Anyone attempting to establish a reputation as a consultant—or establish the right rate for her services—will struggle in the initial
stages. It’s always a risk to go out on your own
and demand fair compensation. Ask for too little,
and people will take advantage of your services or
see them as inferior; ask for too much, and people
won’t hire you because someone else will do the
same work for less.
Discovering what other firms charge and how
they structure their contracts can be difficult. Most
of our assumptions are based on hearsay: “Firm
X charges $600 an hour and sends in junior con-
sultants” or “Consultant Y is absurdly expensive.”
This secondhand knowledge is often outdated—if it
was ever true in the first place—muddying the wa-
ters of compensation even further.
Not only that, but for many of us, asking people
for money just feels wrong, even if our work merits every cent. America has been built on a culture where discussing money feels taboo— even
bringing up compensation out loud is a violation
of trust. These conversations are critical for consultants, however, and the sooner they’re over, the
more quickly the awkwardness passes and the real
work can begin.
I have learned a few things in my time as a consultant that don’t remove the anxiety of this process
entirely, but they do help me put one foot in front
of the other and ask for appropriate compensation
without putting off prospective clients.
ESTABLISHING A CONSULTANCY
I have worked with consultants who use sites like
Salary.com to estimate compensation, as well as
others who believe that their title of “founder/
CEO” means they can ask for whatever they want
and have people lining up to pay. Unsurprisingly,
neither approach works all that well.
Despite all the data we now have available online regarding compensation and salaries, generic
sites are an unreliable method of determining your
rate. Consultants are driven not only by what the
market is paying, but also by the wide variety of
contributions they make to their companies and
clients. Two similar consultants working for similar
companies can command very different rates, depending on their projects and roles.
Flexibility is key for consultants establishing
compensation, just like it is in any other aspect of
the job. Sometimes, reducing a fee makes sense to
get valuable experience or land a valuable client. In
other cases, doing so would devalue your services
and set you back in building a reputation. It’s all
about finding the right balance.
Just like in a regular job interview, howev-
Six Steps to Establishing Your Consultancy Rates
BY SONA JEPSEN