Consulting fees can be a contentious subject. Traditionally you set an hourly rate and then bill your client in pre-agreed time increments. That’s fine, but setting your consulting fees in this way can be a major headache when you leave money on the table because you undervalued yourself.
Instead, consider using a value-based pricing model that takes into account the value that you bring to the project.
You could of course increase your hourly rates and pad them in an attempt to get a fair rate for the work you carry out, but this generally ends badly with the client closely monitoring and vetting the hours you work and bill. This is needlessly stressful for both parties and can lead to friction and resentment. It’s not a position you want to find yourself in.
This is exactly where value-based pricing comes in. You estimate:
What cost benefits the client will see from the project.
What your costs are for carrying out the work.
Then you determine your pricing based somewhere between the two depending on various criteria that could include the following, but you’ll want to determine your own set of criteria:
Your experience level.
How much competition there’s likely to be for the work.
Any future benefits from the project for both parties.
The speed at which the project needs to be completed.
There are often objections to value-based pricing, but mainly from the types of clients that you don’t want to contract with. If a client makes their buying decision based solely on the cheapest price, then they might not be a good fit for your business.
You want clients that perceive the value and benefits that you bring to the table and understand that quality is worth paying for. Value-based pricing, in my opinion, is the way to go for consulting fees—it’s a fairer and more transparent pricing structure that benefits both parties.
Do you price consulting fees based on value or on an hourly rate? We’d love to hear your experiences, so why not share them in the Comments section.
And to follow-through on the tips introduced in this short article, be sure to download your free copy of the special report on How to Start a Computer Consulting Business: 6 Proven Ways to Build Your Initial Client Base.
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Topics:- Computer Consulting Business