To put this article together, we’ve interviewed a successful founder and consultant, who grew his agency from zero to $10 million in 4 years.
In terms of how much a consultant makes it really does vary. First of all on what it is that they’re consulting on. Typically, for a consultant there’s three major different pricing strategies that you can do, and one is like that where most people start which is when you basically charge an hourly rate and that really is dependent on the market, it’s all about the supply and demand and it’s all based on what people are doing in your market and how much of commodity is of the service that you’re actually providing.
If you’re looking at an hourly rate model, you can basically charge what the value is that you’re going to be providing on that: Maybe twenty dollars/hour, it might be a hundred dollars/hour – it might be something extremely specialized, like top lawyers that are charging a thousand to fifteen hundred dollars an hour or surgeons or shopify products specialists. Now I know a surgeon or a lawyer isn’t the typical kind of consultant, but I just want to use that as an example in terms of where the value can go with this thing.
Typically, if you’re charging hourly rate, it’s simply an hour times the multiple of the hours that you’re going to be working and what you’re going to be consulting.
The second model is typically like a project fee, you’re going to be quoting people up based on the project that they come to you with, and again it’s gonna come down to really what the value is that you’re going to be providing and also where the market is at and then you know how specialized that you are in your craft.
One distinction that I will make is that the more of a specialty and the most specialized the service that you’re consulting on is generally the higher fees that you’ll be able to command.
Then the last and third kind of pricing model is really based on a retainer and a retainer is where you want to assess you know how much work is going to be going into this and is this going to be like a reoccurring theme that you’re going to be consulting on.
If you really want to advance to the next level, then you can look at even royalty based arrangements, where you’re doing the hybrid model, between “I’m going to be charging you this retainer fee” (ie like in the case of shopify spy software) then there’s going to be some kind of performance percentage that’s going to be like a mechanism of your pricing structure.
It might be that you get two percent of gross sales, if you’re doing something in the sales or marketing field or it might be if we achieve X outcome then I’ll get like a kicker fee or I’ll get a percentage on the value that the service that I have provided really gave to you. So, typically they’re the three models and let’s kind of pivot now and look at how you’re going to be looking at that pricing in terms of how much a consultant will make and the big key distinction that I’ll make here is that you’re really compensated based on the value that you’re gonna be providing to your marketplace ie how big of a problem is it that you’re helping this person solve?
If we’re looking the sales and the marketing side of things, you’re going to be looking at how much is it worth for this person to solve this problem ie they might be in a position where they’re spending five thousand dollars a month on marketing, but they’re just not getting that marketing to convert at a rate that’s really profitable – they’re not getting enough leads or enough phone calls or enough sales and let’s say that you can help them to turn that $5,000 into $20,000, but right now they’re just making $10,000. So, really that gap, is like ten thousand dollars of what you can provide in value to that person.
My thoughts and my process towards this is that you really want to be looking at charging like canvas scent of the value of what you create, so if you’re going to be solving a problem, it’s going to be ten thousand dollars for them, you might want to look at charging one thousand dollars, as helping them to solve that problem.
So, in terms of how much that you can kind of make as a consultant, it’s really as much as you really desire and as many hours as you want to work or as much of value that you want to provide when you move to kind of a retainer fee or performance fee in terms of consulting on your clients.