Be clear about what you bring to the table and why your services are worth the price you’re charging. If you can’t articulate your value, it’ll be difficult to convince clients that they should pay top dollar for your services. To attract better clients and grow your business, you need to value yourself properly. Remember that your consulting rates aren’t just your price of doing business; they’re a representation of the value you bring to clients. Price your services too low, and you’re underselling your talent and experience.
This answer varies for everyone, so you’re not going to find a golden number anywhere. Once you have a better grasp of the amount of work required, you’ll be better able to set your rates. If you want to build a predictable, profitable, scalable consulting business with premium pricing, then our new Consulting Fees Multiplier mini-course is for you.
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The Big Four consulting firms (Deloitte, PwC, EY, KPMG) earned a combined $146 billion in revenue in 2020. The technology consulting market was valued at $48.3 billion in 2020 and is expected to grow at a CAGR of 11.5% from 2021 to 2028, according to a report by Allied Market Research. Human Resources Consulting helps organizations manage their human resources effectively, such as recruitment, training, and development. According to a report by IBISWorld, the HR consulting industry in the US was worth around $28.6 billion in 2020, with a growth rate of 3.1% from 2016 to 2021. A Statista report determined that the worldwide consulting sector was worth an estimated $251 billion in 2016, with projections indicating a Compound Annual Growth Rate (CAGR) of 3.3% between 2019 and 2023.
Note that your personal experiences and background may influence how you go about setting your rate. Now that you understand some of the factors that influence average consulting fees, let’s take a look at some averages by industry. Keep in mind that these are just average hourly consulting rates. Large corporations are also a major client base for consulting firms; according to a report by Statista, the global management consulting market size for corporate clients was valued at $158.1 billion in 2020. Consulting services for large corporations include strategy consulting, operations consulting and IT consulting. One of the most important things you can do when setting your consulting rates is to communicate your value to potential clients.
The market rate is the average price or range of pricing that clients generally pay for your service. Consider the average market rate in your industry as a small factor in your own pricing. You may be far more experienced than others in the market, meaning you can double the market rate for your services. Conversely, you may be just starting out, and while you may have less experience, you can charge much lower prices – making you much more attractive to new clients. The consulting industry’s average billing rates provide a valuable insight into the current state of the industry. This statistic is indicative of the cost of services, and can help potential clients understand the financial commitment they may need to make when engaging with a consultant.
- We have not conducted or collected any studies or statistics on the topic mentioned above ourselves.
- Note that your pricing structure should be under consistent review, especially as you grow your skills and attempt to expand your consultancy.
- If you’re a freelance consultant, calculating consulting fees can be one of the most challenging aspects of your business.
- As a beginner consultant, you’re typically not working 40-hour weeks.
- Using a formula or fee calculator like the examples listed below is a good jumping-off point.
- While you may want to use the same fee structure across all clients, you don’t have too.
The average consultant billing was $170 per hour, up $20 over the previous survey. This rate was consistent, regardless of years of experience — except for those with less than 15 years of experience, whose median hourly rate was $158 an hour. The share of respondents with hourly rates at, or above, $200 per hour increased to 36.4%, up from 32.1% in 2020. Knowing what your competitors are up to is crucial in deciding on your pricing.
Average Consulting Project Length
Then, mark that up 40%, which results in an hourly rate of about $40. However, remember that your client is likely going to be looking for these same numbers. They’ll average consulting rate want to know how much they should be charging a consultant, so they don’t get duped. If your rates vary from industry benchmarks, be prepared to back it up.
However, remember that this kind of pricing still excludes the true value of your work. If you’re performing business-altering work, that has a financial price tag to it, as well. That 40% markup would cover the cost of your expertise and business expenses like overhead, benefits, taxes, and more.
Learn To Double, Triple, Or Even Quadruple Your Consulting Fees (Without Scaring Away Clients)
Now, it’s very unlikely that you’ll actually bill 40 hours a week, especially in the beginning stages of your consulting business. Plus, you need to account for sick time, vacation days, healthcare, and other overhead expenses. So, you’ll want to double, or even triple that, to get a better idea of your goal hourly rate (which would be somewhere between $77 and $115 per hour, in this example). In the U.S., small business consulting fees range from $95 to $1,500, with an average cost of $399. The hourly cost of consulting fees range from about $45 to $150 per hour.
The scope of work should be a large determinant of your rates, but pricing per hour or project is challenging to estimate. For example, it may be quicker for you to write a 2,000-word article for a company than to help produce a 5-minute podcast episode. For clients to be able to accurately budget for your services, they need to have a good understanding of what’s included in your rate. Spell out the details of what they can expect from you and what you’ll expect from them. This includes things like turnaround time, feedback cycles, and communication frequency.
What if the Client Wants to Negotiate Your Hourly Rate?
The report summarizes key positive and negative impacts listed by respondents. Those with a Professional Engineer’s License (P.E.) experienced a $15 hourly advantage over those without a license (up $5 over the past two years, but down from the $22 hourly advantage in 2018). The average compensation range for a new undergraduate consultant at McKinsey, Boston Consulting Group, and Bain is between $108,000 to $116,000 per year. Your consulting fee will be different than my consulting fee.
Just make sure that you are clear about your fees before beginning any work. When you negotiate with a potential client, make them understand how your consulting services will affect their bottom line. Explain how your consulting rate will get them a return on investment. Many consultants default to charging the same hourly rate they had when they were an employee.
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My Consulting Fees guide goes into detail about the steps to moving to Solution-based Fees™. Many people find that booking a strategy session or some coaching can help them get unstuck too. This last tip may seem silly, but sometimes it really does make sense to charge what everyone else charges for consulting. It comes down to what the market will bear and what your competitors are doing. If you fall in line by charging the same as everyone else, you’re signalling that you’re a worthy (qualified) consultant who plays fairly. You’re also making sure you get the base line rate for consulting in your market.