Some clients are more often asking for custom billing plans to help them quantify their return on investment. If you’re feeling frustrated by all the options, we’ll also walk you through common fee structures and how to get started with calculating your own rates. The figure uses the revenues pe consultant per annum as a proxy for average rates and the number of consultants as a proxy for firm size.

• According to a report by Statista, strategy consulting was the largest segment of the consulting market, accounting for 32% of the total market share in 2020.
• Of course, this assumes you use an hourly rate for your consulting services.
• And while that may work for certain big box discount stores, it’s probably not the approach that will work for independent consulting.
• We asked our list of 45K+ consultants these questions for the latest insights into the financials of small consulting firms.
• But there is no better method for raising your rates and creating more value.
• Of course, sticking to your rates is a lot easier when you set them based on solid research.

If you’re a business consultant who wants to make $10,000 a day and you find a client who is willing to pay $10,000 a day, you’ve just determined the “value” of your service. It’s a common belief that charging too much will put you out of business. However, there may actually be more danger in charging too little as a consultant. Let’s dive into the psychology of consultant fees — along with the different methods and factors to account for when calculating them.

Data

The top three client areas were private sector (non-defense or utility) at 58.8%, defense (private and government) at 11.9%, and utilities at 11%. Conducted in the spring of 2021, the survey of 13,223 IEEE members self-identified as consultants resulted in 1,329 responses, a response rate of 10%. 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.

And if you’re looking for hands-on coaching to implement value-based pricing in your consulting business, check out our Clarity Coaching Program. One of the issues with the hourly method is that your client feels uncertainty around how much they’ll end up paying you. And uncertainty around a project will stop your client from moving forward. The Hourly Formula is when you charge by the hour for your consulting services.

Consulting Rates by Industry

The most important thing is to be realistic about what you’re worth and to price your services accordingly. Don’t sell yourself short, but don’t overprice average consulting rate your services either. It is important to keep in mind that the above analysis from Consultancy.org presents a simplified and indicative view of rates.

You don’t have to work with a ton of clients per year to run a highly profitable consulting business. With the correct strategy and mindset, consultants can earn five/six figures — or even more — per month. We asked our list of 45K+ consultants these questions for the latest insights into the financials of small consulting firms. Clients are often willing to pay a premium fee for consultants who’ve demonstrated expertise in their industry.

How to Network in Consulting (+6 Tips)

Their experience, like special skills and certifications, could be impacting their prices. Maybe their prices are low but their customer service is rated poorly. Or are you offering something unique that only you can provide?

This is referred to as your Minimum Acceptable Rate (or MAR). When you approach a business owner and charge for a project, it is important to understand the work that will be done. The best way to estimate how much you should charge is by estimating how many hours the task will take. Do this by figuring out how long it would take you to do the work based on your knowledge and experience. Do some research and see what the going rate is for your services. You don’t want to undercut yourself, but you also don’t want to overprice yourself.

Must-Know Consulting Industry Statistics [Current Data]

The consultants who charge the highest fees are lawyers, finance, and tax professionals. Because they have unique and specific expertise that is rare. So, you might not be a copyright lawyer or investment consultant, but think about where your expertise is rare in your field. By differentiating your skillset and developing a niche, you’ll become more valuable as a consultant. Note that your pricing structure should be under consistent review, especially as you grow your skills and attempt to expand your consultancy. Your rates should change (preferably upwards) every year as you gain experience, build your portfolio, and prove your worth.

Our new survey reveals exactly what high-earning consultants are charging and how you can set fees confidently to amplify your revenue. 80% of consultant are actively looking to increase their rate. 33% of consultants will lower their fees in order to win clients. This article, Consulting Fees and Rates – How Much Should I Charge?

A consultant’s guide on how to calculate your rates

Don’t be the busy fool who works long hours without keeping track of billable time. You should be aware that any time spent working on tasks directly linked to your client’s project is considered billable time, and accurately calculating billable hours is essential. The project you manage for your customer may result in a $100K increase in new sales.

42% of consulting firms expect an increase in mergers and acquisitions (M&A) activity in 2021. In 2019, the largest consulting market was North America with 43% of the global market share. Small businesses are a significant client base for the consulting industry; according to a report by the National Small Business Association, small businesses make up 99.9% of all businesses in the United States. The consulting industry serves many clients, including small businesses, large corporations, government agencies and non-profit organizations. The sector is expected to continue growing due to the increasing demand for HR consulting services, such as diversity and inclusion training and employee engagement programs. Moreover, it has seen significant growth over the years, although growth rates vary between mature markets and emerging economies.

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No matter what situation you find yourself in, you have the ability (and the right) to adjust your fees accordingly. It’s time to create the business you want, delivering value while making a good living. Let’s take a look at the different methods you can use to create your pricing structure.