Do you know what your work is worth? If you're a freelancer or consultant then understanding what to charge is part of the job.
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Working for yourself and being your own boss maybe your ultimate end goal. Working on a variety of projects with a spectrum of clients can be empowering and gratifying.
As a consultant you are in charge, you have to register as self-employed, set up the consultancy, find your clients, put contracts in places and manage your workload. Not to mention, ensure you are delivering a top-notch service, whilst cultivating new leads and managing your finances.
But when it comes to finances, many don’t know where to start, not only do you need to file your taxes but also set your fees. Yes, there’s lots to do but taking a bite size approach to it all, is key.
Setting your Fees
For some reason when it comes to discussing money with clients, whilst we all want and expect to be paid well, nobody seems to want to talk about it. There is a reluctance to tackle this head on, we end up feeling awkward about asking to be paid for our services. Rather than being a taboo subject, it should be something we talk about more openly.
Setting your fees can be tricky, many questions spring to mind, such as, how much do you charge and how do you work it out? Do you take your current salary and multiply it? Do you charge an hourly or daily fee? Should you set a retainer fee? If you set your fee too low, you are doing yourself a disservice, and if you set it to high you may find yourself struggling to get any work at all.
There’s lots of advice out there about setting your fees, for example The Association of Independent Professionals and the Self-Employed (IPSE), has suggested taking the equivalent earnings you would have received as an employee and adding a third. This approach may work for you but if you’re like me, you’ll want to look at all the advice before making a decision.
So here are some tips on setting your fees:
Do your research, check out the competition and ask fellow consultants what they charge.
To help benchmark your fees check Major Players a recruitment agency that regularly run salary surveys, as well as Londonfreelance.org, which suggests freelance rates and advice for various roles.
If you plan to consult via a recruitment agency, they will have set day rates, depending on your experience and the industry which you can adopt for private work.
Take into consideration your skills set and charge accordingly. However, be prepared to be flexible and negotiate but don’t sell yourself short.
Look at the options that make sense for you. Some consultants choose to work on an hourly rate or a day or half day rate. Be prepared to log your time spent on each project in a timesheet, so you can keep an eye on the figures - particularly if you opt to go with an hourly rate. Day rates are easier to track and calculate.
If you work with particular clients on regular, ongoing basis then a retainer would most likely work better for you. You can work this out by averaging the number of hours you are likely to do in a month.
Some clients like to work on a fixed price contract. With this, you need to make sure your responsibilities as a consultant are spelled out loud and clear because you won’t be able to add additional charges.
Note that with both retainer and fixed prices, you won’t be able to bill your clients for additional hours or days so pay careful attention.
Results based pay -some consultants opt to only charge upon the completion of a project that has gained the desired results. This might work if you are just starting out and are confident in your abilities. However, be very careful if you choose to do this as you don’t want to end up with empty pockets should you encounter any challenges.
Putting in place a good working contract is very important. Your contract is a legally binding agreement between you, the consultant, and your client. It sets out the terms for the service you will provide as a consultant and the obligations of the client.
Contracts protect both parties involved and are there to ensure there are no errors. It is therefore crucial to ensure that they are clear and concise and that there is no room for misunderstandings.
This can and does happen, many consultants have been hired to do one project and then find that its morphed into something totally different. So, a clear contract in place can help you with this and ensure you are paid accordingly for your work.
Your contract should cover the following:
· The services you provide
· project objectives and goals
· Your consultant fees – including late fee handling and invoicing
· Clients responsibilities
· Consultant responsibilities
· Termination requirements – required notice on both sides
· Timings for the project (start date, duration, end date)
There are lots of online resources where you can get template contracts and it’s always recommended that you get a lawyer to look over your contract or help you create one. A good place to start is IPSE, They provide template contracts, contract review services and offer advice on what to do if a client breaks a contract and lots more.
Ebony Gayle is the author of ‘How To Become A Consultant; A Guide To Free Yourself From The 9-5’ Paperback and eBook available from Amazon eBook version only: iBook, Google Play, Barnes & Noble and other online platforms.