A recent client was having trouble determining how to price a new consulting product that might be sold to a team or to an individual, so I wrote an email to share my thoughts on a strategy. If you are not sure how to price your consulting, here is my advice!
Most people, especially people who just left a job where they were paid for their time, try to bill their consulting or creative projects based on the time it took them to do it. This is a false metric and is a great way to hold back your potential.
Consulting pricing is driven by value, both the value produced and your ability to demonstrate that value.
What exactly are you promising? Is there a deliverable? Can you monitor someone before and after to demonstrate higher productivity? Or is this more an intangible “I feel better and learned some skills” kind of thing? If you have some way to monitor, say, a staff person’s output or a website’s traffic—or some other metric before, during and after you help—and can demonstrate that you increased productivity by 15% or whatever, that would be CRAZY valuable. In my world, where my staff is billing $75 to $100 an hour, that’s tens of thousands of dollars of value.
The key part of this is to demonstrate value. If you have a self-guided product or ebook or training program, it will typically be cheaper as compared to a consulting gig where you drive the project and accountability. You might think this is because the latter takes more of your time. While true, that’s not really the driving force of the value. In that scenario you are constantly demonstrating the value you are creating, which functionally creates more value. And more value equals more money.
This is what I mean when I say define what is the deliverable. You should drive pricing not just from the product itself and your time, but also from what the value of the result will be. If you can bill based on a percentage of the value of the deliverable, you likely have much higher upside potential than just trying to figure out a fair hourly rate.
Always bill for value and not time. Time is finite and value is not.