How to decide on a per-hour consultancy rate(6 Posts)
I am leaving my full-time job soon, and am planning to do some work on a consultancy basis for my previous employer. I need to work out how much per hour to ask for as the opening gambit in our negotiation.
Is there a rule of thumb to apply here to arrive at roughly the right figure? I know how much i am paid hourly as an employee, and I also know how much per hour my employer pays a large firm for externally-provided services. The latter is considerably higher!
Any advice or relevant links would be much appreciated.....
We charge by the day and base our rates on the market rates we hear quoted by recruitment consultants and the like. We have different rates depending on what and where the work is. Our rates bands are very, very broad (circa £300 - £1500 depending on qualified/ not qualified, on or off site, south east / rest of the country plus our experience in that field) The big 4 in our field charge out qualifieds at £3000 per day so we're cheap!
You need to charge more than your current hourly rate but maybe not as much as the other external provider. You could start lower but build in a review (and increase) after a few months.
Some factors you might consider are:
Will you be working for or looking for work with anyone else? If so and that work pays more you don't want to lose out. If you work in a small field word might spread about what you charge and differences might be hard to explain.
Will you get a retainer? That would ease cash flow and might help you lower your hourly rate.
Will the work be regular or periodic? We charge less for longer blocks of work because it's easier for us to administer and plan in. We can also get discounts for travel and hotels.
Will you work on their site or from home? We reduce our rates by up to £150 a day for off site working. Our clients are often miles away and our expenses are lower if we work from our home base.
I do special offers in term dates to try to push clients away from school holidays. It mostly works and I usually only work two or three holiday weeks a year.
Remember that you won't get benefits, holiday pay, sick pay etc so the extra must cover those.
Hope that helps.
Thanks Helenagrace, there's a lot for me to think over there!
I am considering requesting a retainer, but I need to get some more information about how much work they are planning to put my way.
Your rates and the external comparison look comparable to those I have been looking at. Can I ask what field you are in?
We run an actuarial consultancy. The bottom of our range would be for a student actuary outside the south east. The top rate would be for a very experienced qualified actuary in an expert field in London.
One other point I remembered last night: there might be times when you want to offer a lower rate if the work or client is prestigious and will reflect well on you. We have done this a couple of times because there are certain companies which we wanted to be able to say we had worked with.
Hope that helps
With a client you know, you can probably work out what they can afford/value and build that into the equation.
More generally you need to work out what you need to live. A book I read suggested think about working 1/3 of the time to work out what you need to live the rest is:
- building business - inc marketing and prospective meetings
- not working (prob not by choice whilst you develop)
So you rate needs to take into account the fact you won't work all the time plus your costs; tax, accountant, marketing etc.
by day is generally better than by hour
and be willing to do block rates
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