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One of the hardest parts of consulting is deciding what you'll charge – especially in the beginning. A lot of people like to try and come up with a standard hourly or project-based rate, but I've found that's a great way to lose money, burn out quickly, and end up resentful of your clients.
Nobody can tell you exactly what you should charge. That's going to depend on your location, experience level, education, sales skills, types of clients, and probably at least another dozen factors I've not listed here. Obviously, somebody targeting small local businesses in rural Oklahoma won't have the same effective hourly rate as someone serving large corporate clients in New York or San Francisco. Consultants charging by the hour aren't (usually) going to make the same kind of money as someone who uses value-based pricing.
What CAN apply to everyone, though, is the idea of rate modifiers. When a project comes up and we've given it a bit of consideration, we generally start to mentally move towards a rate (or at least a rough idea of what we might want to charge). This is where I start, but over the years, I've learned I need to take it a step further.
Whenever I quote a project, I modify my quoted rate by all the little subjective factors that come into play.
Factors that Increase the Price
- Rude, condescending, or annoying point of contact (though in most cases, that's enough to make me decline entirely)
- Quick turnaround time
- A project in an unfamiliar or highly technical industry that will require a lot of extra research that won't give me a lot of long-term value
- A client or project that requires secrecy (can't use them as a referral, can't list them as a past client, etc.)
- A client who wants me to guarantee I won't work with other clients in the same industry while working with them
- A project that just isn't that appealing
- A project where there's an abnormal challenge (as in the case of an SEO project that requires a lot of bad SEO cleanup, or a web development project that's hampered by an outdated infrastructure the client can't or won't fix properly)
- A client who seems needy or very highly particular. Don't get me wrong, I'm happy to work with those people – but I make a point of looking for the signs and charging accordingly.
- A project that is harder because of the nature of the client's business – examples include reputation management for a company with high customer dissatisfaction, or SEO for a company that doesn't get a lot of natural inbound links
- A project that will require me to purchase additional tools/subscriptions
Factors that Might Decrease the Price
- Repeat client that I enjoy working with
- Flexible deadline/deliverables
- A client who rarely requires much hand holding (as opposed to a client who's calling me on the phone over every little question)
- A client whose name carries extra prestige when I'm marketing myself in the future
- A project type I particularly enjoy
- A project that will allow me to learn a new skill or practice something I need to work on
- A project that overlaps with something else I'm doing and as a result, makes my life more efficient
- A project that is particularly easy due to the nature of the client's business – for example, it's much easier to do SEO for a unique, highly-bloggable, consumer-facing company than for something really bland and common
Note that I say “might” because it would be silly to voluntarily lower your rates in most cases. However, I'll have those factors in mind if we get into a negotiation. The important thing here is not to negotiate out of desperation. It leads to bad decisions, and on top of that, clients can smell it – and that's never good.
When and if you discount your rates, don't say, “Well, my calendar IS pretty open right now and I DO need the work…” Instead, go with something like, “Well I don't typically have a lot of wiggle room in my prices, but I've enjoyed working with your team in the past and I do particularly enjoy working on —-.” It doesn't have to be that line, exactly, just something that communicates that you value the relationship and you're not doing it because you're desperate.
What are Your Modifiers?
The idea of rate modifiers is highly personal, and the factors and amounts will vary for everyone. Do you use rate modifiers? If so, what causes you to adjust a rate upwards or downwards?