Consulting Fees Formula I am frequently asked, 'How do I set my fee as a consultant?

' Most new consultants are uncertain how to calculate daily rates based upon their desired level of financial comfort. This worksheet is desi ned to ive the reader a financial basis for determinin a daily or hourly consultin fee. !iscussions about competition and market prices are not included. The consultant needs to find a point of reference that is meanin ful to the consultant... not the client. "enerally, I su est that one should first consider the one#s personal financial need. Most youn consultants usually can e$press this need in terms of an annual salary. This fi ure provides a meanin ful uide for establishin specific e$pectations about annual livin costs and recreational mar ins that are needed to support a life style. %& 'e in by fillin in the followin blanks( I would be comfortable at____. I would be very comfortable at____. My ambitious financial goals would be met at a yearly rate of_____________. )& *e$t, use the yearly rate to calculate your hourly or daily rate. The yearly rate should be multiplied by 1.25 to achieve a loaded or overhead rate. This value is divided by 220 workdays per year to achieve the daily rate. Dividing this rate by 8 provides an hourly rate. Total rate + ,early rate -%.). /overhead rate&. !aily rate + Total rate 0 ))1 workdays. Hourly rate + !aily rate 0 2 hours. Example: 3inancial comfort level + 451,1110year /yearly rate& Total rate 451, 111 - %.). + 46.,111. !aily rate + 46.,111 0 ))1 + 4781. Hourly rate + 478102 + 8)...

!verhead rate " This value is quite conservative /the reader may wish to chan e it&. The loaded or overhead fi ure is the amount required to provide insurance /health and life&, social security /%89 for self employed&, some savin s or retirement benefits, and possibly travel insurance. :F !" !nvesting early in #oth or related !#$s results in remarkable gains %rom the compound interest.; This rate should be ad<usted if the youn consultant has office or equipment costs. =ometimes an ad<ustment is made for special travel e$penses not well covered in the ta$ code, e. ., e$cessive drivin e$penses. >f course, unusual travel such as airfare should be a part of all ne otiations with clients. *early all situations of consultin cover air travel housin and related e$penses as an addition to the daily rate. >nce in awhile the client will bundle travel and the fee in a combined fee. This is usually done to bypass the e$tra burden of internal controls?

therefore, the offer is often enerous. The consultant needs to be aware of the normal travel costs in such a ne otiation. #or$day figure @ The ))1 workday fi ure is derived by multiplyin )1 workdays per month times %%. The %)th month is omitted to provide a month of vacation. These are su estions in case one is ne otiatin a year@lon contract.

%ersonal Consulting Fee Calculator: 3ill in the shaded cells in the followin worksheet to calculate your personal consultin fees(
Comfortable yearly salary: Very comfortable yearly salary: mb!t!o"s yearly salary: $50,000.00 $60,000.00 $#0,000.00 # of months worked: # days/month worked: $orkdays: %o"rs/day: '(erhead rate: Very Comfortable $-+0.,1 Ambitious 11 20 220 & 1.25

Comfortable )otal rate: 45),.11.11 *a!ly rate: $2&+.0, %o"rly rate: 47...%

46.,111.11 426,.11.11
$-,#.#-

48).5%

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