Consulting Fee Calculator: How to be confident with your charges

Consulting Fee Calculator

Emily felt embarrassed pitching her new client for work. ‘If only I had confidence about what to charge’, she thought. ‘I need a ‘Consulting Fee Calculator’ to help me feel less awkward’.

When I started out as a freelance consultant, I had to get over a few internal gremlins. Firstly, there was no security. Effectively I had become a 100% commission only sales person. This was a significant shift in thinking, and I had to ‘feel the fear and do it anyway’ if I was to build up a sustainable practice. The next hurdle was getting to grips with everything it takes to run a small business; from VAT, to corporation tax, to working out how much to take as salary versus dividends. This required a bit of upfront time investment, but wasn’t actually too bad. Gremlin number three was centred around whether to have a value proposition or not. Some people advise that the best approach is to simply talk to everyone and then see what needs doing and do it, whilst others advocate having a niche, or even a micro-niche, and promoting your services within it. That took me a little while longer to resolve, but eventually I found the balance that works for me.

The last gremlin was about how much to charge customers. Even if you charge for a project, you will build your costs up based on an assumption of the time it will take to complete the task, so everything boils down to ‘what should I charge per day’ in the end.

I have since discovered that I am not alone. Many successful consultants struggled with this at the beginning, and those newbies I talk to on a regular basis find this one of the most difficult things of all. Somehow, a feeling creeps in that what you can do for them is not that hard for you, so you feel a slight embarrassment in asking for what seems like a lot of money. When you are starting out, you are just grateful that anyone should want your services too, so you feel that a lower price is a good thing. After all, you don’t want to appear to be money grabbing, taking the piss, or the worst possible scenario, be priced too high so that they don’t go ahead with you. The thing is though, when you are new at it, you don’t really know what is too high. And it’s probably only you that thinks you will appear money grabbing.

The best way to get over these fears, so that you have confidence in pricing for a project, is to think logically about it. I am very surprised at how few new consultants put together a spreadsheet with all their costs, the number of days billing they are likely to have per year, and the amount they are used to earning. Being a self employed consultant is just the same as running a business – you need a plan. A plan for your business, including business development/marketing, targets per month, and above all, a cost model.

I constructed the calculator below so that anyone struggling with this topic can model a number of variables, and project what their minimum day rate needs to be. Explanations for the cells are below the calculator.

I hope this is useful and helpful.

https://dl.dropboxusercontent.com/u/12894395/Freelance%20Day%20Rate%20Calculator%20copy/Freelance%20Day%20Rate%20Calculator.htm

Notes:

  • Input cells are green. Change them and the totals will automatically recalculate.
  • The green cells are pre-populated with numbers so that there is something to start with. It should not be inferred that these numbers are correct. Add in the numbers you will realistically need in your business.
  • Before you became a consultant/freelancer you would have earned a salary (plus bonus maybe) from your employer. What was it gross? Or what would you like it to have been?
  • For your country, add in the number of days that are public holidays when no-one is working. In the UK it is 8, but in other countries this will be different.
  • How many days will you take as vacation during the year? 25 days (or 5 weeks) has been added as this is standard in the UK. You may want to take more, or fewer. Change it to reflect what you’d like it to be.
  • The number of potential working days a year is calculated for you
  • The day rate equivalent for every possible working day is calculated for you
  • How many days per month do you think you will reasonably bill?
  • Being a freelancer/consultant means you need to constantly generate new leads for new projects. How many days per month will you devote to business development?
  • You are running a business, so will need a few days a month on admin, proposal writing, chasing invoices, writing blog posts, marketing, etc. How many days a month will you devote to this?
  • This will calculate the number of days per month and year you will be working. Business development days and practice management are both working days on which you should be paying yourself.
  • Make sure that the two orange cells have the same number in them. If not, adjust your billable, business development and practice management days so they match the total available working days total above.
  • Now add in the estimated costs of managing your business
  • When you were working for an employer, it is likely they were contributing to your pension, and providing you with medical insurances. You deserve to be contributing in the same way to these. Change the pension percent to whatever you want it to be and the total contribution will automatically update.
  • Practice management and business development totals are calculated automatically based on the number of days you specified above, multiplied by the day rate equivalent above.
  • If you were running any other type of business, you would think in terms of the business making a profit after it has paid all of its costs. There is no reason why you should not do this as a freelancer/consultant. After all, by nature, this type of work can be very lumpy, and retaining funds within the business is sensible to smooth out the peaks and troughs of cash flow.
  • If you work directly with customers then the Day Rate is calculated for you
  • If you work through an agency, or umbrella company and they take a percentage of your billings, then add the percentage of the total that they take
  • The final number is the day rate you need to charge a customer through the agency
  • This calculator is for example only, to help in your planning, and does not constitute any form of advice, nor does it negate your need to seek any specific advice from your accountant
Advertisements

