Question

Topic: Branding

Advice Needed- Consulting Fees (1st Time)

Posted by Anonymous on 10/21/2007 at 12:24 PM ET 350 Points
Hello,
I have an excellent opportunity to work with the parent company of my previous employer on a total overhaul of their branding strategy and communication materials. I've been asked to develop a proposal with pricing, but I don't know what to charge since this is my first big 'gig'.

Currently, I work on freelance copywriting projects for the company and charge 50 EUROS per hour, which I know is inexpensive for the industry.

Important points:
-they are mid-sized high technology company based in Switzerland with offices around the globe
-I will be required to travel internationally
-I will work hand-in-hand with the Director of Marketing and the CEO
-Initially I will help develop a value proposition, communications strategy, etc from zero. Additionally, I will write all new collateral from brochures to product sheets.
-The timeline is tight (4 months)
-While the Director said I would be "assisting" him on the project, he also suggested that I would be 'leading' various phases. He also said he doesn't consider me as a consultant, but rather an employee.

I was thinking of charging a daily rate, but still unsure of the going rate and don't think the Director would appreciate this...he wants a fee for total project (budget reasons). I'd like to run to Barnes and Noble and buy a great book, but I live in France and have limited resources. Also I need an answer for tomorrow.

Any advice would be GREATLY appreciated!

Merci!
Valerie



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RESPONSES

  • Posted by Neil on 10/21/2007 at 1:45 PM Accepted
    Well, first off, I think they would pay your expenses such as travel right? So that should be factored in.

    What is confusing a bit is that he considers you an "employee" yet his expenses for you are much less than an employee. Does he provide you an office, full benefits, etc.? Does he pay you a full-time salary like he would an employee?

    Generally, consultants charge *more* per hour than the wage of an employee because there are a lot of savings to the employer even if the consultant has the same skill set.

    EVEN if you charge per project you should calculate your hourly. That is your starting point for quoting the project.

    If your "employer" is not paying expenses (or if not paying some of them) directly then perhaps consider the following formula:

    labor + overhead costs divided by total hours worked. This is the least you need to pay expenses and make a profit. You can adjust up or down depending on the supply vs. demand for your specific skill set and so on.

    Don't forget overhead. Think hard about what you will need to do business and whether you will have to pay for it out of your own pocket.

    If your "employer" wants a per project payment, then you next have the difficult task of figuring out how much time and expense will be required (including overhead). Plus, thinking hard about market conditions.

    Reading between the lines, I have a gut feeling your first instinct will be to make too low an offer. Be careful there. It might be better to make a higher offer and negotiate if it turns out to be too high.

    You might be surprised that your higher offer gets accepted. You are an amazing asset. You are obviously valuable and experienced enough to justify this interest on their part. Why? Think hard about that. And think about how they are gaining. Your expertise and work without the normal costs of a real employee.

  • Posted by Neil on 10/21/2007 at 1:51 PM Member
    One more thing that probably goes without saying but I am going to mention it anyway: do not forget profit when making your calculations!
  • Posted on 10/21/2007 at 5:37 PM Author
    Thanks to you both for your responses. You have some good points.

    My husband, who works in another field for a well-known financial consulting firm, has encouraged me to charge a daily rate within reason, however bill more time spent on the project than actually executed. Apparently this is the unspoken rule for billing clients at their expected rate while earning a profit.

    I find it a bit underhanded, but perhaps this is the way it goes.

    Thanks for the rate quote in England, which shows me that my 500 euro per day is below market.

    I'm going to continue to think and research.

    Merci! Valerie
  • Posted by Jay Hamilton-Roth on 10/21/2007 at 11:19 PM Accepted
    Charge by the hour, especially since the scope of the job isn't clear, nor are you yet experienced estimating how long things will take you to execute.

    As for price, look in the newspaper, online, and call agencies. Find out what your "competition" charges. Pick a middle-of-road price, and ratchet up after a comfortable period of time. Realize that you'll be paid in more than money - you'll be gaining experience and a track history. Don't get greedy to start with, but don't work for pennies either.
  • Posted on 10/22/2007 at 5:30 AM Author
    Thanks for all the great responses.

    I've decided I don't have enough information to provide a total project price. I will tell my contact that if he could provide me a firm list of deliverables then I can provide a more accurate estimate.

    Until then I developed my own list of deliverables with an estimated price determined by a daily rate.

    Zahid made an excellent point about future projects, which indeed will be the case since the client is understaffed and has come to rely on me for copywriting.

    I already know that they were set to work with one consultant whose proposal was then refused by the board due to the cost. This is why they have now called me....unfortunately, I can't find out his costs.

    Thank you for your very good advice.
    VALERIE




  • Posted by Harry Hallman on 10/22/2007 at 7:18 AM Accepted
    One thing I try to do is ask what the budget is for the project. 50% of the time they will give you a figure higher than your expect, the other 50% they will tell you a lower figure than they really have budgeted.

  • Posted on 10/22/2007 at 9:40 PM Accepted
    This is not the kind of question you should be answering without careful consideration of the options and implications. Clearly your current rate is way below market value for this kind of project.

    If you want to get a copy of the book "Rasputin For Hire" I will be sure it is sent to you via Global Priority Mail, with an upcharge just to cover the cost (over and above what they charge on the website). Details at:

    www.rasputinforhire.com

    The book deals with the various ways consultants price their services and how you can arrive at a fair fee. I agree that the way your husband suggested doesn't exactly feel honest, and that's one reason I don't like charging by the hour or the day. Maybe you can set a project fee by estimating your time at, say, 60% of your time for 4 months, or something like that. If you figure there are 20 working days a month, that means you'd be selling 45-50 days.

    The daily billing rate from an experienced senior consultant would probably be in the range of US$2,500-3,500. It would certainly not be less than US$2,000. And travel would be billed in addition (at cost), to keep the client from sending you all over the place without consideration of the cost.

    Hope this helps. If you order the book, let me know by private email, and I'll have them expedite your order ... maybe even sending it same day.

    Good luck!
  • Posted on 10/23/2007 at 4:04 PM Author
    You made some great points, thank you!

    I am going to the US this weekend for a short trip and I plan on buying both books once I'm there. Obviously, I need all the resources I can get.

    I've submitted my proposal and I'm happy with the total cost I estimated. Perhaps I am on the lower end of the market, but this is my first gig and will be a great reference for me to further develop a consulting career.

    Thanks to all for your encouraging advice...
    VALERIE
  • Posted on 10/25/2007 at 2:43 AM Accepted
    My rule of thumb is this:

    I think about what role I would have at the company should I be a full-time employee doing this work, whatever it is. Let's say I decide that I would be a Marketing Director.

    Then, look at resources like www.salary.com and see what an appropriate annual salary would be, in this case, I'll say 75.000 GBP per year.

    My first step is to say that my hourly wage then is 75 GBP per hour. It's a smooth way to rationalize/explain the hourly rate. People in a full-time job get paid for 2.000 hours per year with paid time off, and you will be working with less certainty and benefits.

    I also will take that * 8 hours and call that my "working day" rate, defined as "coming in, leaving, and taking lunch when 'everyone else' does" when working onsite.

    Remember that you are creating value for them, so don't be shy about asking to be compensated for that value!
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