There is a lot of money to be made in the consultancy sector. If you are in the process of launching a business that offers such services to industry, it is important that you understand how to determine what to charge clients. There are a number of pricing models for setting your consulting fee that you could put in place, the following suggestions are amongst the most common.
The approach that many firms use in regards to consultancy work is to charge a simple daily rate. How much money this entails would depend upon what specialized area the focus is on. When calculating a daily rate, it is important to factor in to the equation the number of days that the contract would last for. Also, expenses incurred may be added on to the final costing.
A retainer is another approach that can be used, typically if a consultant is to provide services for a fixed period of time, for example one year. A client would be asked to pay a single amount and in return be able to call on the expertise of the consultant for guidance and input whenever it is deemed necessary. If such a contract is to be used, there would usually be a cap on the number of days on which the client can use the consultant.
A fixed price is similar to a retainer, though it would typically be linked to the completion of specific deliverables. Under such a contract, there would be no reference to the number of days that are to be worked, the focus instead would be on ensuring that clear objectives are able to be met within a specific time-frame.
A contingency or success fee is a model that can be extremely lucrative. It would involve a client offering to share success with the consultancy if and when a required outcome is achieved. For example, if the goal is to reduce operating costs whilst also boosting productivity, when this is met a percentage of the cost savings can be passed on.
Another of the popular pricing models for setting your consulting fee would be to work on an hourly basis. The amount charged to the client would depend upon such factors as the expectations that have been put forward, as well as the skills necessary to bring targets into fruition. Related expenses and supplies would be charged to clients at cost price.
