How Much Should I Charge? Setting Your Consulting Fees

A prospective client asks you to do a project that is a bit outside of the norm, and now you’re struggling to figure out what you should charge them for the service. You don’t want to undercut yourself, however you also want to make sure that you remain competitive in your market, especially if clients are requesting quotes from several different consultants.

The honest truth is: there is no perfect method for setting your consulting fees. You need to create a fee structure that is going to work for both you and your clients.

Fees May Be Hard To Research

You can certainly try to research your competition, but most consultants do not practice the habit of making their fee structure public –online or on paper.

Why is this? Well, for the most part, fees are constantly changing and not all projects are the same. Rates go up and down all the time. Freelance consultants (just like any other service provider) reserve the right to charge whatever they want to whoever they want. They can charge one client one fee and another client something completely different and no one will ever know.

Therefore, you will find that researching fees in your market may become tedious-you’ll hit a bunch of dead ends. However, you can still try a few places:

1) You might get lucky and find some discussion forums that other consultants are posting to. In these forums, everything from handling clients to fee structures to how other people market their services or acquire new clients can be found.

2) You could try to network with other consultants in your industry to find out what range their fees run in. You may have to skirt the issue and get to know the other consultant prior to prying into their personal fee structures.

3) Try searching Google. Who knows? You might find some consultants that have absolutely no problem posting their fees.

4) Hop on some of the freelancing forums online. Millions of clients are posting projects and millions of freelancers are bidding. Pay attention to the projects and the average bids that are placed. Unfortunately, the clients have the ability to “hide” bids in order to eliminate the chances of people bid-comparing, however spending some time in these forums is a great way to gauge fees ranges.


What Other Consultants Do

Some consultants charge per the hour, others charge per project. Some ask for a retainer, others do not. Freelance writers may charge per word. Some may charge late fees, some may not. Everyone has their own method of assessing fees, and none of them are wrong as long as there is a profit.

It basically boils down to: How do you want to charge for your services? You need to find a method of charging that jives with you, your bills and the time that you invest into your work.


Take Everything Into Consideration: The Big Picture

There is a lot more to consider than just the items listed above. Beyond that time and energy that you devote to your work, you also have to think about the overhead that you pay to provide your services.

If you are a freelance writer, do you have to pay for the Internet? How about the electricity that you use in your office? If you go into the freelance forums and bid on projects, you need to take into count the time that you spend doing that and the fees that those forums assess to you.

Do you transfer money from the freelance forums to PayPal or your bank account? Does that cost a fee? What about the time it takes to do that?

Do you spend time emailing clients? All of the time and resources that you put into your work should be factored into the final figure.

So, basically, you want to figure out how many hours per week you work and how much you need (or want) to make each week in order to pay your bills. It would also be nice to make enough money to make you happy (and possibly passionate) about what you do for a living, but that’s a whole different article.

The Final Number

You already have the weekly amount that you would like to see in the bank account. Add in all of the expenses that you incur in order to make that figure hit the bank, and then divide that big-picture number by the number of hours you want to work each week.

For example, say that your big picture number each week is $1500, all expenses and pay included, and you’d like to stick to 35 hours per week. Divide that big picture number of $1500 by 35, and you have your hourly fee: $42.85.

Of course, nobody wants to charge $42.85 for an hourly rate. It’s simply too messy to keep track of. Round it up to $45-and most of your problems are solved.

Setting Fees for Projects

The next question is: What if I don’t have any idea how many hours it will take me to complete the project?

There is no reason why you can’t simply quote your hourly fee and work from there with the client. However, if a client absolutely demands a complete estimate for a project, it’s not a bad idea to sit down with them and figure out how much time the project should take and base the estimate on that amount of hours. Any “extra hours” put into the project can be negotiated, however, most projects can be estimated in terms of time –especially if you know what you are doing.

Setting fees for your consulting business is not a one-time thing. You will need to assess your hourly rate in comparison to your time investment and expenses (and how they all weigh against your competitor’s fees) on a consistent basis as your business begins to grow. You may notice that your expenses are increasing as you get more clients, resulting in the need to raise your fee; however your fees should always reflect a rate that makes both you and your clients comfortable.