Sales and marketing alignment – if they aren’t aligned then who wins?

Sales and marketing alignment

Sales and marketing alignment is so often an after thought, if it’s a thought at all. How many of these do you recognise?

“What are marketing doing? I have huge targets to hit and they are worrying about the font and colour of the corporate presentation. Why aren’t we getting any well qualified leads through that I can get in there and close?”

“We’re trying to run these campaigns, and yet sales won’t give us the data to add to our mailing list. If they don’t provide their customer and prospect contact details, we can’t be expected to generate the demand they want. I just don’t understand why they don’t want to work with us more.”

“The slides created by marketing aren’t quite right. I’ve added my own slides, and changed a few of the facts and figures around. It’s better now. I don’t understand why marketing don’t just give us what we need. They don’t seem to get what it’s like in sales.”

“Whatever we give sales, it’s never good enough. They complain and then change the material we provide them. We must have at least 50 different versions of the new corporate story by now. How are we supposed to ensure that the messaging is right when they treat everything as the Wild West?”

This is something I have faced throughout my career. As a sales person I looked at marketing and wondered what on earth they were doing that was relevant for me, and as a marketer I saw sales protecting their own customers, data, and environment and keeping me out.

The bottom line is that sales and marketing have exactly the same ultimate objective – to sell more services to existing customers and to attract new logos. The problem is that they are two different types of character, with two different sets of process goals along the way to the ultimate joint goal.

Aligning sales and marketing (and product) and creating greater collaboration helps to speed up the journey towards attaining the new business needed. Imagine both sales and marketing collaborating fully on lead generation initiatives, follow up with the prospect or customer, and on the development of messaging and campaigns. A sales person is likely to know more about the customer challenges and environment than anyone else in the organisation, and marketing are crying out for that information in order to develop more targeted messaging and campaigns. Marketing are the custodians of the messaging and collateral, so sales being involved at its creation stage would greatly enhance the effectiveness of any material, or campaign.

I work with sales and marketing teams to align their goals and working practices through joint workshops, followed by one-to-one coaching. I also bring new technologies to them that can act as catalysts, or the common watering hole, around which both teams can gather to further their joint ambition to generate more business. If you could do with a look at your sales and marketing alignment then I can help you develop common ground, better working practices, and a lead to opportunity process that everyone is happy to support.

Sales coaching – accelerate sales achievement

accelerate sales achievement

If you want to accelerate sales achievement for your team, then you need to do more than inspect their pipeline, read them the riot act when the numbers are poor, or send them on a training course. What they really need is personalised focus.

If people are really the most important resource in any company, why are they often treated as robots who need to deliver on their objectives, without adequate help or development? Professional (and for that matter personal) development is critical to the success of any team, function or company.

Take Philip, the marketing manager for a large technology company, who has been tasked with achieving a 40% increase in MQL this year with the same budget, and a more complex set of services. One option is to let him figure it out, after all he was hired because he has experience and knows what to do. Then watch him fail, or worse still fail while creating unnecessary stress and knocking his confidence. A second option is to provide him with coaching and training so that he is supported in this Hurculean effort.

