Is It Time to Consider a Fixed Fee for Your Consulting Services?

Is It Time to Consider a Fixed Fee for Your Consulting Services?

Generally, the more experience you have as an independent consultant, the more likely you should move from billing by the hour to a fixed fee. At some point you’ll master your specialty and work much more efficiently than others. This means to earn what your services are truly worth, you’ll have to keep raising your hourly rates. But at some point, you’ll reach an invisible rate ceiling when clients think you’re too expensive, even if it takes you half the time to do the work.

When you reach this point, it’s time to start thinking about billing for your services by the project instead of by the hour or day. The idea is to price the project as if you’re going to do it from scratch, even though you know you’re going to adapt plans and materials from prior projects. By doing so, you’ll boost your income per hour.

Here’s an example…

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How and When to Raise Your Consulting Rate

How and When to Raise Your Consulting Rate

The easiest time to raise your rate is on the cusp of something new — a new year, a new project, a new client. With the new year just a few weeks away, now might be the time. This article offers ideas of how to do this, as well as some sample language to use when notifying your clients.

How to determine your new rate

Unfortunately, there’s no one-size-fits-all formula. Instead, I suggest triangulating on a rate that seems fair. Look at several different numbers and then decide. Here are four suggestions.

First, make a ballpark guess of what you think your new rate should be. For example, if your rate is now $150 an hour, what do you think is a logical next step? $175? $165? Jot it down.

Second, calculate a percentage increase. The amount might be 3% or 5% annually. Or maybe you need to make up for two or three years without a rate increase, and a 10% or 15% increase seems appropriate. Do the math a few different ways and see how these numbers play out. In my example of $150 hourly, a 5% annual increase works out to $157.50 for year one, $165 for year two, and $172.50 for year three. 

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How to Figure Out Your Consulting Bill Rate

How to Figure Out Your Consulting Bill Rate

Dear Liz, 

I have a quick question. I know a consultant who is going to do some work designing a company’s program for high-potential employees. The consultant has talent but not much experience. What hourly rate would you consider low, fair, too high? Can you ballpark this for me?

- Louis

Although the question is brief, a helpful answer is not. Pricing consulting services is notoriously difficult, particularly for self-employed consultants. You need to consider the real and perceived value of your services, expertise, and experience, as well as geography and market conditions. Several factors need to be considered:

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