How to become a consultant blog

2019 Consulting Fees Study (And How To Raise Your Rates)

So, you want to raise your consulting fees?

Most consultants do. But, there are many factors holding them back.

This year, we sent out our most comprehensive consulting fees survey to date.

And we’re sharing all our findings and insights with you below.

If you feel like something is holding you back from raising your consulting rates and earning the revenue you want in your business, this study is for you.

This is the data we use to help hundreds of coaching clients increase their fees by 30%-400%+.

Read on to learn about what consultants are doing with their consulting fees — and learn how to earn more revenue in your business.

QUICK LINKS:

Summary of Our Key Findings on Consulting Fees

We’ll get started with some of our key findings from this year’s study.

  1. 80% of consultants are actively looking to increase their rate.
  2. 42% of consultants have never tried value-based pricing because they don’t know how.
  3. Productized consulting services are becoming more popular — 40% of consultants offer a fixed-scope, fixed-price productized service.
  4. 33% of consultants will lower their fees in order to win clients.
  5. Consultants who are specialists and make it clear in their marketing are more than twice as likely to have most of their consulting income from retainer-based work.
  6. Consultants who are specialists and make it clear in their marketing have a higher average consulting engagement value — 25% more of them make $20K-$100K+ per consulting engagement than consultants who don’t make their specialization clear.
  7. 29.67% of Consultants who price their services based on value and ROI have successfully completed a performance deal — versus only 8.13% of consultants who use an hourly rate.
  8. Consultants who price their services based on value and ROI are 86% more likely to offer productized services.
  9. Most management consultants use an hourly rate, whereas strategy consultants are split between hourly rate and value-based pricing.
  10. 32% more of consultants who are specialists and make it clear in their marketing enjoy an 80%+ profit margin in their business compared to those who don’t make their specialization clear (or who aren’t specialized at all) — 36.17% of whom listed their profit margins at 50%, 40%, and 30% or lower.
  11. 50% fewer female consultants price their services based on value because they don’t know how compared to male consultants.
  12. Consultants who earn $10K+ per month have a much higher average consulting engagement value (59% of them charge more than $20K+ per project compared to only 15% of consultants earning less than $10K per month).

Consulting Pricing Strategies

As a consultant, there are many different ways to price your services.

We asked consultants about their particular pricing strategies — and the results might surprise you.

How Consultants Set Their Rate

how consultants set their consulting fee

The majority of consultants (31.37%) use a project-based rate to price their projects.

23.38% of consultants bill by the hour.

17.30% of consultants use value-based fees to price their projects.

15.40% use monthly retainers — and 12.55% of consultants use a daily rate.

How Many Consultants Have Used Value-Based Pricing

percentage of consultants who use value-based pricing

Value-based pricing is a hot topic in the consulting world — and for good reason.

It’s one of the best ways consultants get leverage and increase their earnings without spending more time working.

Despite that, value-based pricing is not easy to do.

41.63% of consultants have never priced their services based on value because they don’t know how.

28.33% use value-based pricing on some of their projects. 16.16% use value-based pricing exclusively.

13.88% of consultants never price their services based on value because they are satisfied with their current pricing structure.

How Many Consultants Do Performance Deals

percentage of consultants who do performance deals

A performance deal is where you are paid based on the performance of your work.

EXAMPLE: Your client is currently making $100K per month. You help take them to $200K per month. With a performance deal, you’re charging a percentage based on the extra value you’re creating. So, if you and the client agree on 10% of the extra value, then you’d be earning $10K per month on the project — in addition to your base pay.

So, how many consultants actually use performance deals?

60.46% of consultants have not done a performance deal, but are open to the idea.

15.40% of consultants have done a performance deal and it worked out well for both parties.

14.26% of consultants have not done a performance deal and are not interested in this pricing strategy.

9.89% have tried a performance deal, but it did not work out well.

How Many Consultants Have Retainer-Based Work

percentage of consultants who have retainer projects

One of the best ways to build a more resilient consulting business is to use monthly retainers.

With a monthly retainer, you’re working with & billing your clients every month. That means it’s recurring revenue.

Recurring revenue can provide a higher sense of security because you know you have predictable income coming in each month.

41.44% of consultants don’t have any retainer-based work, but would like to.

37.83% have some work that is retainer-based.

17.68% said that the majority of their income is monthly.

3.04% of consultants are not interested in monthly/retainer-based work.

How Many Consultants Offer Productized Services

how many consultants productize their consulting services

Productized consulting is when you take your service, strip it down to its essentials, and give it a fixed scope and price.

They are another fantastic way to create greater leverage in your business.

50% of consultants do not offer productized consulting but are interested in doing so.

40.49% do offer productized consulting. 9.51% do not offer productized consulting and aren’t interested in doing so.

Consulting Fees Positioning & Mindset

Much of pricing comes down to confidence.

We asked consultants about their mindset as it relates to their pricing.

How Many Consultants Lower Their Fees To Get Clients

consultants who lower fees to get clients

Lowering your fees to get clients is never a good idea. It sends all the wrong signals to the client about the value you can add to their business.

