When you go out on your own, one of the first challenges is working out what to charge for your work. Sounds easy, right? Think again. Do you charge by the hour, the project, the month, the day? And do you charge what you want to earn, or what people will pay – or what you’re worth? How different are they?
Working out your worth is a tricky business, and one that requires research around the marketplace regarding what and how people are used to paying and what consultants are charging[1]. In conjunction with this is the trickiest piece – determining the value of the impact you make for your clients.
A lot of professional services charge by the hour. Consistent marks of time in which the amount of work estimated to be completed within that time is then roughly multiplied by the amount of work that needs to be done. However, is one hour of work selling on the phone the same value of one hour of work facilitating a strategy? Just change the rate, right? How much, when, and for how long all come into play.
The other, and perhaps harder, thing to do is to put a dollar value to your skills; being confident to say, yes, I’m worth that amount of money because of the value that my business delivers to clients. Over time this gets easier. These decisions are often wrapped up in reputation, demonstrated results, experience and sheer hutzpah to put it out there – and then stick to it.
I’ve dealt with consultants who have ‘rack rates’ but then crumble under pressure to reduce their costs significantly. This damages more than charging somewhere in the middle because of the inherent devaluing process, which then impacts the consultant further down their career path. The same can be said for those negotiating salaries.
Then there is the perceived value due to the cost; cheaper is not always better, and some clients will pay more as they feel it is getting them a better product.
I’ve determined my rates through thinking about all this and more. But learning to back myself and be confident in what I’m worth has been the greatest outcome of all.
How do you work out what to charge? What are you worth?