How do you set consulting fees?

One of the most common questions I receive
by those who are trying to start or grow
its consulting staff is: "How and
What to charge clients for your consulting
services? "

The methods of billing clients are numerous.
There are hourly rates, by-the-job fixed rates,
Emergency or performance agreements,
flat fee plus expenses, daily fee plus expenses,
and many other methods of charging for your
consulting services. Which is best?

Consider some ways of billing for the '
time.

1. Hourly or daily

Many consultants charge by the hour or day.
To establish an hourly or daily rate, seek
to calculate the number of billable hours in a
years. Many hours are spent on marketing and
and other administrative functions, so this
time is not charged to the customer. As well,
vacation time, holidays, sick days, and so on,
can not be directly charged to the customer.

Consultants, like other businesses, must charge
sufficient to cover their overhead and also
earn a profit. If a consultant wants to earn
twenty-five U.S. dollars per hour of labor time,
he (or she) may have to pay 100
dollars per hour for the customer. This presupposes
a half-billable and 50 percent
overhead and profit.

Your hourly or daily rate may be limited by
what your competition charges, especially if
you are not positioned as different
from them.

2. Fixed Rate or Flat

Some consultants charge by the job or a flat fee.
For example, a tax consultant might charge three
hundreds of dollars to prepare a tax return for
you and your spouse, including an audited
income for your business from the information
you have provided. If the consultant takes only one
Now to do this, he receives three hundred U.S. dollars
per hour. If, however, the tax adviser
incorrectly calculates the time required, you might
twenty hours to complete the work and only make
fifteen U.S. dollars per hour.

Of course, consultants can also make a profit
the work of its employees or subcontractors.

Many consultants claim to make on a flat rate
that on an hourly basis. The benefits include
able to give an estimate to the customer in advance and
less disputes on price (as the total bill was
agreed in advance).

To protect yourself on flat rate assignments,
Always limit the scope of your engagement
something that can easily be calculated.

For example, if you are asked to give an estimate
for creating a website for a business, you
would break the project into small tasks.

First, it could give an estimate for the preliminary
research and recommendations. Estimate the time
required to meet with the customer, know
its activities and objectives, develop strategies and
budget, and prepare recommendations on how
proceed. Then, give the client a quote (perhaps
in the form of an agreement letter or a page
proposal). After accepting the offer by
customer in writing, you can proceed with this
phase of the project.

Some consultants collect half of their share
before and half after the completion of assignment
each phase of the consulting project.

If the client doesn `t like your advice,
at least you get paid for the work you've done.
Maybe you can accuse him of preparing
alternative proposals.

If your web site project has been divided into
smaller steps or assignments, you could find
that time has passed more about the project
than expected.

In addition, you may not know until you have
the bill for the entire project that the client
won `t pay, and because it is not satisfied
with the results or because it is unable or
willing to pay.

Breaking down a project into small tasks
helps you estimate more accurately and limits
the financial exposure.

3. Emergency or Performance Arrangements

Sometimes customers ask you to become their
partners. If you do, you are no longer a
consultant goal.

What if your client asks you to do the management
counseling for 25 percent of the net
profits? There will also profit from any
After writing off his car, home office,
entertainment, travel, wages to self and
family, and other expenses?

On the other hand, if you are a marketing
consultant who is absolutely certain
that can increase a client `s sales, is
can feel safe charging of a fee based on the
increase in the volume of customer sales. Six
the client to cooperate with you in
achieving this goal?

Some consultants charge a flat fee plus a
percentage of ownership or profits for their
services.

The rights under contingency or performance
agreements are risky. Most consultants are
better to pay a fair price for their
services and leaving the risk of customer `s
business for the customer.

4. Value of rights under

Sometimes consultants can justify fees based on
their value to the client. For example, if
save a million dollars in client fees, your
charge may be higher in order to reflect the
value of services rendered.

You might pay an accountant or lawyer a fee of
fifteen hundred dollars based on the time for some
taxation of services. What would you
to pay to legally save a million dollars more
in taxes? Ten thousand dollars, one hundred
thousands of dollars, or more?

You can apply this information to your
consulting practice? Is there any particular
valuable service that can make that would
justify premium rates?

However and whatever charge you, be sure that
the fee is a good value for the customer
and compensates well enough.

For more information and resources on
advisory, visit:
http://www.yenommarketinginc.com/consulting.html ......