Consultant: tips for invoicing customers
Tip 1: Your hourly rate is an estimate of your value.
As a freelancer, you need to look to the future and assess the impact of your work on your customers.
Let's take an example: If you are asked for your rate, you need to think about how your work would be useful to your customers. With your production, your customer could grow his email list, generate leads, improve the productivity of his employees, generate more revenue, etc...
You will never know exactly in advance the impact in figures that you can make, but on the other hand you know that you can provide more value to your customer, to his employees, or to the customers of your customers.
Tip 2: Your rate is still largely how your customers perceive you.
Your Hourly rate is the first perception that each customer has from your experience and of your value as a consultant.
Because your fees are an expression of your value. Low-cost consulting rates do not necessarily mean that your customers respect your perceived value. If your customers have regularly used freelancers, they know the average prices on the consulting market.
The act of proposing low rates simply to reduce competition won't always serve you.
I am not proposing to increase your rates just to highlight yourself, but there is no reason to hesitate to offer a higher rate that accurately reflects your expertise, your knowledge and your experience.
READ MORE: The complete guide to getting clients for your consulting business
Tip #3: Pricing is an emotional process.
You and your customers approach your rates emotionally and rationally, especially when you are both business owners. Vos tariffs are influenced by feelings : what customers think of you, what you think of them, what they think when sharing their valuable project, what you think of this project, and so on.
When considering your consulting rates, don't overlook your feelings. But don't let them get the best of you either. We'll talk about that later.
Tip 4: The services you offer are not the only factor that determines your rates.
While the services you offer are critical, you should also take into account the value of your expertise, of your acquaintances And of your network. How are these elements integrated into your services and how do they increase your value? How can they benefit your customers? This does not only apply to consulting services.
As a consultant, you can carry out other activities. For example, you may also want to know what hourly rate to charge for public speeches and other networking activities. Your experience in these related areas will also be taken into account in your rates, regardless of the service for which you are quoting.
READ MORE: The 3 best low-cost businesses to create with €1,000 or less (or even €0!)
When calculating my rates as a freelance writer, I thought about my marketing background and planned to implement a great marketing strategy. Then, I considered my established writing process, which includes top-notch proofreading software, a contract writer, SEO optimization, and more.
Your rate also depends on your reputation, your rigor at work, your adherence to deadlines, your organization, and your ability to accept advice and criticism. These are all components of your added value as a consultant. It's not easy to define these elements, but they can add a lot of value to your services and contribute to Raise your rates.
Tip 5: Your price cap starts in your head
If you have absolutely no idea where to start setting consultation rates, take stock of yourself already.
- What are your personal expenses?
- What are your business expenses?
- What kind of lifestyle do you want to build or maintain as an independent consultant?
The answer to these questions will help you set a minimum rate - a basis on which you can build your pricing strategy as a What entrepreneur.
READ MORE: 4 online business ideas for beginning entrepreneurs
Also, take a moment to look to the future. What are your goals for your business and for yourself? Don't neglect your ambitions as a consultant and business creator. You have the right to live comfortably and prosper financially, too.
Freelancing offers you financial freedom. Why? It's up to you to establish your income and work hard enough to earn and multiply it.
Now that we've talked about the details of pricing your consulting services, let's dive into concrete steps for setting your rates.
How much to charge for a consulting activity: Set your rates
The tips above, combined with the processes below, should help you determine the price of your consulting services And to create a price list for your business. Note that your pricing structure needs to be reviewed constantly, especially as you develop your skills and try to expand your services. Go back to these steps as you grow your business.
1. Determine your value
Start by looking at the average consulting rates in your industry, or in other words, the market value of your service. Get an idea of the averages used in your sector of activity through Glassdoor, Malt, or even LinkedIn.
Looking at market value gives you a good starting point and shows you what your customers can expect from the price of your services.
Then look at your competitors, some of them entrepreneurs publish their rates on their website. Understand their pricing models. Don't copy them entirely, but get an idea of the market situation.
Third, take a close look at your expertise. For this step, try to disregard your other research and focus primarily on yourself.
- What education and experience did you have?
- What is unique about you and your career that could help increase your rates?
- Can you manage deadlines and meet expectations?
These soft skills are just as important as your resume.
Finally, determine your business expenses and goals. These numbers will help you set a base price. What you are willing to accept is just as important as what your customers are willing to pay.
2. How do you calculate average daily rates for consulting services?
Lots of young entrepreneurs take the gross wage as a basis in order to set their average daily rate (MJT), but the TJM and gross salary are not comparable. Why is that? In addition to a gross salary, employer contributions and a number of benefits in kind provided by the company are added.
A freelancer, on the other hand, pays his contributions alone, and does not benefit from the same advantages (in kind, mutual insurance, social protection or risks of precariousness in the event of the termination of the mission)
To overcome this, use a TJM instead, which allows you to obtain an annual turnover equal to the gross salary tasked (net salary + employee contributions and employer contributions). This method allows the freelancer to obtain enough “margin” to subscribe to private insurance (unemployment, mutual insurance, or insurance).
Another point: using this method allows you to set aside enough money to cover potential periods of inactivity.
Here is a quick equivalence of annual gross salaries in CDI vs TJM:
- 30,000€ --> 250 €/day
- 40,000 --> 330€/day
- 50,000 --> 405€/day
- €60,000 --> 480€/day
- 70,000 --> 560€/day
- etc...
