How much do you charge as a Business Consultant per hour?
Recently, it appears that more and more people are claiming to be consultants. Why is this? Is it a lucrative market or is it just for prestige, brand awareness? What about time and effort, is it worth it?
In order to clear up any ambiguity, please describe the work of a Business Consultant and what sort of pay should they expect to receive in exchange for services rendered?
Who is a Business Consultant?
I think a better term to use is management consultant as compared to business consultant.
According to the Management Consultancies Association, based in the UK, management consulting is the practice of creating value for organisations, through improved performance, achieved by providing objective advice and implementing business solutions. In other words, management consultants help take organisations further than they would go on their own.
According to Wikipedia a consultant (from Latin: consultare "to discuss") is a professional who provides professional or expert advice in a particular area. Pieter P. Tordoir states, in his 1995 book, "A consultant is usually an expert or a professional in a specific field and has a wide knowledge of the subject matter."
Based on these definitions consultants come in many different shapes and sizes with areas of expertise. This expertise could be functional as in engineering, accounting, information technology, human resources, marketing, manufacturing, sales, etc. Knowledge could be industry specific or it could be defined even further as in a functional expertise within a specific industry. For example healthcare human resource management.
Is it lucrative to be a consultant? It can be if you have something to offer a client. Some consultants make 5 figures, some 6 figures while others 7 figures and above. Some consultants use time and material. Others charge on project basis, while others earn their fee based on performance, like improved profitability. Fees charged are going to be based on industry norms, location, your expenses, how much profit you want to make — and of course your level of expertise.
UPDATE: 16 June 2014 — One thing I forgot to mention is perceived value. The more a consultant charges they are perceived to have more expertise and value then some one who does charge as much. For example, someone starting out may charge $50/hour while someone else like Carsten mentioned charges $3K-$5K per day. The latter consultant is perceived to have more expertise and value than the person who is charging $50/hour. So you need to do your research as I and Carsten stated to determine the appropriate billing for your expertise and experience.
Hi Hanna, I think Jeff hit the nail on the head. It all depends on your experience and what companies are willing to pay for the services. It requires market research and a field of expertise.
Consultants are also (many of them) combining different services such as providing training to organisations and coaching.
To give you an example, my field of expertise is prospecting. That's where I consult companies on, their level of prospecting activity. Many of my clients don't prospect enough, their sales teams don't prospect enough and my job is to help establishing a plan on how they can achieve that.
I use specific methods and after my consultation is done my company provides additional training and coaching support for individuals to grow their prospecting activity. As you can imagine this has a big impact on the company's revenue stream and the individuals commission.
I believe in fair pricing and the companies I work with will grow their sales steadily (instead of the spiked increase you would get from conventional sales training). This means the sales will usually go up by anything from 12% to 45% or even higher than that in the first year. Once the sales is up it stabilises but it won't go back. As a company we guarantee those results and if you work with companies making 1 Mio $ or more in turnover than this increase means anything from 100K to 450K extra in revenue.
How much do I charge? It depends. We have different concepts that we can offer to the client but single consultation for example will be charged 250€ (around 280$) an hour. However we usually waive the consultancy fee completely if a company grants us the entire project meaning training all their sales staff (incl. managers) and follow-up coaching. In this case we charge per employee attending from 1,700 EUR (approx. 2000$) upwards. This includes a 2 day training and 4 follow up coaching sessions (depending on the type of project will be either done in a group environment or individual coaching). We measure the results (meaning sales) and can show exactly where the growth came from.
Some consultants charge 3K - 5K a day and other charge that for half a days work. It all depends on their field of expertise and the impact they are making. We just started out (a little over a year ago) and have already substantial success with our concept. The min increase we generated for one client was 12% while still in the project and their sales is still growing.
I hope this answers your question from a sales consultant viewpoint. :-)
Dawkins, I believe it depends on the scope of the work needed. I charge $250.00 with a minimum of hours per day. I spell out what the services will entail to the business. I haven't had an unhappy customer yet. Well once sometimes the findings hurts.
I have charged much more and a couple of time less only for the exposure of the situation. A consultant needs t understand exactly what their time is worth.
You should not try to trade time for money, but trade expertise for a large fee. The more your expertise the more you get paid. Never put a hourly value on your time , but a results and expertise value on your service and you will make more than you ever expected.
Yes, this is a growing career path for sure. Note that there are two distinct paths: A "consultant" is more of strategist where a "Coach" is more of an actionable, behavioral implementer. Depending on the segment and the organization being served, this is wide spectrum of skills and values. I have seen such individuals with earnings as low as $50K to as high as $500K. Naturally, experience, exposure and positioning are all influences accordingly. Are you seeking to work as one or are you needing such services?
I personally charge a minimum of 100 dollars a hour depending on the services i am providing. As a mediator i choose a minimum of 400 per hour. if i am working in a corporate setting i charge significantly more depending on the service. In corporate settings i charge more because i am working with executives and for them to value the time we are working together. the price needs to be attention grabbing.
start with charging a $ a minute & scaleup to a $ per second...
a person who shares, designs & manages a business plan (in action) is known as a business consultant.
I am a management consultant. My base rate is $360/hour plus expenses. I sell my expertise in blocks of time: two months, six months, one year, or three years, either full time or half time.
You have to be ready for a couple of things: you will not be billable all the time. On average, I'm billable between 40% and 50% of the time. Last year, I hit 50% and felt pretty good about it. This year, it's looking like 40%. Non billable time is spent selling, building expertise, building contacts, traveling through non-glamorous airports and sleeping in Residence Inn rooms that all look exactly the same (down to the artwork).
Get started by working for a consulting firm for at least two or three years. Learn their processes, from sales management to delivery management. Keep on contact with the people you've helped. When they move to new companies, send a fruit basket. Those are your best "first leads". 90% of your business development will be by referral and handshake, so buy the first round of drinks, every time.
Find a mentor. Have a conference call once a month. Never miss.