New consultants--setting your prices/fees
Entrepreneurs don't have enough trouble deciding what business they're going to be in. They have to make hundreds of other critical decisions. For example, how do you decide what to charge for your products/services? Cost plus margin works well for most material items. But for professional consulting fees, the task is more challenging.
Checking a few of the average-salary-by-position-by-location websites can be helpful to give you the general cost of living in an area and the going rates for skills and experience similar to yours. Some associations or other professional groups publish guides for their industries. Trying to figure out what the market will bear can be fraught with uncertainty and risk. It's easy to know if you're charging too much--you won't get hired much. But how do you know if you're charging enough?
Here's a good article (using legal services as an example) about the different concerns with set fees versus hourly. And I can tell you, having hired a trademark attorney myself who charged a set fee (who hooked me with a Google paid ad), you do tend to get the low-end-of-the-spectrum type of service.
The fact is, supply and demand have a lot to do with how you set your fees. If enough customers agree to pay what you ask and you start receiving more work than you can handle and have to start getting help, you may raise your fees and start turning down jobs that don't pay what you ask. If you discover that another consultant with what you think is the same background as yours is charging substantially more, before you jump to raise your prices, be sure to check thoroughly to make sure that person doesn't have a different background, more experience in certain areas, additional exposure to markets or industries that you don't have. Here's a good article about starting a consulting business from Entrepreneur.com.
It's always a bit of a crap shoot to set fees when you start your business. But eventually you'll settle into a rhythm, and your fees will accurately reflect your value in the marketplace.
Checking a few of the average-salary-by-position-by-location websites can be helpful to give you the general cost of living in an area and the going rates for skills and experience similar to yours. Some associations or other professional groups publish guides for their industries. Trying to figure out what the market will bear can be fraught with uncertainty and risk. It's easy to know if you're charging too much--you won't get hired much. But how do you know if you're charging enough?
Here's a good article (using legal services as an example) about the different concerns with set fees versus hourly. And I can tell you, having hired a trademark attorney myself who charged a set fee (who hooked me with a Google paid ad), you do tend to get the low-end-of-the-spectrum type of service.
The fact is, supply and demand have a lot to do with how you set your fees. If enough customers agree to pay what you ask and you start receiving more work than you can handle and have to start getting help, you may raise your fees and start turning down jobs that don't pay what you ask. If you discover that another consultant with what you think is the same background as yours is charging substantially more, before you jump to raise your prices, be sure to check thoroughly to make sure that person doesn't have a different background, more experience in certain areas, additional exposure to markets or industries that you don't have. Here's a good article about starting a consulting business from Entrepreneur.com.
It's always a bit of a crap shoot to set fees when you start your business. But eventually you'll settle into a rhythm, and your fees will accurately reflect your value in the marketplace.
posted by Barbara Payne at 4:54 PM
1 Comments:
Consulting for Dummies is a good book that helps with price setting.
corey
Powerful Business Book Secrets
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