The most common discussion I have had around consulting is setting the price on my services. Yes, customers care about my rates. However, the conversations tend to be focused on what the pricing should be for the person with whom I am speaking. There is no silver bullet for this challenge. On the other hand, it is not as difficult as many of us think.
Setting The Price Based on the Market
The easiest way to figure out a good rate for your services is to look at the market. If you are already employed, then you have a salary to use for a metric. If not, then take a look at the typical salary ranges for your skill set in your area. This can be found through job sites like monster.com or business (or career) analysis sites like Glassdoor.
The computation based on your salary is easy math, divide by two thousand. Thus, if you are making $60,000 per year, then your base rate is $30 per hour. You probably want to add a modifier to cover expenses and ten to twenty percent on top is going to be solidly in the market rate. Therefore, our example would bump up to $33 to $36 per hour. If you go with that number, then your odds of being aggressively priced in the market are pretty high.
Remember The Details
The money involved in working for yourself can seem like an offer too good to refuse. However, there are a lot of things you will give up that need to be factored in. The benefits you receive from an employer will disappear. That means you need to factor those into your pricing. If you want to work for yourself full time, then make sure you have some reasonable estimates for health, dental, and vision insurance. Those can add up quickly.
Personal time off, sick days, vacation days and even Holidays off will also go away. You can take those days off, but you will not get paid for those hours you do not work. That may impact the modifier you apply to your base rate. It may be surprising, but many consultants look at a forty percent multiplier to that base rate as a break-even point. When in doubt, try out a price for a while and see how it goes. You will be hard pressed to change a rate mid-project, but you can always bump it up for the next one.
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