Setting Fees For Your Consulting Business

Setting consulting fees and alternate ante for a new adviser can be a arduous process. If you set the alternate amount too high, you will not get business, set the alternate amount to low and you'll not accomplish money.

There are several factors that actuate the actual alternate amount for collapsed consulting fee. The a lot of important is absolutely simply, how abundant do you need? There is a blueprint for ambience this amount and you'll be afraid how carefully the aftereffect parallels what others charge.

X = alternate consulting rate

To acquisition X


How do we acquisition X?

First we allegation to ascertain a few constants. We'll alpha with our abject amount which is Y.

A= is the bacon you admiration

B= the amount of hours you can realistically bill in one year.

To ascertain the abject amount (Y) A/B

So for archetype if you admiration a bacon of $80,000 per year and you can bill 1500 hours as an IT adviser you are larboard e amount of $53 per hour. This is not your abject rate, you still accept one added calculation.

Next we accept to add in the cocky application tax. This is the tax for Social Security and Medicare for a cocky active or baby business owner. This amount is 15.3% Add this to the $53 (53 * .153)

Now we accept a abject alternate amount (Y) of $61.

At this point abounding absolute consultants set their amount and adhere up the shingle. This is why abounding of them are out of business aural a year or two. You accept to accede all of the added things you'll allegation that your employer paid on your behalf, and money to abound your business.

H = Bloom allowance costs

The aboriginal and a lot of cher is bloom insurance. If you accept a ancestors of four you can calculation on at atomic $500 per month. Bloom allowance for cocky active can be actual expensive. Check with several brokers do get the best amount and again bisect the absolute annual amount by the amount of hours you will bill. Taking a amount of $500 per month, or $6,000 per year, at 1500 hours your amount will allegation to access by $4 per hour to awning bloom insurance.

M= Marketing and sales costs

For an absolute adviser your business is alone as able as your next engagement. We acclaim a minimum of 5% of your aboriginal year estimated sales to accumulate the pump primed. $2.6 would be our alternate amount at this salary.

P= Professional fees.

This is the amount for your accountant, advocate fees, answering service, and any added account or annual fees you'll allegation to pay throughout the advance of the year. We'll use a amount of $2400 for this example, so P= $1.6 ($2400/1500 hours)

F=Fudge factor.

The avoid agency is the baby things that are traveling to appear up from time to time. Stamps to mail out invoices, a one time amount for your accounting software (QuickBooks, or Microsoft money) and the dozens of added items that pop up from time to time. As your business grows the F agency will accept added costs like rent, and aerial for non-billing employees, extracted and disconnected by the amount of advisers and the amount of hours worked. For now just use your best guess. If you allegation starting point $200 per ages is not unreasonable. F=$1.6

Now we can amount out X


Or an alternate consulting amount of $71