48.67% of consultants lowered their fees to win clients in the past, but don’t do it anymore.

32.32% often lower their fees to win business.

19.01% haven’t and would not lower their fees to win clients.

How Many Consultants Are Specialists

how many consultants are specialists

Specialization is another important pricing factor for consultants.

Clients are often willing to pay a premium for consultants who have demonstrated expertise in their industry.

62.93% of consultants are specialists and make it clear in their marketing.

26.62% have specialist expertise, but don’t make it clear in their marketing.

6.65% of consultants do not have specialist expertise but are looking to specialize.

3.80% of consultants do not have specialist expertise and are not looking to specialize.

Consultants Who Want To Increase Their Fees

how many consultants want to raise their fees

As you might expect, the majority of consultants (80.23%) want to increase their fees.

And 19.77% of consultants are not actively looking to increase their fees.

Consulting Business Financials

How much are consultants charging for their services? How much are they earning per year?

We asked our list of 30K+ consultants for the latest insights into the financials of small consulting firms.

Average Consulting Engagement Value

average consulting engagement value

Here’s how the numbers break down for the average consulting engagement value:

  • 22.24% – $500-$2000 USD
  • 18.25% – $2001-$5000 USD
  • 16.54% – $5001-$10,000 USD
  • 14.83% – $20,001-$50,000 USD
  • 12.74% – $10,001-$20,000 USD
  • 7.79% – $100,000+ USD
  • 7.60% – $50,001-$100,000 USD

Consultant Monthly Earnings

how much consultants make per month

Why should you start a consulting business?

One of the reasons consultants start their consulting business is for the unlimited earning potential.

With the right strategy and mindset, consultants can earn five or six figures — or even more — per month.

29.90% of consultants earn $10K-$45K per month.

23.57% earn $5000-$10K per month.

21.86% earn $2000-$5000 per month.

20.72% of consultants earn less than $2000 per month.

2.47% earn $45K-$100K per month — and 1.52% are earning $100K-$250K per month.

0.76% of consultants are earning a whopping $250K+ per month.

Consulting Business Profit Margins

consulting business profit margins

Consulting is known to be a high profit-margin business — and the data supports that.

28.14% of consultants enjoy an 80%+ profit margin.

16.92% have a 70%+ profit margin.

15.59% of have a 40%+ profit margin.

14.64% have a profit margin of 30% or lower.

12.55% have a profit margin of 60%+, and 12.17% have a profit margin of 50%+.

Consulting Demographics

We always ask our list of consultants to tell us about other aspects of their business. This helps us break down the numbers even more.

Here are the demographic data from our list of 30K+ of independent consultants and small consulting firm owners.

How Long Consultants Stay In Business

years of experience in consulting

Our study features brand new consultants and veterans.

23% of consultants polled have been consulting for 1-3 years.

18.06% have 3-5 years of experience, and 18.06% also have 5-10 years of experience.

17.11% have more than 15+ years of experience.

15.02% have less than 1 year of experience, and 8.17% have 10-15 years of experience.

Types of Consultants

types of consultants and their fees

There are many types of consultants. So, what are the types you’ll find in this study?

  • 25.10% – Management consultant
  • 19.20% – Strategy consultant
  • 16.73% – Other
  • 10.46% – Operations consultant
  • 6.84% – Marketing consultant
  • 4.75% – HR consultant
  • 4.75% – IT/Tech consultant
  • 3.99% – Non-profit consultant
  • 3.23% – Sales consultant
  • 2.85% – Financial advisory consultant
  • 1.14% – Data consultant
  • 0.95% – Design/branding consultant

How Many Consulting Firms Have Employees or Contractors

consulting business employees vs contractors

If you want to scale your consulting business, hiring employees or contractors can be a great way to do that.

44.11% of consultants we polled do not have any employees or contractors.

42.02% use contractors, but don’t employ anyone full-time.

13.88% have full-time employees.

How Many Employees do Consulting Firms Have?

how many employees in consulting firms

Of the firms that do have employees, how many employees do they have?

62.10% of consulting business owners have 1-3 full-time employees.

22.58% have 4-10 employees.

5.65% have 11-25 employees.

4.84% have 51-100 employees.

2.42% have 26-50 employees, and the same percentage have 100+ employees.

Consultant Age Demographics

age of consultants and income

You can be any age and start a consulting business.

The majority of consultants we polled (29.47%) are 50-60 years old.

27.19% are between 40-50.

20.15% are 60+.

19.20% are between 30-40, and only 3.99% are between 20-30.

Consultant Gender Demographics

consulting gender demographics

75.15% of consultants we polled are male, and 25.8% are female.

Where Consultants Live

consulting business locations

Consultants all around the world took our fees survey.

Here’s where they are from:

  • 65.21% – North America
  • 9.70% – Western Europe
  • 7.98% – Asia
  • 7.60% – Africa
  • 3.80% – Australia/New Zealand
  • 3.23% – South America
  • 2.47% – Eastern Europe

How To Set Your Consulting Fees (Consulting Fees Calculator)

Want to know exactly how much you should be charging to reach your income goals?

