Business Development Consulting Fees

Consulting fees, consulting fees…How do you set consulting fees? Here’s a guide to setting consulting fee rates. (It’s also applicable to those wondering how to set consultancy fees — an independent consultant is still a consultancy and so is a freelancer!)

When you become a consultant, you’ll need to set consulting fees. Consulting pay and fees can be worked out in several ways. Here’s some information to help you figure out what clients should pay a consultant (some clients are still prone to consultant fee sticker shock, though). With this in mind, you can determine typical consultant rates — what companies pay consultants for their hours, days, projects and expert opinions.

The main strategies for setting consulting fees include:

1. Doubling/tripling your hourly wage
2. Using a daily rate for consulting
3. Setting consultant fees by the project
4. Setting consulting fees based on performance
5. Setting consultant fees strategically using real-life data
6. Charging what everyone else charges
7. Moving to Solution-based Fees

(Want even more info? Get 200+ pages on setting consulting fees in my Consulting Fees: A Guide for Independent Consultants).

Main Strategies for Setting Consulting Fees

1. Double/triple your hourly salary-based wage as basis for consulting fees

To set fees, some consultants simply take the hourly wage (plus benefits) that they would earn when working on salary for someone else and then double or triple it. If you’re doing this, you’ll probably find that tripling your hourly wage is the best move. Some consultants choose a triple rate because of what they call the rule of thirds — one third goes to your real wage, one third to expenses, and one third to administration, low utilization and bad debt. It’s pretty easy math, which is also a reason it’s popular. (If you prefer some help, use our hourly rate calculator for this step.)

Let’s say you make $60k a year plus benefits and you get four weeks of paid leave .

($60, 000 salary + $15, 000 benefits) / (48 weeks * 40 hours) =

= $75, 000 / 1920 = $39.06

If you double this and round up to the nearest multiple of $5 or $10, your consulting rate should be about $80 an hour. ($39.06 x 2 = $78.12, rounded to $80.)

If you triple this, your consulting fee should be about $120 an hour. (Or $39.06 x 3 = $117.18, rounded to $120 per hour.)

I recommend rounding up to the nearest $5 or $10 multiple, because a $78/hr or $117 fee looks odd. And while that may work for certain big box discount stores, it’s probably not the approach that will work for independent consulting.

Of course, this assumes you use an hourly rate for your consulting services. Many people work out an hourly rate, but actually charge by the half-day, day, project or another arrangement.

2. Setting a daily rate for consulting (per diem rate for consulting)

To set a daily rate, simply multiply the hours you work in a day by the hourly rate from the above example.

8 hours * $80 hourly rate = $640 per day

3. Setting Consultant Fees by the Project

Some consultants set their rates by the project. They estimate the number of hours they expect to spend on a project, then multiply by their hourly rate.