Set Your Rate

How to Structure Your Pricing as a Consultant

Are you charging the right rate for your services?

This is a common concern from independent consultants and fractional execs. 

I’ve worked independently for over ten years. Here’s my general guidance.

1. What’s the expected rate range for an independent management consultant?

There are three factors to consider: market rate, client expectations, and the value of your expertise.

First, look at the market. The first standard deviation of market rates for independent consultants is between $1500 to $3000 a day. 

Rates higher than this are usually reserved for very senior advisors with C-level experience. These are typically found in PE/I-bank deal flow. 

Rates less than this are for ‘doers’ – program managers, project managers, etc. 

Second, know that companies who use consultants regularly have a sense of what they normally pay. Larger companies will fall in the middle of the range I mentioned above. Private equity firms tend to pay more, while startups with tighter budgets offer less.

Lastly, the rate also depends on your functional area. For instance, strategy or CFO-level work usually commands higher fees than HR or marketing work. Likewise, consultants with more experience can charge more than those just starting out. 

2. What would your rate be if you were working full-time?

Think of it as the opportunity cost of leaving a full-time job.

Your consulting rate should reflect what you could earn working for an enterprise company, including potential full-time earnings — including salary, bonuses, and benefits — with what you plan to charge.

Use our rate calculator to calculate this for yourself.

3. What’s the financial impact of the problem you’re solving for the client?

Don’t get too scientific about it and answer the simple question – is financial impact big or small?

For example, consider the impact of a $50 million project to that of a $5 million project. Work on a larger-scale project inherently holds more value for the client. 

4. Are cash-equity split offers worth it?

Cash-equity splits are a common arrangement for consultants working with startups, as they may not yet have the budget to pay your full rate. They offer the rest through equity.

Before accepting, recognize the risk that the equity portion may never materialize. Would you still be willing to work if you were never paid the equity portion? Many seasoned consultants who take on the work recommend asking that the equity portion vests in full immediately and gives financial upside to account for the risk.

Personally, I don’t take equity beyond a few hours-a-month advisory role. 

Master the Art of Selling Consulting Services

You must sell work to be an independent consultant. 

But finding the next project is a huge worry for many of you.

My take? Don’t worry. As a consultant, you already have the skills to sell your services effectively.

Here are some of them:

1. Ask questions to reveal the client’s business needs (you already know how to do this). 

2. Define a sales process for yourself, as you’ve recommended to clients.

3. Prioritize conversations that fit your target client profile.

4. Use your problem-solving skills to assess situations and summarize problems clearly.

5. Identify and contact the decision-makers in a company instead of just someone.

This is only the start. 

Read 7 more sales tactics for consultants here.

Remember, the path to success is paved with continuous learning and embracing fresh perspectives.

Let's stay connected, share ideas, and elevate your consulting business.

Stay curious, friends.

The 2×2 is brought to you by Keenan Reid Strategies

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