The greatest challenges I’ve had starting and operating my own business has not only been determining my fees, but also asking for them. Different from other business, consultants, trainers, and coaches are “the product”. The knowledge and expertise you possess and your ability to deliver it must be measured in dollars and cents.
In the beginning, I researched to figure out how to set my fees. The two most common approaches I found were based on setting either an annual salary or hourly wage.
1. Annual Salary: First, set the amount you want to make annually. Then divide the annual salary by 12 months, and the result is a target amount to earn monthly for your desired salary. As you get jobs, set the price according to this monthly target.
- Desired salary: 75,000 desired annual salary
- Target: $6, 250/month
2. Hourly Wage: First, decide how much your time and expertise are worth by the hour. Next, when a job offer comes in, calculate the number of hours needed to complete the job. These hours should include the time it takes to draft the proposal, take phone calls/respond to emails, preparation, the presentation or training, and your expertise. Then multiply that number by your hourly wage and you have the price for the job.
- Requested Job: 4 hour training for Executive Directors
- Desired Hourly Wage: $100
- Total Hours: 16 hours
- Proposal- 2 hours
- Correspondence- 1 hour
- Preparation-8 hours (I average at least 2 for every hour of training)
- Training- 4 hours
- Travel- 1 hour
- Training Fee: $1,600
There formulas were easy enough to use; however, the hard part is asking for it. It is common to question your own worth and fear that a client may be unwilling to pay. Knowing your worth and having the confidence to ask for it is a huge step in being successful (see my former blog posting on Imposter Syndrome).
Once you have the confidence to ask for what your worth, there is the additional challenge of asking for it. Which is relatively easy when a client expects to pay, but it turns out, some people in business operate under the false assumption that consultants are willing to work for free. Watch this video and let me know if it sounds familiar…Webdesign clients in everyday life
I’m continually impressed by the number of organizations who request my work for free. Now don’t get me wrong, sometimes there are jobs which are “marketing” opportunities and will convert into paid work. These are the exception, not the rule so you have to be judicious and strategic about the work you choose to do at your own expense.
Most independent consultants are passionate about their work, which is why we’ve chosen the roller coaster ride of self-employment. Because we’re so passionate we’re sometimes willing to bite the bullet and work for free, hoping it converts into a paid opportunity. But this can be a trap. After all, would you expect to walk into one of Gordon Ramsey’s restaurants (clearly passionate about his work) and get the meal for free? In fact, you would pay more for one of his meals over one from untrained, disgruntled chef. Do not let your passion become an obstacle to financial success.
So what do you do when someone asks you to “volunteer” your time and expertise?
1. Determine its marketing potential. Ask the client about the audience and reach out to a colleague to get their input.
When you do an event for marketing purpose (gratis), be sure to maximize the opportunity. Work with the client to create as much visibility and opportunity as possible. This might include your profile on promotional materials (printed and online), an information table, or advertising on their website or newsletter, and more.
2. Gently request payment. And do not feel guilty about it! You worked really hard to develop your expertise and it’s worth a fee. Discussing money can be uncomfortable; in the US it is impolite to discuss money, especially when it is centered on our own worth. But it must be done.
The terms of fee should be discussed in the initial conversation. You don’t want to spend time planning with the client only to learn later that they don’t plan to pay. If a client does not mention money, then typically they are looking for a “volunteer”. If the client does not bring up fees or payment, gently ask them about their budget or tell them you have a fee and will include it in the proposal (never give an amount without a full assessment of the job). Let clients know you can be flexible if they have limitations (if you want), but that you do not offer services gratis. In some cases, they may not be able to pay so you will have to walk away. In which case, you must accept that it was not going to be in your best interest anyway.
Know your worth! Ask for it…and you’ll get it!