When you are trying to work out what fees you will charge as a consultant, it is vital that you factor in all potential costs. You must work out what your underlying expenses are and how much your desired income is, to calculate the relevant revenue required. Too often, consultants forget about seemingly small overheads that all add up to a significant proportion of your costs. It is important you factor all of this in when calculating your rates, otherwise for a set time period you will be stuck with your existing fee structure and unable to increase revenue. The only other way out of increasing rates is by reducing costs somehow, and that is not always easy.
As Coaches or Consultants, you will constantly have a barrage of calls and meetings to organize. You will always have administrative work, but it is important that you factor in the time you spend on arranging meetings and add it to your fee structure. It is surprising how much time admin work can take up of your week, and it can really slow down the efficiency of your business. Consultants spend at least 10 hours a week on arranging and organizing meetings with clients, which otherwise could have been used to earn money.
Alternatively, you could reduce costs and save money by using an automated service. A service like MeetFox increases the time you have for meetings and stops you from hiring someone to arrange your meetings.
You can not afford to waste time chasing up clients, nor can you afford to lose out on timeslots that were allocated to people who didn’t show up. You need a system that reminds clients via multiple mediums to attend the meeting. For example, MeetFox can offer text and email reminders automatically to ensure that neither you nor the client forgets about a booking. All these little time-consuming tasks quickly add up to a lot of your revenue.
Expense of traveling
It is surprising how even a couple of short 15-minute journeys to a client can quickly add up to a significant proportion of your day. Commuting causes you to miss out on working with other clients and earning money. Not to mention the cost of transportation and reduced job satisfaction caused by traveling. It is fundamental that you factor in these costs along with the reduced productivity.
It is becoming increasingly popular for coaches to arrange virtual meetings as opposed to physical ones. This enables both the client and coach to have more free time to focus on being productive at work and leisure activities. MeetFox can offer a one-stop shop for all your needs, wether that be scheduling reminding or meeting, taking the burden out of commuting from client to client.
Many providers charge businesses excessive fees for paying by card and using their platform. A lot of people do not factor in the proportion of their profit lost from the cost of transaction charges. Many companies charge around 3% for the use of their services, and in a competitive market that could be significant. Make sure that any card charges are passed onto the client and not taken out of your own salary. MeetFox offers a service in which payments are also integrated into the service, and it is all available for businesses to use at a clear set price. This certainty enables you to forecast and set definitive rates for the long run.
Whenever you take time out of your planned work hours, please bill the client. Do not allow work to rule your life. Make sure you set a boundary for yourself and stay within them. You should assess and track how many hours you work for a client on a app. Too often, people look over when they have had to spend a few extra hours on a task, but all these hours quickly eat into other potential meetings. If you are ever unsure whether to charge someone for additional work, look at what your competitors are doing and assess the situation.
General price increases
One thing that might not be factored in, especially if you have fixed rates for a long period of time, is the impact of inflation among other general price increases. Your company needs to model how rising costs will have an impact on your target profit and salary. Therefore, try and communicate with all the companies you rely on, in order to gain a grasp of when they will increase their prices. If you gather all this information you will be able to add it in when you next set rates.
Other tips on setting your rates
Clients may wonder “why are you increasing prices?”, so you need to make sure your price increases are justified and not seen to be exploitative. You will have to calculate what costs have increased and how frequently these prices will increase, so that the rate increase translates into an honest price for both you and the client.
Coaches and consultants need to base their fees on the value they deliver, and they spend on a task.
If you are wondering how much you should charge, simply consider the following:
Start with your desired annual wage. For simple math, let’s assume you want to put $120,000 in your bank account each year.
Since you are self-employed, you will need to factor in taxes, health insurance, and business expenses. For that, let’s add $60,000 for a total desired annual income of $180,000.
Let’s assume that you book 50% of your working week time on paid consultations each week. Say you are only working 47 of the 52 weeks, and you are booking half of your time each week.
Twenty hours a week for 47 weeks = 940 paid hours of work. If you want to earn $180,000 annually, you would need to charge $191.49 per hour for your time.
So, internally, you know you need to baseline charge of ~$200 per hour to hit your goals.
However, you need to also factor in the value the customer gains from your advice and adjust the price accordingly.
If you are ever unsure about what you should do, then ask our community!