#projectmanagement #consultancy
When you are starting out in Consultancy or as a Freelancer it is difficult to come up with realistic charges. If you charge too little you will make yourself look like you are not worth your money. You will also need to take on too many clients in order to make ends meet. If you charge too much, you will not get clients. So finding the balance is key.
How to figure it out
As with everything related to setting yourself up this requires some research and a lot of thought.
- Who is your target group? – You can charge more for services to Senior Managers, than for services to Junior people
- How much experience do you have in the particular service? For example if you have been mentoring for years you can charge more than when you are just starting
- What was your last salary? Divide it by the number of hours you worked per month and you will have an indication of what your charges could be.
- What is the local rate. This really requires research. Who are your peers? What do they charge? Do not compare yourself with PWC or KPMG, unless you have enough experience to really be comparable. You can find numbers in the internet, but again ensure they are comparable to your region and they country you are in. Charging rates applicable in the US, while you live in Kenya, will not get you good-will and clients.
- Don’t go in too high when you are starting up. Consider giving an initial assessment or consultation for free, so they can get to know you.
- Consider speaking at your local professional organization to establish your name. This will make you known as an authority on the topic and will help you be able to charge more.
- Be flexible, be willing to negotiate, but know what your minimum hourly rate has to be for you to make ends meet. While calculating this, assume you will only be doing paid work for 60-70% of normal working hours, since you will need to spend time on planning, strategizing, writing proposals, blocking etc.
- Remember that you need to charge also for time spend preparing for client engagement, and for time spend commuting to the client site or meeting site. So if you figured out that you need KSH 2,500.- per hour to comfortably pay your bills, but you are planning for a 1hr meeting with the client, that will take you 1 hr preparation and 30min commute one way, then you can consider going in at KSH 7,500.- per hour, if that is in line with comparable local rates. If not, then you can consider discussion with the client about your actual time spend on preparation & commute.
- Be open and honest to the client. They will understand
As you learn to charge the right amount and gain confidence in the delivery of your work, your name will build itself and you will be able to charge more. But always keep the bigger picture in mind. Is this client doing an initial project with you with the potential of getting bigger and more important projects later? You can consider going in cheaper, but be honest about it, otherwise you may end up doing the big project for the same low rate.
Finding the balance is not easy
We all want to earn big money
But we need to be smart and humble about it. No one earns the big money from the first gig and then manages to maintain it. Build your name slowly and slowly increase charges. Also look out for external issues that may influence your ability to charge. For example during the pandemic, especially during serious lockdowns, all had to reduce their rates in order to remain in the market and get work.
Let’s be flexible and realistic in the rates you charge.