Training enables Philip to gain new skills or ways of doing things that could help him reach his goals. A more efficient way of using the MAP so he can reduce time spent on inputting data. Or training to provide greater insight into the CIO challenges and pain points, which enable him to develop better and more relevant messaging for his campaigns. There is also training in new digital marketing practices, more effective lead generation, and managing the gap between sales and marketing.

Then there is the more personal approach of professional and ongoing coaching. A one-to-one session every few weeks with a coach will enable Philip to bounce ideas around, discuss different ways of doing things, even just get stuff of his chest. Coaching is usually centred around a particular task or set of objectives and is therefore very focused. It involves Philip’s manager too, so that everything is aligned. It is possibly the most useful investment a manager, or the HR department can make in their people, with results being visible very quickly.

Imagine Philip has had some relevant training, and has been supported with professional coaching. Imaging that with this scenario he makes his incremental 40%, and this gives him immense satisfaction, his confidence is high. The company has spent a bit in his development, but has benefited from the return they wanted, and a confident, happy, and engaged employee. Now imagine Philip had been left to swim on his own. He achieved an incremental 20%, he is stressed, burned out even, he feels unsupported, and is on the verge of quitting. The company has saved on professional development but at what cost?

I provide coaching and training to sales and marketing people in order that they can accelerate sales achievement and performance, and be fully supported and engaged for years to come.

Forget the customer value and forget any ROI

Customer Value

One thing I have learned is that if you forget the customer value, you can kiss goodbye to your ROI. How does the following resonate with you?

The guys from product have just come up with a new feature release. They tell you it means that customers can see their data in seven new ways, and that they can do all of that through a self-service portal. The product guys are pleased with themselves because the self-service portal pushes a number of things onto the customer, meaning that they have less manual work to do. They go on to tell you about the 17 new features and how technically cool they are. ‘Wow’, you think, ‘these guys really know how to create some great features.’

You leave with a list of things that the product does today that it didn’t do yesterday. Things you can tell your customers about. They are bound to think they are as cool as the product guy did, after all they buy technology all the time and can surely see just how great these are.

You spend thousands of dollars on a campaign to boost the awareness of the new features, and feel great because you’re meeting your objectives of having new stuff to talk about to customers, and will generate at least 20% of your annual MQL from this one campaign alone.

A couple of weeks later you have your head in your hands, and are in front of the CMO, trying to explain why your open rate was low, and the click through rate non-existent. Your ROI looks shot on this campaign, and your CMO is not happy. Not one bit.

As you crawl back to your desk, you try to work out what went wrong. The features were cool, but no-one seemed interested. You call your colleague and coach for their advice. After a few minutes listening silently, they ask you, “What does the customer need?”. You stop short and don’t have an answer. It’s then that you realise your mistake. Instead of focusing on the customer’s need and relating this back to your new features, you simply went ahead and pushed a load of meaningless things at them.

I see this scenario almost every day. Product, Marketing, and Sales not well aligned around the customer. And let’s be clear, the only reason you sell products or services is because a customer perceives that they address their requirements, be those opportunities or problems. Smart companies centre their product, proposition, and offering development around customer needs. Positioning then becomes easy. If you really understand your customer’s business, their needs, and market challenges, you can tailor your offering accordingly. If you then understand your purchaser’s persona, you can tailor your messaging to address their needs.

I work with clients to develop a deeper understanding of their customers through workshops, developing user scenarios, and mapping customer needs to the portfolio, so that they accelerate their sales and marketing performance, and deliver the ROI that the CMO needs to see. Focusing on customer value is key.

How to Turbo Boost Your Sales Team

It’s 0830am on a Tuesday morning and the sales team is out and about getting ready to meet with their clients or prospects. In thirty minutes’ time they will be with their contacts finding out about the client, discovering what makes them tick and analysing the problems the client’s business has in order to reel them in towards a sale.