These costs could be different for everyone, depending on tax status and business type. Never hesitate to consult an accountant, entrepreneurs like you or public bodies to get additional information.
3. How to calculate consulting rates for a project
Fixed rates create a simpler process (you don't have to worry about time tracking), but this structure can be tricky because of the possibility of slippage and our tendency to underestimate the length of a job.
It is essential to define and control the scope of work determined in advance when invoicing the project. The best way to set your rate per project is to determine how many hours you expect the work to take. You can make a rough estimate based on your knowledge of the subject and how long it took you to complete certain tasks in the past.
The definition and compliance with specific specifications are essential for invoicing the project.
This step can be difficult for new consultants, and that's where industry averages come in handy. Never forget to add a 10-20% margin for unexpected events to the time needed for your projects. An obligation as What entrepreneur so as not to let yourself be tricked by customers who could take advantage of it.
I am deliberately not providing examples because the different stages of a project are still very specific to the type of mission proposed.
It's also a good idea to include a clause in your contract stating that any work that falls outside of the pre-determined framework will be subject to your hourly rate.
4. How to charge rates for consulting services
Working in “Technical Assistance” (in Régie/AT) means that you receive monthly remuneration for working with a client for a specified number of days. This type of billing can be great for your consulting business because it's income that you can count on and that you can plan for the duration of the mission.
To calculate your TA consulting rates, you can proceed in the same way as for the project method, that is to say to the time spent + a percentage to cover the unexpected.
Now that you know your different rates, let's see how to communicate them to your customers with confidence and clarity.
Communicate your consulting rates without disassembling yourself
If you want to know how much you should charge for your consulting services, drawing up numbers is only half the battle. The other half is communicating your prices clearly and confidently.
The conversation about rates takes place with each customer, sometimes several times. Sometimes it's fun, sometimes it's tricky, and sometimes it's horrible.
Here are a few things you need to remember:
Each customer is different
Some will offer you “fixed rates” telling you that this price corresponds to what they pay to other freelancers. They will explain their mission to you as if it were a job offer and will seem to leave little room for negotiation.
Others will start the conversation by asking what you're charging. Some are open to discussion, while others will shut the door right away.
The point is, you can't always prepare for what every exchange might turn out to be. The only thing you can do is prepare yourself with confidence and patience.
Don't talk about numbers until you know what you're getting paid for.
Understanding exactly what the customer needs (and how they understand them themselves) plays a major role in setting your price, or even in deciding whether to continue with the process. In addition, If you give the customer an idea of what you're charging, maybe he will more difficult to change this rate If the project is more complex than expected.
If a customer asks you up front, “How much do you charge for your services?” , try to steer the conversation toward the details of the project. For example, you could say, “I would like to get a good idea of the scope of the work before discussing rates,” which brings me to the next point.
Trust is important
How you sell yourself and how you discuss your rates can influence how your customers feel about your services. Trust and confidence can be very helpful. When asked, don't present your rates as a question or half-apologise. State your price and be ready to defend your position.
Compromise is the key
If a customer accepts your rates as they are, great! But sometimes that doesn't happen, and that's okay. Focus the conversation on negotiation instead of refusing right away. And if you plan to do other missions with this client, try to be flexible.
When a customer doesn't agree with your rates, several things can happen:
- They respond directly with another rate. Compare this figure to the minimum rate that you've determined based on your costs and goals. If you want to work with this client, try to find a compromise with a rate that is higher than your minimum rate.
- They indicate a rate that they paid to other consultants. This may be true or it may be a tactic to get you to lower your rates. Take these words at face value and take the opportunity to explain what sets your services apart from others. Make the customer not focus on the numbers but on your overall value as a consultant.
- They just say, “It's too high.” If the customer resigns immediately, don't worry. Start by asking them what their budget is and go from there. Depending on what he answers, go back to options 1 or 2 above.
READ MORE: 5 low-cost business ideas that you can start with less than $100.
It's totally normal to say “no”
If you're not ready to accept their rate or if you think the customer won't be the right one, it's okay to say “no.” Even if you are the one who prospects the customer, you are as valuable to them as they are to you.
Many consultants make the mistake of making price concessions in order to satisfy the customer or to win the contract. You will never progress or gain respect in this way. Good work requires an appropriate rate, but the first person to enforce it should be you.
Don't be afraid to bargain
The truth is that tariff negotiations are a big question mark. Both parties are likely to have no idea what to expect and how to proceed, and leading with confidence and patience is extremely professional.
Negotiations, especially those about your value as a consultant, can be very anxiety-inducing. But the advantage is that they can give you a very good idea of what it would be like to work with each potential customer. Observe how the customer communicates, negotiates, and treats you throughout the process. Chances are, their collaboration style isn't very different.
You have every right to back off a negotiation and come back to it later. This shows the customer that you are not reckless and that you approach important decisions after careful consideration. It's totally respectable to say, “Thanks for this exchange, I'm going to take the time to review and think about your offer. I'll get back to you by...”
Don't leave the question up in the air, set a specific date.
Believe in your value and the right price will follow.
It's normal to dislike the process of setting and communicating your rates. With practice as What entrepreneur, you will gain confidence, know your value, and ensure that your rates reflect it. But that trust starts with working on yourself.
When you believe in yourself, your talent, and your worth, it's much easier to put a price on it.
How did you approach setting your consultant rate? Do you have questions about how to set the right consulting rate that we can answer? Share them in the comments below!
