Consultancy charges

[Pauly08]

Apologies for the school boy question but I’m hoping someone can help me here. I have worked for various companies helping others with their e-commerce sites in various different capacities. I am no longer in this field of work but have been asked to help a reasonable sized local company launch their first transactional site on freelance basis so here’s my question, how much do I charge as a daily rate? Is there a typical going rate?

 

[GreatSEO]

It depends on what you feel you are worth and also what the company are willing to pay.

I have seen some consultants charging £250-00 per day and some charging 2k per day but it depends on the size of the project etc etc

Hope this helps

Dave

 

[scifind]

Depending on the client and your worth start around £35 pounds per hour, this is of course if the client is willing to pay this. Depending on your relationship with the company you may wish to do a lower rate but avoid going too low.
If you had an idea of the budget for the project you may want to charge a project rate, doing your homework and give realistic projections of time you can / need to devote first

 

[Pauly08]

That does help Dave, I had £250 in my mind so feel better now you have mentioned that figure. Thanks.

 

[Pauly08]

Depending on the client and your worth start around £35 pounds per hour, this is of course if the client is willing to pay this. Depending on your relationship with the company you may wish to do a lower rate but avoid going too low.
If you had an idea of the budget for the project you may want to charge a project rate, doing your homework and give realistic projections of time you can / need to devote first

The horly rate sounds interesting, is that common to charge this way? Will find out budgets etc next Wednesday, how does a project rate work? Thanks, Paul

 

[Humphrey]

Hi Paul

There is a free Excel based Consultancy Fee Adviser tool at www.bizbasics.co.uk in the Free Tools section.

Hope this helps

 

[Pauly08]

Hi Paul

There is a free Excel based Consultancy Fee Adviser tool at www.bizbasics.co.uk in the Free Tools section.

Hope this helps

Thats great, thank you I'll take a look.

 

[Wendy.Rule]

A couple of things to look out for...
1. The more you charge the more likely it is to be a day rate and whether you work 8 hours or 12 hours you still get paid the fee for that day.
2. If you chose an hourly rate it is likely you will have to report on effort at a more detailed level also.
3. If they are likely to negotiate then start at a rate that is higher than you are happy with and expect to negotiate down a little.

 

[testudo]

There's several factors to consider here. Do you have a particular area of expertise, for example, web developer, designer, content management or SEO expert. I used to work at a web company and we charged around £400 per day (or £60 an hour) for our "expertise" regardless of whether you were getting a developer, designer or account manager doing your work (the overheads averaged out). So don't sell yourself short.

Secondly are you looking to position yourself as a consultant in the long run or is this just simply a way to keep your head above water? If it is the former then set a rate that absolutely sets you apart from an employee, so they view you differently and think about how they use you. Make yourself exclusive and valued.

On the point regarding project pricing, it can be the best way to go but be sure to set very clear staged deliverables so you and they know you are on the right track. Think about the end goal and work back from there. What are the stages between there and now and the fact that you don’t know everything. Give yourself a get out clause if they become too demanding and you end up working at a loss.

Good luck!

 

[Qdos]

For services (e.g. consultancy/ hair & beauty / plumber, childcare and of course a web design freelancer etc), the time based costing formula is as follows:

ANNUAL OVERHEADS
ANNUAL AVAILABLE PRODUCTIVE HOURS = Rate per hr (breakeven)
(Hours x Days x Weeks)

The average person living in the UK would realistically need a minimum survival budget of £20k after tax to live on. A freelancer would have nominal operational overhead; a vehicle, small materials expense, phone, office expenses, insurances, webhosting, marketing, etc, but still less than £10kpa on average. Now the average productive hours (that means time spent on a client's job or with the client, but excluding one's own time on book-keeping, etc is approx six hours a day) multiplied by working a five-day week, 48 weeks of the year, allowing for illness and holidays, give us:
E.g:

£30000 = £21.00 Per Hour (rounded up Breakeven)
6 x 5 x 48
(1,440 hours)

The above example is based on one person as a 'fee-earner' and only covers costs. To improve lifestyle and reinvest in the venture, a target profit would realistically need to be reflected in a price to the customer of at least £50 per hour. This is because of an axiom called "The thirds rule": a third of your profit will go in tax; a third is for you, the other third is to re-invest in the business to grow it (to add staff, contribute to replacing equipment, a vehicle, etc). This helps set a sales target....

Therefore there is a benefit of having other 'fee-earners' working for you (we need back office staff to handle admin and other functions, but a fee-earner is someone who is directly influencing sales by duplicating your own efforts). This is because you can multiply the number of productive hours. Even though your overheads would be higher, the bottom figure in the equation would reflect a lower hourly rate overall, thus:

E.g:
Venture with 3 fee-earner staff, each paid £15,000pa, plus yourself (if you decided to keep working 'in' your business, more than 'on' it!):

£75000 = £13.02 Per Hour (Breakeven)
4 x 6 x 5 x 48
(5,760 hours)

Point being, it's more cost-effective in the longer run to employ fee-earning people (or outsource) than trying to do it all oneself.

There's a different calculation for product sales....

I've been a qualified freelance Business Start-Up advisor for over 15 years and run my own training company.....hope that helps!

 

[Epindura]

I did not think this was a school boy question at all, I am glad you have had the nerve to ask it. I think this is where we fall short, we deprive ourselves some knowledge for fear of what people may say or think. This is a very good question and many small business owners stammer when you ask them that question. I think a better fool is the one who asks or else you will end up some miles away from the point you where just less than half a mile from.

See you got some very good answers there, and I bet this will benefit those of us who have been shy to ask

 

[Qdos]

I did not think this was a school boy question at all, I am glad you have had the nerve to ask it. I think this is where we fall short, we deprive ourselves some knowledge for fear of what people may say or think. This is a very good question and many small business owners stammer when you ask them that question. I think a better fool is the one who asks or else you will end up some miles away from the point you where just less than half a mile from.

See you got some very good answers there, and I bet this will benefit those of us who have been shy to ask

Nicely put and absolutely right. I've seen stats that indicate over 75% of start-ups don't take advice at all; of which 80% don't make it to the end of their first year. Of the 25% or so that are wise/humble enough to seek professional advice (I include querying existing businesspeople in that), 80% are still trading two years later....

 

[Pauly08]

Thank you all, some very good advice there and you are right I'm not afraid to ask questions, a little knowledge goes a long way and everyones 'little' bit of knowledge goes even further! I have my first meeting with them tomorrow so fingers crossed.

 

Surely the amount charged per day is dependent on what skills are being brought to the table and the value of those skills to any given company.

The chap who said his company lumped all skills together ,web designers,devolopers,SEO.

was a million miles off the mark as to valuation.

Earl