What Should You Charge? A Simple Pricing Guide For Business Consultants

Stop trying to guess the maximum a client is willing to pay

If you don’t know what to charge, asking others won’t help.

For starters, people fib about their fees to impress others. Second, you’re not asking a question about fees but a question about strategy.

Your fees should reflect the audience you’ve decided to target, the services you’ve decided to offer that audience, your positioning relative to competitors in that niche, and the investments you’ve made in yourself.

Most business consultants, I suspect, take a pretty crude approach to setting their rates. They try to name the highest figure they think the client will accept. They might use questions such as ‘How much is this problem costing you?’, ‘What is the size of the team?’, or ‘How much are you spending on [object]’?

Then they name a high figure, send the proposal, and hope for the best. There are plenty of problems with this approach. The biggest is it’s simply not consistent with everything else the consultant is doing.

Pricing Is Strategic Decision About Where To Play

Your fees should reflect the strategic decisions you’ve made about which sandpit you’ve decided to play in. There are an infinite number of options here, but here are some common options:

1. Smaller projects, high volume. You might decide to play in the less competitive world of smaller projects with a rapid turnaround. In this approach, you work on volume. The upside is less competition and less volatility. The downside is it can gruelling and your earnings might be limited by your time.

2. Differentiated services and audience. You might decide to play the differentiation game. You might develop completely unique services to a niche audience. The upside is you can charge a premium, the downside is you’re in a smaller market and it’s not easy to develop something truly unique.

3. Big Brands, big projects. You might decide to target larger brands with bigger budgets? The upside is obviously financial, the downside is it’s far more competitive and more volatile. For example, a few months ago we had two clients withdraw signed contracts worth $200k+ to us. When fewer clients represent a large amount of your business, losing one or two can have a bigger impact.

There are a near infinite number of options here. The key point is if you’re not sure what to charge, you’ve probably not made a strategic decision about where to play.

Your pricing should reflect everything else you’re doing. It’s not something you consider separately. It should sync up perfectly with your target audience, your promotional materials, the projects you’re selling etc…

You really shouldn’t be asking what other people charge because it shouldn’t matter. They’re not following your strategy.

Pricing Reflects Your Target Audience

Your pricing should reflect the audience you’re targeting.

Pricing for smaller clients

If you’re working with smaller clients, you should have a clear, repeatable, methodology which doesn’t change greatly from one client to the next.

You want to offer enough value to attract clients, but not so much you overdeliver. You should aim to complete these projects at speed with a more or less turnkey approach. You spend your time developing the right processes and then delivering at speed. Your sales process should be largely automated.

Pricing for larger clients

If you’re targeting larger brands, then you need to create extreme value. This might be offering skills and services which are incredibly valuable and few people are able to match. You can’t simply say “my advice is worth more than their advice”. You need to have a set of skills, resources, services, and a visible track record which proves it.

You should spend far more time scoping out services with prospective clients at this level and typically delivering a fully customised approach to their unique situation. The success rather (converting prospects into clients) will also likely be lower due to increased competition and higher fees.

Other Considerations When Setting High Fees

If you want to set high fees, there are other considerations too.

1. Do you have experience selling to large organisations? Do you know how to get the right people in the room? Do you have existing relationships and contacts at these organisations who know and trust you?

2. Do you know how to develop a proposal which tells a compelling story and reflects what organisations need to hear? Do you know the difference in what the contact is looking for versus the procurement team?

3. Do you have the extreme level of trust required to sell a project at a five to six-figure level? No-one is going to pay you $50k unless you can demonstrate previous projects at that level and their success.

4. Do you have the right policies, procedures, and certificates in place (insurance, data privacy and protection procedures, tax certificates etc…) so large firms are able to actually hire you?

If the answer to these questions is no, it might be worth considering whether you charge less and offer a differentiated service instead.

Your Fees Should Match Your Brand

Picture two restaurants. One with beautiful decor, based in a centrally located high-rise with a stunning view. The menu has beautifully designed menus using carefully selected fonts printed on cardstock. The lighting is dim and stunning. The service staff are immaculately dressed and attentive.

Now compare this with a typical airport restaurant just off the concourse. It’s incredibly bright and noisy, the service staff are stressed and hurried and the menus are laminated and have stains on them. You don’t experience the latter to charge as much as the former. And that’s totally ok. The problem begins when expectation and reality differ.

If the experience in the airport restaurant turns out to be better than hoped, that’s great. But if the experience in the former turns out to be worse than hoped. That’s the kind of problem people don’t forget.

In short, if you’re charging premium prices, everything else about you should be premium too. You should have invested significantly in your website to make it unique and stand out. It shouldn’t be something you created on Wix or Squarespace in a day or two.

You should feature professionally-taken photos. Your proposal templates should be professionally designed. Your case studies should be easy to find and read. And you should have invested heavily in your own skillset through training courses and qualifications. It’s important to think through every interaction to ensure people are getting the best possible experience.

Pricing is ultimately one part of the story you’re trying to tell.

A Few Simple Pricing Boundaries To Consider

I’m sure many people have read the above, nodded along, and are still wondering that’s great, but what should I charge?!?

