Knowing what to charge as an independent consultant can be tricky, especially if you feel it’s time to start charging more. How do you know when you’ve established yourself enough to raise your fees? And how do you know it’s appropriate for each individual project?
It all comes down to the specifics of your circumstances. How much you charge is dependent on a number of factors: your experience, the type of client you work with, the work you do, and your reputation and brand. This means there’s no ‘right’ time to start increasing your consulting fees — it’s broadly up to you.
In this article, we’ll provide you with 5 tips to help you increase your consulting fees and earn the paycheck you’ve wanted to since becoming an independent consultant.
1. Be confident in your abilities
In some ways, being a consultant is just like any other kind of employment. What you can earn and what opportunities are available to you are often dictated by where you start. As such, the way in which you conduct your consulting business will affect how much you can charge. It’s tempting to go in with attractively low consulting fees and try to gain a competitive edge by being the most affordable consultant in town. But this may start your consulting firm off at a disadvantage.
Because your fees are lower, you’ll need to accrue more billable hours to make the move to self-employment worthwhile. And this means you have less time available for administration, networking, skill building and all the other things that add value to your consulting services. Therefore, consultants who start low-cost, stay low-cost.
Evaluate how much you currently charge for your clients, and think about whether it accurately represents the amount of work you do for them. Are they happy to pay your going rates or do you find that you often have to haggle? If you don’t have to negotiate, there’s a chance you could be underpaying yourself. At the same time, you don’t want to ask for so much that you scare clients away. When in doubt, start with a higher (but reasonable) ask and negotiate down.
2. Expand your skills
Businesses seeking the services of consultants want a return on their investment. They want the valuable knowledge and skills that will make their business more profitable, and they’re prepared to pay for them.
While it’s important to be confident in your ability to deliver, you should never stop learning. It makes sense that the more experience and skills you gain, the more value there is in your services and the more you can charge. It’s just like climbing any other kind of career ladder. The only difference is that you get to define your own worth. And your skill set is what defines whether or not you’re worth your fee.
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You can add value to your skill set by both developing ‘deep’ and ‘wide’ skills. It’s up to you to find the balance between being a ‘jack of all trades’ with a wide range of specialisms, or becoming an unparalleled expert in one particular field. Both options will allow you to charge more for your services. But those rare few who have both varied skill sets and deep industry knowledge command the highest fees.
Nonetheless, the more skills you learn, the more you have to offer your clients and the more value you have. So you can charge more as you engage with multiple sides of a project and maximise your value among your clients.
3. Know your audience and ask accordingly
One of the most potentially bewildering things for new consultants is the lack of standardisation in pricing within the field. If you’re truly flummoxed when deciding how much to charge your clients, it may help to think less about you and the skills you offer, but more about the client and the project. Even the most successful independent consultants charge on a sliding scale depending on the client and the engagement. It’s up to you to determine what you deem appropriate.
This means it’s important to factor in your client’s needs and resources when you think about your fees and rates. It stands to reason that larger corporate firms (while harder to land) will be able to afford to pay more for your services than smaller startups.
That said, not all startups will have a smaller budget. Many in the tech sector, for instance, are very well funded and have the capital to invest in growth, but in some cases potentially lack commercial expertise. The point is that you can never know your audience too well.
It also stands to reason that taking on more work will command a larger fee. Larger projects and engagements will require more work and take up more of your time. If you don’t want to increase your fee by going after a bigger client, it might be worth increasing it by going after a bigger engagement. However, ensure you don’t limit your flexibility by committing to a lot of long-term projects — you want to ensure you’re still working with a range of clients to help you expand your skill set, which in turn will allow you to charge more in the future.
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4. Always place your fees in context
Remember that your clients aren’t throwing away money on you. They’re making an investment in themselves. As such, you can ask for more if you can demonstrate the value you will deliver. What’s more, they’re paying you out of allocated resources, not their own pockets. Therefore, you shouldn’t be shy about demanding a larger fee if you’re confident that you can demonstrate increased revenue or efficiency savings over a set period of time.
This is an important part of going independent. It requires you to think about your worth in a different context, and measure the gains or savings that you could facilitate for clients. Demonstrate that you can deliver a healthy ROI and your fee is almost a non-issue.
5. Have a brand
As Amazon founder Jeff Bezos once said, “Your brand is what people say about you when you’re not in the room.'' Having a brand that’s synonymous with excellence is not only a great way to ensure that you always have prospects and clients in the pipeline, but it also helps you ask for more.
When you’re starting off as an independent consultant, you might worry about how you’re going to stand out amongst your competitors. And the value inherent in your individual brand and reputation will be what makes people want to hire you. When prospects see or hear about the results you deliver, your brand will become a trusted commodity and referrals will inevitably follow.
Unlike larger firms, nobody will be able to accuse you of coasting on the reputation of the firm itself. You’ll be defined by your results and the quality associated with your brand.
And the more prospective clients associate your brand with quality, value and an excellent chance of a healthy return on their investment, the more you can justify increasing your fees.
So, what are you really worth?
Increasing your consulting fees isn’t an act of greed — it’s asserting the value of a commodity. And that comes from knowing your worth as an independent consultant. It means being assured in your skill set and experience, and gradually growing your reputation.
The more work you put into establishing yourself, the more you can charge.
Don’t start your consulting firm off at a disadvantage by underselling yourself, but at the same time don’t oversell yourself and price your services out of the market. Charge according to the value you offer the client and invest in yourself. Then, the only way is up!
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