Consultant’s Fee Schedule

Tuesday, April 16th, 2013

Setting your fees is one of the single most important business decisions you will make.

Hourly rates are misleading and easily disputed.

CalclulatorIf you are new to consulting you may be tempted to peg your fees on an hourly basis to the equivalent hourly rate of your previous salary. But is that all you are worth? Remember, business must turn a profit to be viable and whatever your previous employer was paying you was at best a third of what “they” thought you were worth to them!

In addition, in our experience, most middle level managers who have taken early retirement or who were “downsized” very likely were underutilized and underpaid to start with.

Just as you may be worried about a potential client expressing dismay at paying, say $250/hr., in our experience they are just as likely to question the value of retaining you if your fees are too low.

So, the reality is that hourly rates are an arbitrary number that is impacted by your overhead and other business expenses. Particularly if you’re dealing with small business owners, they are going to be suspicious of hours, no matter how low or high the rate.

Is there an alternative? Yes . . . several.

First is hourly.  Then there are retainers. Next is payment by project. Then there’s a combination of hourly and retainer or hourly and project. It can be confusing. Rather than make any recommendation at this point, let us tell you how we charge.

We like a flat fee with per diem expenses for travel & meals and reimbursement for any out-of-pocket expenses.

What’s the size of the problem?

Before establishing a flat fee, it’s important to know the value of the project and the scope of the solution that is expected, including all deliverables. If the problem is costing the company, say, $1.6 million per month, you should be able to charge $100,000 or more, assuming you can solve the problem.

If, however, the problem is only costing $20,000, you may want to walk away from it, telling the client that you don’t feel it would be cost effective for you to spend the amount of time and resources required. Offer to help them find a less expensive solution. (Don’t be surprised if they come back and insist you take it on . . . but, that gets us into another subject, sales and posturing for another day.)

Where the problem and/or scope of work are not clear, we offer to approach the challenge in three phases.

  1. The first phase, developing the Program Plan, might cost $5,000. This results in a report with a complete analysis of the problem and specific recommendations for the solution including budget projections. That might total something like $78,400. Also included in the Program Plan is a projection for the Third Phase, the Follow-up Report.
  2. The second phase is Execution, following the Program Plan as developed.
  3. The third phase is a Summary Report and Recommended Follow-Up Action Plan.

The client signs on to the program in phases, one phase at a time. If, for example, the result of Phase One is a report that outlines the execution phase, with a budget attached, the client is able to take the outline and decline any further involvement . . . or, if they so choose, take the outline of the report’s recommendations and execute themselves or contract with someone else to execute.

As for payment, it is important to get some money up front before beginning on Phase One. We typically get 50% of the agreed-upon fee at that time, and collect the rest when the Program Plan is delivered. If the client agrees to proceed with Phases Two and Three, which are likely to be a much larger sum, you may want to schedule payment based on certain milestones in the process.

I might point out that in over three decades using this approach, we have only had two occasions where the client failed to proceed after having received the Program Plan. Obviously, the way it is presented to clients is a key factor in the “Sales Process.”

I welcome your comments on fee setting.  It’s a big subject! In fact, if you have a burning question, let’s talk on the phone.  You can reach me via the Contact Us page.

Joseph Krueger

 

 

Consultant’s Website

Tuesday, April 16th, 2013

Business websiteOf course you realize that these days you cannot credibly do business without a website. As soon as someone meets you, or is referred to you indirectly, they will want to “check you out.” In the professional world, that means first looking up your profile on LinkedIn, and then taking a look at your website.

What is the visitor looking for?

The visitor to your website will be looking first for these five things:

  1. Do you have the skills that will help the visitor solve whatever problem he or she has?
  2. Does your website demonstrate credibility — i.e., the professional certifications and/or connections that give the visitor a sense of comfort – and will it justify to any superiors the visitor’s interest in working with you?
  3. Does it clearly define your area of expertise and give examples of problems you address/solve?
  4. Does the site explain the process you use?
  5. Does the site make it easy for the visitor to contact you?

In past years, the classic brochure served these purposes. There is still a purpose for a brochure, but the website has taken over these initial functions. The website also offers opportunities that the brochure never did.

  • Your website allows you to more fully “develop your brand,” including selection of graphic elements, colors, illustrations, your photo, etc. Over time, your site can easily evolve as the market does or as you do.
  • You can offer examples and in-depth information to your potential clients by way of articles, white papers and case histories published on your site – a breadth of resources impossible with a simple brochure.
  • Your website can be, and should be, updated regularly to show you are actively engaged in your work.
  • Your website can offer interactivity.

If you are starting your website from scratch, you have a number of decisions to make. The most important (in our opinion) is how to be sure your site serves as a lead generation source. If you’re not getting response to your site, it becomes an expensive window dressing. A good, easy-to-navigate, basic website that will generate inquiries or serve as a starting point for meaningful dialog is 90% of its value.

Here are questions we’ve faced in building new websites over the years – and still face!

Do you want to build the site yourself? Many professionals enjoy the creative process and have the ability to master new computer skills and programs. For them, building a website can be a satisfactory way to save precious dollars during the startup phase of their practice while creating a valuable asset. You can purchase a domain name, hosting service, an appropriate website theme, and some training for an initial outlay of as little as, say, $200 dollars.

What’s your time worth? Contrary to many advertisements that declare you can “Build your site in 30 minutes!” we believe you will find it takes many hours to get the site up and functioning as you planned. You may need to hire someone to help you along the way. Typical American tech support can cost from $50/hour up. (The trick with tech support is that you must be able to guide them. They are supporting your plan, not acting as advisor.)

Should you hire a web design firm? If you know that you want “something special” for your site, you should figure a minimum price of $5,000 to hire a firm to build the site. (Prices could easily be twice that much. On the other hand, if you can provide clear and competent direction, you may be able to get away with less.) If the designers are good, they will involve you intensely at the planning stage, asking you to complete some sort of questionnaire and discussing with you the “look and feel,” any particular components you want to include, etc.

If you feel you need just a simple site, you may be able to have a designer put one together for as little as $500 or $1,000. In this case, the designer is probably using a template to speed things along. You will still be offered choices of colors, fonts, etc. If you’ve already created a logo and professional business card, you will want all your marketing pieces to have a family look.

Are you ready to provide all the copy/text for the site? Generally, unless a designer specializes in a particular industry, he or she will look to you to provide all the content for the site. The designer may suggest categories – for example, “We need biographical information here.” Or “Describe your specialty here.” – but you will have to write everything. To the extent that you can do some of this even before you make a decision about what type of site to develop, you will be ahead of the game.

Where do you find a web designer or tech support? The best way, we’ve found, is via referral. You can start your search by looking at a number of sites of friends and professional colleagues. What do you like about the sites? What don’t you like? Start a list that you can use when you interview potential designers. Pick a few sites that you really like, and track down the owner. Ask who did the site and how well the process went. You’ll immediately learn whether or not that site owner wants to make a referral!

There’s plenty more to “the website decision,” but at this point simply acknowledge you must have one, start researching “what you like,” and realize that a simple  professional-looking one-page site is better than no website at all.

Virginia Nicols

P.S. If you already have a website, but want more confidence that it’s doing its job, check out our guide: Website — The Hub of Your Marketing Plan. It’s aimed specifically at professionals.