One of the first questions to pop up in your mind while starting a consulting business is ‘how much should I charge as a consultant?’ But the answer to this isn’t simple or straight forward. There are several factors such as experience, industry, target audience, location, etc. that can determine a marketing consultant’s hourly rate.
To help you answer the question, ‘how much should I charge as a consultant’, here’s a detailed guide for you.
How to start a consulting business that people want to pay for?
The only way you will be able to run a consulting business where you can charge a good consulting fee is if you set it up properly and offer the right services to the right people.
Here’s how you can do that:
Do your research:
One of the biggest mistakes some people make while launching a consulting business is that they do some superficial research and then do the opposite of what everyone else is doing. Their hope is that if they do something different they will stand out from the competition and more people will want to work with them.
But what they don’t realize is that every other top business consultant in the market is offering more or less the same services because they have done their research.
This has helped them understand what the market wants. So, instead of trying to reinvent the wheel, you should offer the same services the competition is offering. The main change you need to do is package it better and offer the best service.
For the research bit start by making a list of all the top consultants in your industry and check out their websites and funnels. For example, if you wanted to become a social media consultant, I would recommend that you visit the websites of social media marketing consultants such as Mike Gingerich and Chris Makara.
You can then go through all the pages on their websites to understand the services they offer. You could also sign up for their email list to understand their funnel and the tactics they use to pitch services.
And don’t just visit one or two consultants, visit dozens of them. This will give you a good understanding of what the market wants, how to create an offer, and how to present your services.
Find a mentor/business coach:
The quickest path to becoming a successful consultant is to find a business coach who has already done it. A coach will help you reach your target quickly as you will avoid the mistakes that most newbies make. A coach will also hold you accountable and motivate you. So, you will get more done.
The coach you choose should depend on how you want to grow your business. For example, Kate Ahl, who runs Simple Pin Media wanted to scale her social media marketing agency.
So, Kate worked with a mentor who could show her how to do this as described in this podcast episode.
But be warned that a good mentor will charge you a few thousand dollars a month or every few months. If you aren’t ready for this, you can read some blog posts and books or buy a course. This won’t be as straightforward as having a mentor as you will make many mistakes, but you will eventually get there if you put in the effort.
Later, when you save up enough, you can get a mentor or a business coach who can show you how to scale results.
A good social media marketing coach can also help you determine your price as they can answer questions like ‘how much should I charge for social media marketing’, ‘what is the social media consultant rate’, etc. based on your experience and skill level.
Show your expertise with free content:
Content marketing should always be an important part of your consultancy’s marketing arsenal, but it is an absolute necessity when you are just starting out. This is because when you’re starting out and have no clients yet or very few of them, it can be very hard to display your expertise.
But if you create content, you will show people you know what you are talking about. So, more people will want to work with you even if you don’t have many testimonials.
For best results, the only blog about the topics you want to specialize in as this will help you stand out in that niche. And create better content than every other blog out there.
For example, check out Melonie Dodaro’s Top Dog Social Media blog.
You will find that most of her content is focused on LinkedIn marketing. Mainly focusing on one topic has helped Melone establish herself as one of the top LinkedIn marketers out there.
Build your own list:
One of the reasons why I asked you to sign up for email lists while doing your research is that email is the best way to promote your services. It is more effective than social media marketing when it comes to the acquisition of customers.
So, right from the beginning build up your own email list. It will help you build up an audience to market to. Whenever you want some new clients you can promote your services to these subscribers. But remember that for this to work you will also need to constantly nurture your subscribers with a lot of free and useful content. There are several email service providers like Aweber, Drip, and ConvertKit that can help you with this task.
If you observe most of the top consultants out there you will find that they will be making a strong effort to build their list by running newsletters, offering lead magnets, organizing webinars, etc. An example of someone who is doing their best to build their list is Ann Smarty of SEO Smarty.
If you visit Ann’s website you will find that she uses various types of optin forms like popups and welcome mats to generate leads.
Regularly promote your services:
Once you implement the above techniques you will get some customers and your pipeline will fill up. This can sometimes lead to you getting distracted from looking for new clients. So, set aside a time every week for this. As a consultant, your day/week should be divided into three main tasks. You should spend a third of the time creating content, another third of the time looking for new clients and a final third should be reserved for servicing the clients.
This will ensure that you have a steady stream of clients without worrying about feast and famine cycles.