I can’t say that my experience can be generalised across every industry, but I’ve consistently found certain pricing tiers entail certain expectations. Here are some considerations at different levels.

$1k to $5k - Turnkey Service, Small Clients

At this level, you’re offering a turnkey solution to small organisations. If you’re lucky, you might be able to turn this into a retainer-based service, but this won’t be too common.

Be mindful you probably need 15 to 25 of these projects a year to succeed (assuming you don’t charge $1k, then you need a lot more). So you need a lot of automation in the sales process and the ability to turn these around in 1 to 2 weeks. Be very clear about the unique value you’re offering.

$5k to $10k - Mostly Turnkey Service, Mid-Tier Clients

This is usually a more customised turnkey service targeting medium-sized clients (typically in the 50 to 250-employee range. You can customise these projects to a client's specific needs and be more personally engaged in the sales process.

You can do the math, but you probably need 7 to 15 of these projects to earn a living. This tends to be the level a lot of solo consultants work within.

Once you begin getting a few concurrent projects at this level you can begin to build a business and plan for the long term. When I first started out, I often charged fees at this level. For clients we have ongoing relationships with, we sometimes still take on projects at this level for them.

These projects should take a couple of weeks of your time at most.

$10k to $25k - Smaller Project, Larger Brand

At this level, you’re offering a highly specialised project to a brand which has the means to pay for it. Differentiation of your services is key here. Much of this work tends to come via reputation or referral. You will usually report to a director and VP level within the organisation.

You can thrive here by doing one unique thing extremely well. What is something that larger organisations really need but are unlikely to hire someone to do full-time? What are the skills you possess that others don’t?

You should invest a lot more time in the sales process. You will need to win 3 to 10 of these projects a year to balance your time accordingly. These kinds of projects should take a month or two of your time at most.

$25k to $50k - Multi-Service Project, Large Brand

At this level, you’re either offering a bigger service to a large brand (e.g. a full strategy) or you’re offering multiple services to a brand with the aim of achieving an ultimate objective.

You need to invest a lot more time in the sales process at this kind of level. You need to ensure you customise the service far more to the needs of the organisation and build trust among everyone that might be involved in the project.

It’s very hard to sell these kinds of projects with an outbound, cold-calling, approach. You will probably need to be a known industry name where people seek you out. You will probably spend 3 to 4 months on these kinds of projects, so plan accordingly.

$50k to $100k - The RFP Level (Highly Specialised Service, One Brand)

Many organisations set $50k as the maximum value before the project has to go out as an RFP (request for proposal).

The RFP is essentially a detailed document explaining precisely what the organisation needs and requests specific information to compare your solution against the solutions of others.

Logically, this makes sense for the organisation to do. In practice, it’s usually messy. The RFPs are often written by people who don’t know enough about the service and they often assign high weightings to factors which make little sense.

Often they simply pick the cheapest option and fail to check the vendor is capable of doing what they claim.

The biggest problem with a project going to RFP however is it attracts larger firms with dedicated resources to RFPs. RFPs can take a huge amount of time to complete. Larger firms might be able to assign someone full-time to complete it.

If you’re a solo practitioner you might also find yourself at a disadvantage here as most RFPs are a better match for teams.

$100k to $500k - Multiple Services, One Brand

At this level you’re offering a combination of services to a very large organisation staggered over a longer period of time. You’re often reporting to the C-suite at this level or the one below.

Unless you are the leader in a field you have created, you’re not going to win contracts at this level as a solo practitioner. FeverBee was only able to win contracts at this level once we expanded our team and expanded our services. 

Once a project reaches $100k+ you’re going to be competing against management consultancies and agencies who are terrific at the RFP process, often have existing relationships with the sellers, and have more advanced offerings than you.

These projects aren’t unwinnable. But they usually require either an RFP to be written with you in mind (we’ll talk more about RFPs later), very strong relationships with decision-makers, or an incredible ability to participate in RFPs.

$500k+ - Agency Work

This is the sand pit the top management consultancy firms play in. You can’t compete at this level as a small consultancy practice. Your best shot is a larger management consultancy firm brings you in as a subcontractor as part of the project.

Two years ago, FeverBee gained a $150k contract as part of a $2m project for a non-profit. But these kinds of projects are rare and it’s far more common for the bigger firm to simply take on the work themselves than sub-contract it out. It’s also a lot harder to work under a bigger organisation and adapt to its processes.

A more common approach to getting to this level is to shift from a consultancy to an agency or product work. In this approach, you can help the client develop the strategy and then execute the strategy. Top management consultancy firms will often sell a project at this level and put 10 to 30 people on the account to staff it. 

Strategy Before Pricing

Yes, you certainly can take the (sadly common) approach of charging each prospect the maximum you think they will agree to.

The problem with with this is you’re going to have to reinvent the wheel for every client you get. Sometimes you will be doing small, piecemeal, projects. Other times you will be doing highly customised projects. But these require very different processes and skillsets.

However, if you make the strategic decision now about which clients to target, what services to sell them, and how to position yourself, you will be able to optimise everything you do to match. Your sales process, promotion, and new skills you acquire and be laser focused on that particular price point.