Are you wondering what you should charge as a consultant? I’ve seen a lot of consultants undercharging for their services lately or worse, giving too much away!
If you are just starting out as a consultant or are thinking about a services-based business it can be hard to figure out what your hourly rate should be. Let’s take these factors into account:
#1 Consider your overhead
First of all, realize that your hourly rate at a full time job is different – you have overhead and expenses that you didn’t have there. For example:
- Computer, printer, office equipment
- Website, marketing, advertising
- Ongoing training, classes, conferences
- Health care, virtual assistants, accounting
That adds up!
#2 Consider your billable hours
You are not going to be able to work 40 hours of billable hours a week. So at first $50 or $75 per hour sounds great but you may only be able to be actually consulting for between 10-20 hours/week with all the other things you need to do.
If you have products or if you are blogging regularly then you need to carve out time for that. And remember your marketing activities take time too!
Work backwards with how many hours you can bill each week, how many weeks you are going to work, and what your income goals are. Take a look at how I break things down in this video (I get down and get a little funky about one minute 30 seconds in):
So let’s look at that math again. If you are charging $50/hour and billing 10 hours a week for 50 weeks/year then your income is $25,000. If your income goals are higher than that then you better have some products or other sources of income.
#3 Make sure you have room to bundle
While I say that you shouldn’t discount your services, you may want to give people a volume discount. It’s easier to work with 4 big clients at $1000/month each than to work with 20 smaller clients at $200/month each. Less switching gears and less overhead.
So you want to make sure you have some room to go from a single hour session to a 10 hour package, for example. Your single session rate needs to be higher.
Obviously you also want to watch the industry you are in and charge within the range of that industry. Do some googling and see if other consultants have their rates on their websites.
Also watch out for the “brain-pickers” and people who want to spend an hour of your time for free. This may be something you do if are just starting out or it is a really good friend of yours. But make sure it’s on your terms and you are guarding your time well. It’s precious and you are worth it!