For that, we developed a Consulting Fees Calculator.

In 4 steps, you’ll learn your daily billable rate and your ideal hourly rate so that you can reach your target income.

It’s an invaluable tool to help you get clear on how much you should be charging your clients.

That said, we advise you to move towards greater leverage — away from billing based on your time. Here’s how you can do that:

  • Productized Services: Giving your services a fixed scope and price, creating a more efficient delivery.
  • Value-Based Fees: Pricing your services based on the value you might create for your client instead of the time you spend delivering.
  • Monthly Retainers: Recurring revenue where your client either pays for your work or pays for access to you.
  • ROI-Based Fees: Pricing your services based to capture a percentage of the earnings or savings you create for your client.
  • Equity: Working for shares in your client’s business instead of a fixed amount of money.

Past Consulting Fees Comparison

This is our 3rd straight year doing the Consulting Fees study.

To see the past year’s results, click on one of the links below:

What’s changed over the past 2 years on the topic of consulting fees?

Value-based pricing is becoming more popular. In 2018, 12% of consultants used value-based pricing. In 2019, 17% percent of consultants use value-based pricing.

Consultants are earning more per month. In 2018 24.3% of consultants were earning $10K-$45K per month, compared to 29.09% in 2019.

And the same amount of consultants (80%) are actively looking to increase their fees.

Consulting Fees Action Plan

Here are three action items for you if you’re serious about raising your rates and increasing your revenue.

  • Elevate your mindset. If you’re uncomfortable with the idea of raising your rate or you would feel that your clients would leave you, then you need to work on your mindset before you think about your pricing. Read The Elite Consulting Mind — and take action on what you learn there.
  • Raise your hourly rate. Even though hourly rates aren’t ideal, they are often the foundation of your pricing strategy. And no one is going to give you the green light to raise them — you must do so yourself. What better time than now? Commit to raising your hourly rate by at least 10-20% by the first of January 2020.
  • Experiment with a leveraged form of pricing. Whether that be productized consulting, value-based pricing, or ROI-based pricing, charge a client using a method other than just your time. You’ll learn how much more revenue you can earn when you stop charging for your time and start charging what your clients really care about — the value you’re creating for their business.

Want Expert Help To Raise Your Consulting Fees?

No matter your level of experience, the Consulting Success team can help you raise your consulting fees.

Our Momentum program is for newer consultants who want to follow a step-by-step system to predictably and reliably get to 6-figures per year or more.

Our Clarity program is for consultants committed to maximize their value and fees through personal coaching and strategy on more advanced pricing strategies, marketing systems to generate consistent leads — to grow and scale their business.

Whether you’re struggling to price your services based on value, want to build in more recurring revenue, or want to know how to structure an equity deal properly, our programs will help you increase your pricing with confidence.

Conclusion

That concludes the 2019 Consulting Fees Study.

What did you learn?

More importantly, how are you going to use this information to increase your value, raise your prices, and reach your target income?

Information without action won’t get you anywhere.

I challenge you to take what you’ve learned here to make your consulting business better.

We’d love to hear your thoughts about this study.

Leave a reply in the comments — and share your thoughts below!

THE ELITE COACHING PROGRAM
FOR
CONSULTANTS

Develop a predictable
pipeline of clients.
LEARN ABOUT COACHING »

Please Share This Article If You Enjoyed It:

8 thoughts on “2019 Consulting Fees Study (And How To Raise Your Rates)

  1. Bogdan says:

    Wonderful survey! You’ve done a great job surveying such a large pool of consultants and sharing the results!
    I was curious if you’re willing to maybe show us a breakdown by industry? I’m operating in the IT/Tech consulting and I’m curious how the numbers look for that…Cheers!

    • Thanks Bogdan – appreciate the comment and support!. We will look into this and notify you with any updates.

  2. very informative and helpful reserach.great hard work by Micheal and Thank you for Sharing.very very incisive.God bless you Micheal. says:

    very incisive,detailed information and very helpful .Thank you Micheal.Solid hard work and your generosity in sharing with us Micheal.God bless you!

  3. Joe O'Mahoney says:

    Great work, yet again. Really impressed with your output. Would it be possible to get this as a .pdf please? I’d love to share it with my MBA students, but the current format doesn’t lend itself.

    Thanks

    Joe

    • Much appreciated Joe. We don’t have a PDF available but why not provide the direct link to the study to all your students. They can access it on their phones, tablets or computers : )

  4. The depth and quality of your content is unique. I’ve recently joined a specialist consultancy (small team 50+) part of an international consultancy and advisory organisation. I would love for some collaboration in the future, I’m only in 2 months so have to settle before I start recommending external support to the Senior Management Team, they have a great foundation to expand from.

    • Appreciate that Peter and congratulations on the new position, that’s exciting!

Leave a Comment, Join the Conversation!