as you go. Many freelancers and consultants make the error of conflating standard pricing with average consulting fees, which is incorrect. The extent of the work, client perceptions, your value, or even your cash flow are not taken into consideration by averages.
Look at consulting rates per industry if you like, but don’t use them as your pricing guide; rather, use them as another source of information.
But keep in mind that your client will probably be seeking for the same figures. In order to avoid being taken advantage of, they will want to know how much they ought to charge a consultant. Be prepared to provide evidence if your rates differ from industry standards.
Have faith in your abilities, and the right price will come.
Although it’s normal to find the process of determining your consulting rates to be unpleasant, you shouldn’t have to sacrifice your finances or sleep as a result. You may grow confident in your value as a consultant and make sure your pricing reflects it with a little practice and knowledge.
Now that you are aware of your consultation fees; allow us to assist you in getting there. Join our free course to discover how to launch a consulting firm. We’ll lead you through our tried-and-true process for generating cash from your talent.
