Pricing your services

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Photo by Chesney Bradshaw

If you are deciding to move into an independent consultant role, how do you price your services?

The experts say that you should take your earnings or salary annually, add 30% for your overheads and work out your hourly rate.

Is it as simple as this?

When you do that simple calculation, you may find that you have priced yourself out of the market. 

What do you do? 

Well, the first thing would be to look at the going rate for consulting services in your professional field. This research will give you an idea of what other independent consultants are charging and you may want to adjust your rate accordingly.

Overheads are a tricky area because yours could be lower or higher than other consultants. The best advice is to work out your overheads accurately and then see if they are reasonable. High overheads could price you out of the market.

These days overheads can be less because many business people are working from home.  Apart from Internet services, printing, photostating and additional consumption of resources such as water and electricity at your home need to be assessed. 

Some top independent consultants price their services much higher than the market average for number of reasons. They might not like doing consulting work and prefer to work on other, more profitable sides of their business. Consulting work can be difficult because of customer expectations. Customers may not believe that the service you have offered them is worth the price you are asking. You need to carefully manage client expectations.

Pricing is also a psychological indicator of your value and the value of the expertise that you bring to the party. Undercharging may win assignment but clients but then they may then not value your service so highly.

If you are unsure of pricing your consulting services, it would be advisable to consult with an expert in the field who can give you professional advice. 

Remember to look at what the big four consulting firms offer. Your expertise may well be on par with whatever the consulting firms are offering. So don’t sell yourself short.

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