Tuesday, December 5, 2006

Sticker Shock Over Consulting Fees

While conducting some research recently I discovered a blog called Consultant Journal. The blog, written by Andrea Coutu, had some postings about how to set consulting fees. One that caught my eye was a posting on the Sticker Shock Over Consulting Fees.

In my last post I discussed the Velvet Rope Policy as it applies to your current and potential clients. It's possible that a litmus test for your clients could very well be your consulting fees. Those that may balk at a consulting fee of $100 per hour for example, might not be a good client to retain. In other words, they probably didn't match the criteria you feel represents the type of client that energizes and motivates you to perform at your best. Those that wouldn't reject you over your fee probably know and understand the value of someone like you to their organization. They are very likely your ideal client.

As consultants we have businesses to run. Sometimes our clients forget that there are expenses we incur while running a consulting business. In the grand scheme of things, when our expenses are factored into our fees they are actually very reasonable. Nobody every questions the rates hairstylists charge. The woman who cuts my hair (what's left of it) gets $15 for what amounts to 10-15 minutes of total work. I'm sure some of her expenses are factored in like the amount she has to pay monthly for the rented space at the establishment where she practices her trade. When you figure it out, her fee almost comes out to $1 per minute. Do I question it? No, because I know when I leave I get a decent haircut.

Don't forget too that when you are a one man or one woman army running a consulting business, half of your time will be spent doing the actual work you set out to do and the other half will be spent drumming up business. You need to compensate for that.

Andrea's blog posting provides further insight into consulting fees.

1 comment:

Andrea >> Become a Consultant Blog said...

Thanks for reading and linking to my post. I like the velvet rope analogy, as I really believe that setting your consulting fees is really as much marketing as it is finance.