Based on data, we can determine the compensation range of consultants from some of the top consulting firms in the U.S. At the end of a project, they charge the client for the number of days it took to complete a project. My first project as a consultant lasted 3-months for $70K.
Just take a look at Laura Belgray’s now retired 1-on-1 copywriting consulting rate pages. She charges $1450 for a single hour of her time and $10,000 for an entire day! If your consulting services can help clients make bank, they should pay you more. Many consultants default to charging the same hourly rate they had when they were an employee. So it’s important to raise your rates to reflect that reality.
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Consultants are notorious for undercharging — especially when they charge by the hour. You’ll spend just as much time winning projects as you do delivering them. As a beginner consultant, you’re typically not working 40-hour weeks.
However, if they wanted to make the same compensation, only working 20 hours, that’s $206 per hour. Most consultants that use value-based pricing have experience and previously established trust. Your clients know will know the price of the project upfront. The conversation about rates happens with every client, sometimes more than once. Sometimes it’s pleasant, sometimes it’s awkward, and sometimes it’s ugly. This step can be tricky for new consultants, so this is where industry averages come in handy.
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The pace of disruption today can open an exciting period of positive change for businesses. But to navigate this complex and dynamic environment, leaders will need to harness the Five Key Forces of Change. Now, you decide to develop a value based price of 10% of $2.4M or $240,000. So, you charge the company $60,000 for the research, analysis, and deliverables. According to Salary.com, the average freelance consultant makes $70,137 as of October 29, 2021. Join 300,000+ entrepreneurs worldwide in learning the latest insights & tips
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It’s natural to dislike the process of setting your consulting rates, but you shouldn’t have to give up money or sleep because of it. With a bit of know-how and practice, you can become confident in your value as a consultant and ensure your pricing reflects that. Defining and reinforcing a predetermined scope of work is crucial when charging by the project.
What do you charge for consulting when starting out?
Value pricing is a hot topic in the consulting world, and for good reason. But, as you can see, it takes an experienced consultant to make it work. Instead of “pitching” your client, you’re collaborating with the client on different ways to help them achieve their goals. Give your client 3 options in your proposal, and allow them to choose their level of risk. Ask the prospect if $117K in revenue would mean the project was a success.
Depending on the client or project, you may adjust your structure or choose a different model to charge entirely. Educational differences in billing rates were consistent with the 2020 survey. Having a Ph.D. translated into a $45 higher median billing rate ($215 an hour), with 17.5% of respondents holding a Ph.D., or its equivalent. There is virtually no difference in hourly rate between those with a Bachelor’s degree and those with a Master’s degree.
Average Consulting Rates by Industry in 2020 [Infographic]
Coaches can usually charge upfront for a set number of sessions or charge for individual sessions. But consultants who work with businesses — especially large corporations — usually need to adapt their payment terms for this industry. As an entrepreneur and consultant, you’ll be paying for your own benefits, buying your own computer and workspace, and no one will be paying you to go on vacation.
Or are you offering something unique that only you can provide? If you are, this can be your unique selling point and allow you to charge more based on value and scarcity. Some consultants will mystery shop their competitors to get an idea of pricing or join groups with other consultants and coaches to have open discussions online.
Step 5: Triangulate Your Consulting Rate with the Top Consulting Firms
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. However, you’ll always have to consider nuances and variables when pricing your services. As a consultant, you could quickly sign a 3-month project for $50-$75K.
- Engineering consulting is the practice of performing engineering as a consultant.
- Instead, your rate will vary based on your expertise, experience, education, and industry.
- 33% of consultants will lower their fees in order to win clients.
- They also spend a huge portion of their time looking for consulting clients.
- He draws an X on the side and says, “Hit it right here with a hammer.” The company’s mechanic hits the machine with a hammer.
These calculators are a great way to start off figuring out your own consulting rates. Consulting fees vary drastically by industry, and it would be impossible to list an average hourly rate for every industry. The table below lists the average consulting hourly rate by industry. Three types of firms find themselves in the consultant revenue range between $150,000 (R1 million) and $220,000 ( R3 million) per year. The Small and Mid-size Technology Players tend to have comparable rates, yet vary in size, ranging from small local players to large mid-sized firms with thousands of employees. 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.
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The number of respondents who worked solely as independent consultants in the calendar year 2020 continues to decline. After peaking at 48.6% in 2018, it has declined steadily to 36% this year. The top three client areas were private sector engineering consulting fees per hour (non-defense or utility) at 58.8%, defense (private and government) at 11.9%, and utilities at 11%. This year, the survey included a number of questions on COVID 19, specifically how it affected consulting activities in the past year.