I have a background in Health Care and specialize in post-acute care and how its been impacted by reform etc. I have recently started doing some consulting for a couple smaller agencies in my area and the business was generated by word of mouth. I do not have any formal training in being a consultant but drew up a simple agreement that states my rate and simple terms. I am using these smaller agencies as sort of a guinea pig to test procedures and ideas etc and so far its all working out well.
My question is this; I want to approach some of the bigger fish in my area (New England region) but I have some polishing that needs to be done in terms of presentation of terms as well as agreements.At what point in the selling of your services does rate come up? Is there an ideal time? Is hourly the best method (in your opinion)? I will use an Attorney to draft a better consulting agreement when the time comes. I have no issue with speaking or selling myself because my main job is actually a sales and marketing position with a very large territory, its the details of consulting that seem a bit of a mystery to me.
I have worked for some of the large consulting firms so let me try and help. First you need to sell yourself. Once you have done that and are invited to compete on a project you will be asked for a proposal or to respond to one. That will include the scope of the project, hours and pricing. Every player in the industry knows what the other players charge. Much of the business we won was won based on relationship building because people need to trust you can deliver the goods.
Writing a check separates a commitment from a conversation.” - Warren Buffett
I’ve been a software consultant for almost 19 years now working in the legal industry. Here’s my thoughts:
I always tell them my hourly rate in my first discussion. Being up front is the best. If you’re too expensive for them, they need to know that right away.That said, be prepared to give major rate reductions for your first couple of clients. I cut my rate in half for my first few projects, so I could make them happy and get some work in the door. Win-win.I always bill hourly. I often give an estimate of the cost, but only bill the actual hours that I spend completing the project. I’m usually under my estimate which makes my clients happy. A few consultants in my space give fixed rate estimates, but this leads either to over-billing or getting screwed because you didn’t estimate all of the work properly.Be sure to keep track of your hours and stay on budget as much as possible. Notify the client as soon as you realize the project is going off budget. Most clients understand that stuff happens and the estimate doesn’t always cover everything that might be exposed as you get into the nitty gritty of a project. Being open and honest is always the best course of action.I have an amazing product that I use to track my time called YaTimer. Only costs about $60, I think. Make sure you have something to track your time since that’s how you get paid.Hire a good accountant!