One size fits all works great for scarves and ponchos, but for consulting rates? Not so much. Several factors impact how much risk you’re taking on as a consultant, and more risk can — and many times should — mean higher pricing.
Here are four risk factors for you to consider when pricing your consulting services.
How long have you worked with your client? If it’s a long-standing relationship where you’ve built significant trust, it’s considerably less risky than the first time you engage with a client. Conversely, if you’ve never worked with a client before, it’s a bigger risk to you as a consultant.
Your first inclination might be to discount your services in order to land a new client, and there are times that might make sense. But remember the risks inherent with new clients (like being unfamiliar with underlying systems of decision-making, buy-in and culture) as you set your rates.One price doesn't fit all when it comes to #freelance and #consulting jobs. There are risk factors you should definitely charge more for! Click To Tweet
2. Time Frame
Your client needs you to turn around their deliverable in a rush? If you can fit it in without compromising deliverables for other clients and if you want to accept the assignment, consider charging more for this quick-turn service.
Part of what we do as consultants is teach our clients how to treat us and help them understand the value of what we do. By having an upcharge for rush jobs, you’re letting your client know that moving faster than your typical timeline (and moving them to a priority position in your queue) has value to them and that they should pay for that added value.
3. Duration And Project Size
For those new to consulting, it may sound counterintuitive, but you should charge more for short-term engagements than longer-term ones.
When you think about the energy and effort it takes to prepare proposals and sell services, larger projects are often more efficient to win and service than smaller ones. Especially after you’ve had experience scoping them, larger engagements provide a level of stability to your practice. Plus, you only have to win a few of these projects to fill your calendar.
Smaller, short-term engagements, on the other hand, typically require a similar amount of time for administrative tasks like setup and billing, and they may even require the same sales cycle.
Every consulting engagement is different. That said, engagements that require you to create completely new methods or materials are higher risk to you as a consultant than ones where you apply practices you’ve used successfully many times before. And new services require substantially more work on your part to sell and execute. Your pricing for this type of work should reflect that effort.
And it goes without saying that you should be charging significantly more when your client will ultimately own the intellectual property you create. Work with your attorney to ensure your IP rights are reflected appropriately in your consulting agreement.
Be sure to consider the risk factors you may want to charge more for in your consulting practice, like history, timeline, duration and customization, before entering into your next engagement.
This article first appeared in Forbes.