Setting up as a consultant, find it impossible to talk about MONEY!(4 Posts)
Hello! Not sure where I post this, but I am in the process of setting up as a consultant, on top of my 'day job' (don't worry, this is permitted within the terms of my contract). I am/will be consulting to large organisations who have plenty of cash! My trouble is, I find it incredibly difficult to talk about money. In fact, I find everything related to this embarassing and difficult, from working out how much to charge, through to invoicing etc. To the extent that it makes me feel slightly sick. For example, I have been doing a lot of work for one particular client for free but this has grown bigger than originally anticipated and now I have asked for a smallish fee. I am deeply concerned that the person I am working with will now think I'm a horrible grasping person. This is ridiculous and pathetic I know and really stems from a deep uncertainty about whether I actually know anything of value. But does anyone have any tips or at least empathise?
It is difficult to know how to price yourself but large organisations will be used to a decent 'going rate' for consultancy advice and if you under price, they may well think that you are no good!
Some questions to think about. What do your competitors charge, what has your organisation paid for consultancy advice in the past. How do you compare with the competition, can they do what you do? Are you in a niche position.
My organisation recently paid £1,100/day plus VAT for some very specialist advice for a piece of work that no way in the world could we have done. I would have thought at least £500/day. Try to think if you were doing this as a full time job and needed to make a living from it. How many days realistically would you get paid work per week? Maybe one or two. How many days would you have to work/research your field, prepare quotes for work, likely success rate and time needed to network. You won't get paid for any of this but will need to do it to be able to justify calling yourself a consultant.
As well as invoicing, you might want to think about Ts and Cs if you are doing discrete pieces of work rather than just being a hired help for a day. You need a clear document setting out what you will be doing per piece of work, when you will deliver, how the client will pay, late payment terms plus any charges for additional work. Both you and the client need to be clear about what it is you will be doing.
Also do you need to set up a company for this, what about liability if they wil be acting on your advice and it proves incorrect?
Also if the person think you are horrible and grasping for asking for payment for doing some work in your own time then stop doing the work. Presumably they have been happy with the work you have done up until now? Start charging for it.
I don't think you should see youself as a grasping person because you are charging. You are earning your money because you have a skill/expertise/information that your clients need.
DP has just been through something similar...he did some free work initially which was testing the water but it quickly started to snowball so he asked for a fee and explained that as he's trying to establish himself he was willing to do some work for free initially but now has to charge as he has to make a living. He provided them with a breakdown of what they had got 'for free' and showed them a quote with a costing of what else they wanted.
He was dreading it but turned out the company were fine about it as they hadn't realised how much they had got him to do for free!
I don't like it either. It was much easier as an employee to talk money when it wasn't mine!
If you are doing this for extra cash and/or to build up a freelance base for later down the line you need to limit the freebies and spend your time building up a bank of potential paying clients.
I offered a few freebies/skillshares at the beginning, but actually I think the only thing it gave me is experience of doing what I do but as a consultant - ie I don't need really need practise what I do (marketing) but doing it as a consultant was new. I personally found that people who don't pay, don't always then see the value of paying you for follow on work.
I'd explain to the client that you have really enjoyed what you have done for them to date, but you are taking on other clients, so you need to either finish the assignment or move to a paid rate. Try and get a testimonial if they are happy.
I always love a book to help. When I set up I found this very helpful. It gave me the confidence (to some extent) to feel justified re charging etc. It also helps you work out a rate etc.
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