4 pricing, packaging, and sales strategies for charging the right amount
Now that you know how to set up a business that generates demand, I am going to finally answer your question ‘how much should I charge as a consultant’.
Charge by your experience:
Most of the consultants I come across tend to charge between $50 to $500 an hour. I occasionally come across people who charge less than $50 an hour and those who charge more than $500 an hour.
For example, I once came across a guy who had a consultation fee of around $2,000 an hour. And he’s not alone. There are several people out there who charge more than that.
The main difference I find between those who charge in the lower end and those in the higher end is experience. Those who price their services more towards the lower end are usually just starting out and have very little experience. While those in the higher end have more experience with a ton of testimonials and case studies.
The consultant who was charging $2000 an hour was able to set that rate because he had a proven track record of helping businesses scale their results with Facebook ads. His site was full of case studies and video testimonials.
This is why he was able to set such a high price. When businesses see that he can get results they won’t mind investing, especially if they know that after investing in a call they can use what they learn to make even more money. That’s another thing that matters.
If you are in an industry where you can show people how to earn more or save more, they will definitely be more inclined to make a higher investment. While if you are in an industry where it will be hard to get people to picture a monetary benefit (as it seems more like a hobby) it can be harder to set higher prices.
So, when you are starting out, set a low price of around $50. As you gain experience you can gradually increase the price. And to warrant the increase in price you should display your experience with some good case studies.
At the beginning, you can just share video case studies like the below YouTube video where you interview clients who got positive results from your efforts.
If you aren’t comfortable with video, you can create a simple case study like this one from OutreachMama. It’s just a blog post.
But once you have several more case studies you can create a dedicated page on your website like this one from Conversion Rate Experts.
If you can show people that you can help them get results and that they can use these results to better their lives and their business, they won’t mind paying more.
If you are finding it hard to set a price based on your experience you can use a consulting fee calculator.
Don’t try to ever go with the average. If you look at things like ‘how much does the average contractor charge per hour’ it can get very confusing. This is because these studies usually don’t show consulting rates by industry or experience or skill level. They usually show the average of all industries and experience levels together.
Create different plans:
Another thing you might want to do is create different pricing plans and packages for your potential customers. This is because different people will have different needs and budgets. You can have small plans for people who are just starting out. These could be a one-hour consultation session or a half-hour session every month or few weeks.
While for people who are further ahead you can meet once a week or several times a week and you can offer extra things like unlimited email/slack support, templates, etc. and charge more.
Another option would be to offer full-fledged agency services instead of just relying on consulting.
Go beyond one on one consulting:
Another way to make your plans more affordable is by going beyond one on one consulting. One on one consulting can be expensive as you have to dedicate your time to one person at a time. Not everyone will want to pay the high amount this requires. This is why instead of just offering one on one consulting/coaching you can offer other services such as group coaching.
If you run a group coaching program where you work with 10 to 15 people at a time you can reduce your rates and make your programs more affordable.
Another option is a membership program. This can be even cheaper.
An example of someone getting this right is Jenn Scalia.
Jenn offers a one on one coaching program which is priced very high and needs a long term commitment. But along with that she also offers a group coaching program. People can join this for a smaller fee.
And she also has a membership program that costs even less. People who aren’t yet ready to spend a lot for one on one coaching can sign up for Jenn’s smaller programs.
Set up an ascension funnel when starting out:
When you are starting out and haven’t got many testimonials, it can be hard to convince people to pay for your services. This is why you should try implementing an ascension funnel. An ascension funnel is when you sell something that costs less to potential customers and slowly get them to purchase more expensive services.
A good starting point would be something cheap like an ebook that costs less than $10. If they like the content there you can ask them to sign up for a group coaching program. And from there you can pitch other services like your one on one coaching.
But in order for this to work, you need to share the best information in your lower-end products too.
Once you help a lot of people and get some social proof, you can switch it with a descending funnel. This is where you pitch your most expensive service first and then promote your more affordable ones if they don’t convert. Then slowly get them to work their way up to the more expensive services if they buy the lower end products/services.
I hope this article has answered your question ‘how much should I charge as a consultant’. If it has, then you should use the tips in this article to set up a successful consulting business and then set your price.
I recommend that you use a calculator that will help you figure out an accurate price based on your industry, experience, and skill levels.
What advice do you give people when they ask you how much should I charge as a consultant? Did I forget to share anything important? Please leave your comments below.