I spoke with a consultant the other day, we’ll call him Terry. He had a question for me, “what should my daily consulting rate be? I’m a manufacturing consultant.”
My answer, “I can’t tell you.”
Terry: “Why not?!”
Me: “Because I don’t know.”
Terry: “What? Really? Why don’t you know? Isn’t there a standard rate?”
Me: Well Terry, there is a standard rate. A standard rate for people that don’t know what they are doing. And a standard consulting fee for those that do know what they are doing. Which one are you? Tell me more about you and your business and then we can get into more details…”
When the problem you are solving is causing a lot of problems for the client, and if your solution is valuable you can and should be setting your rate using value-based fees.
Terry went on to tell me how he’d been in the manufacturing industry for 20 years. He had worked with some of the top companies. And now, he was going out on his own and wanted to know what to charge.
From what Terry told me it was clear he could definitely help the companies he was going after.
So there wasn’t a question of whether a need existed…
…Whether he was solving a problem that existed…
There definitely was.
But I still couldn’t tell Terry what he wanted to know.
Actually, I should clarify. I could offer him a range of what consultants charge and go on with my day, but I didn’t feel comfortable doing that.
You see, if I did. Terry would potentially be leaving a lot of money on the table.
I could say, “Terry, you can probably charge $250 an hour without much trouble.”
Instead, I asked Terry to tell me more about his prospective clients. How big of a problem was he helping to solve?
Was it a $1000 problem, a $100,000 problem or a million dollar problem?
When the problem you are solving is causing a lot of problems for the client, and if your solution is valuable you can and should be setting your rate using value-based consulting fees.
With this approach, Terry could go from making $3000 on a project to $25,000 or more.
Give thought to what problem you are solving for your clients and how much your solution is worth to them.
When you’re talking in dollars and cents, this definitely makes sense : )
If you’re looking for more detailed information on understanding, setting and increasing your consulting fees, check out our Consulting Fees and Pricing Guide. It’s guaranteed to help you earn more as a consultant.