The world region and country you’re living in are one of the biggest factors that determine your hourly rates. Independent contractors aren’t the only experts who can be consultants, small businesses that operate like agencies can charge consultant fees, too. In this case, a small business consulting fee may look a little different than it would for an individual consultant. Many consultants and freelancers make the mistake of confusing average consultant rates with standard pricing—that’s not the case. Averages don’t take into account your value, the scope of work, client perceptions, or even your cash flow. However, if you set your rates too high, you may alienate yourself from the client and out price yourself out of the project.
As a rule of thumb, some consultants simply take the hourly wage (plus benefits) that they would earn when working on salary for someone else and double or in most cases triple that amount. So for example, if you want to hire a business strategist that makes $150 per hour for longer-term projects, he would charge you between $350 – $600 per hour for his services. The daily rate is just an hourly rate multiplied by the number of hours the consultant will spend working on the project. Typically, IT consultants work average between 12 and 14 hours a day and charge from $1,500 to $3000 and up. Enterprise companies offer first-class development and consulting services that cover a wide range of industries.
Grow Your Consulting Business
Notice that this is a bit more precise than the estimate of hours we used earlier. The difference between what freelance men and freelance women earn is smaller, but still unfortunately present worldwide – on average, it’s $3. People have been led to believe that goods and services have an inherent value—but they don’t. Pricing comes down to two parties agreeing to a specific number.
But consultants who work with businesses — especially large corporations — usually need to adapt their payment terms for this industry. To determine your hourly rate, start by considering your ideal salary. Divide that by 5 (for the number of weeks in a year), and again by 40 (assuming a normal workweek). Some people get a bit squeamish at the idea of telling a client their hourly rate. In these cases, it can be easier (and smarter) to give someone a project rate.
How Much Should I Pay a Business Consultant?
An hourly rate might be appropriate when the project is short-term and you don’t know the exact scope. There is no one answer for how much to charge for consulting projects – the fee depends on many factors such as experience level, skill set, and type of work. The more you work as a consultant, the better you’ll get at setting rates and charging fees. When deciding what pricing model to use, you should consider what will work best for both you and your clients. Hourly rates are simple and easy to understand, but they may not be the most profitable option for you. Project rates can be a good middle ground, but keep in mind that if a project takes longer than expected, you won’t make any extra money.
It’s only a 1,458-word document, which is almost half the length of this article. Yet, as much as we love this piece, we’d argue the Declaration of Independence is worth approximately 2.5 billion times more. The end value is different from the input—and your consulting fees should reflect that.
Discovering what your competitors are charging
But it removes a lot of the uncertainty around hourly billing. Hiring consultants on a monthly retainer gives you a guarantee that you have help whenever you need it, especially if you are working with high-value consulting firms. IT consultant rates often depend on location, company size, experience, and many other factors. For instance, the USA holds the highest IT consulting rate—$100-$250 per hour compared to $50/h for the same service in Estonia. Average IT consulting rates of those companies range between $250-$850/h, depending on the consultant’s tech expertise, location, skills, and so on.
- For clients to be able to accurately budget for your services, they need to have a good understanding of what’s included in your rate.
- And finally, remember to include any additional expenses you’ll expect to incur.
- Clients are often willing to pay a premium fee for consultants who’ve demonstrated expertise in their industry.
- Now, it’s time to learn how to communicate your prices with clarity and confidence.
- No matter what way you set your consulting fees, be sure to use a consulting contract and agreement for consulting services.
- The category Mid-size Global Accountants refers to the top 20 global professional services providers, excluding the Big 4, such as BDO, Baker Tilly, Grant Thornton, RSM and PKF.
We don’t ever recommend lowering your fees to win consulting business. Doing so sends the wrong signals to the client about your value, and what you can do for their business. With a monthly retainer, you’re working with (and billing) your client on a monthly basis.
Average consulting project fees worldwide in 2018
Instead, you’ll spend time networking, writing blogs, crunching finances, paying bills, etc. And it certainly looks like a lot more money than the other pricing strategies, but it’s a lot harder and more complex. Unless you average consulting fee per hour can PROVE the incremental value and your client agrees, value-based pricing is complicated to pull off. When you approach a business owner and charge for a project, it is important to understand the work that will be done.
If you’re working with clients locally, know that where you live can also affect how much you can charge. Clients in big cities and coastal areas often have bigger budgets and are willing to pay more. If you’re providing remote services, set your rates based on your client’s location, not your own. For companies just getting started, a business plan is the perfect place to begin.
How to Calculate Your Consulting Fees Based on Different Payment Methods
Usually, small outsourcing companies specialize in one specific area, like UI/UX design, web and mobile app development services, or exact programming languages like Node.js, React Native, and so on. Also, it’s better to check their portfolio on their website or read reviews on Clutch or GoodFirms to be sure that you’ll get a good service. https://www.globalcloudteam.com/ The average compensation range for a new undergraduate consultant at McKinsey, Boston Consulting Group, and Bain is between $108,000 to $116,000 per year. You’ve found a good starting point when calculating this rate. However, if you want a more advanced calculation, you can download our calculator at the end of this article.
Pricing products is easier than pricing services because, with products, you can easily trace the production costs. However, with services, determining the value of what constitutes your services — time, staff, expertise — is highly subjective. It’s a great option if you want to get an experienced consultant for a reasonable price. They have 10 to 100 developers and consultants in-house serving SMBs, but also occasionally work with Fortune 500 companies. They also work with big industrial companies, but they’re not as expensive as enterprise-level ones. The project price starts from $125,000 and reaches $5+ million.
IT Consulting Fee Structure
No matter your level of experience, the Consulting Success® team can help you raise your consulting fees. With the correct strategy and mindset, consultants can earn five/six figures — or even more — per month. One of the reasons consultants start a consulting business is for the unlimited earning potential.