The structuring of consulting charges and pricing can occur in various ways. Like most companies providing services, a major challenge is pricing. Typically, pricing merchandise is easier than services because products allow you to trace production expenses easily. However, when it comes to services, establishing the worth of your staff, time, and expertise is subjective. For this reason, small business consultants implement different strategies to make sure their pricing is appropriate.
In this process, consultants consider various factors to avoid the risk of undercharging or overcharging. Here's a look at the various consulting structures.
This structure is very common among business consultants. You can easily determine your fee by considering your past wages and applying a small markup. Alternately, you can examine your competitors and charge the average rate. New consultants, however, might want to consider undercharging in order to develop a portfolio and gain references.
Small business consultants often charge based on the going rate in their location, the number of small businesses looking to hire and several other factors. Average hourly rates might go up or down depending on these outside factors.
This rate originates from an hourly rate multiplied by the daily hours that a consultant is expected to be accessible for work. Numerous consultants prefer this model because clients are accustomed to hiring services daily to prevent limitations on the extent of work, which typically occurs if you charge hourly.
Clients are often more comfortable with a daily or hourly rate because it's possible to acquire services on a short-term basis instead of investing in a longer contract. As you gain more expertise and experience, you can deliver more volume and results. The problem with this model is that you can only generate more earnings if you work more.
This model is appropriate when there's ongoing income. A retainer offers stability however, you may need to search for the next client fast if the retainer ends suddenly. Additionally, because retainer work can keep you tied up for a prolonged period of time, it limits the amount of clients you can take on and therefore isn’t great for consultants looking to build their portfolios.
A high-level consultant, such as a business growth strategist, typically uses this structure because the demands of the task usually include additional expertise in areas like management advisory and strategic planning. You determine the rate by approximating the amount of time you'll spend on a project.
Most projects have numerous phases such as assessment analysis, research, evaluation, and implementation. Some of these jobs may include a business growth strategist working on a project rate along with additional consultants working on a daily or hourly basis.
No matter what fee structure you decide to offer to your clients, be sure to do your research on the going rate, make modest estimations on how much time projects will take and charge what you think you are worth. Clients will pay for the very best services.