At 0930am chunky laptops come out of bags and are put on the table in front of them so they can huddle around the screen, or are hooked up to hot, wheezing projectors that don’t want to recognise the computer. This rigmarole takes a good 5 minutes, or more if the projector is in a bad mood, and breaks rapport. The conversation has stalled and all the good work the sales person has done to this point is either negated at worst, or severely depleted at best.

Once the laptop is booted up and all eyes are glued to it, the search for the version of the presentation that’s been created for the meeting starts. Once found, the conversation can turn to the content and the sales person starts to claw back to where they were before the clunky interruption.

The sales person will no doubt do a fabulous job with the client, mixing their art, experience, skill and intuition in just the right way to reel them in. But is there a way of turbo boosting sales? A way to make their very hard jobs much easier?

There are two issue with the typical Tuesday morning above:

1.  The content they are using for their meeting is more than likely different to the content being used by all their colleagues

    • Does it matter that the content is different? If I were just talking about the use of different product sheets for different products it wouldn’t be an issue. But the fact is that most organisations do not have any structure or control over their collateral, its distribution or how it’s modified and used. If every sales person is using a different version of the corporate presentation, some with incorrect facts, others with information that breaches confidentiality, still others that breach the brand guidelines, then the answer is yes, it does matter if the team, all of whom are representing the same company, are doing so in an inconsistent manner.

2.  The interruption to their meeting causes a break in their rapport and sales process

    • Let’s face it everyone hates the technology in a meeting room, as it so often doesn’t do what you want it to. Everyone accepts that things don’t always connect up right first time. But it is awkward for everyone. An awkward silence as one person struggles to make it work while the other just waits saying ‘no it’s fine, take your time’, when both of you know they really mean, ‘come on, I haven’t got time to waste’. We all know that building rapport and maintaining it is crucial in human interaction. Sales people are naturally better at it than most other groups, and have no doubt been on training courses where they have been told about the classic NLP techniques of mirroring, pacing and leading. Some of them may even implement these well. But an interruption like technology turgidity can break state and set the meeting back. (NB. It is true that print-outs can be made before the meeting to avoid techno trauma but there is an even better way to put the right information in front of your customer as we shall see).

In my role running marketing I used to have sales people craving new content all the time. They’d want new ‘hooks’ and good stories. However, they would also then modify whatever we produced. We’d create one version and within days there were more than twenty floating around. No-one had any idea what the correct or most up to date version was. It was like the Wild West. Marketing, Brand and senior management had no control and no structure over what was out there or how sales people were representing the company. One thing was certain through, there was zero consistency.

One way to overcome these issues is to deploy Content Live, a new application designed to right the two wrongs in our illustration. Content Live is an application that sits in the cloud where HQ (marketing, sales, brand, etc) can upload content and it is automatically pushed out to every account holders’ iPads. Instantly this provides a structure to the sales person, and the whole organisation; they know what is official, what is the latest and where to find it easily. It also provides control because the files uploaded can be locked so driving consistency of message and delivery.

As the content is already sitting on the sales person’s iPad, always refreshed 24 hours a day, there is no need to go through techno trauma or break rapport with a client. How simple is it to take out the iPad, swipe the screen and show the right content as part of a natural conversation? Very. Imagine how powerful it could be for a sales person to be talking to a client about their issue and the be able to say ‘We just did a very similar thing for Big Bad Brummies PLC. Here’s a quick 2 minute video of their CIO talking through their challenges and how they overcame them’. Very powerful indeed, as they swipe the screen of their iPad and play the video in the meeting as part of the sales conversation. After all there is no better sales resource for a company than a happy customer.

Importantly, the sales person will also have their own space in ContentLive where they can upload any documents that they do create. Of course it is right that the further up towards account based marketing (ABM) you get, the more likely it is that content will be modified, but with Content Live it is all structured and controlled and visible.

There are other add-ons too, such as ‘News You Can Use’ which provides the latest news on clients direct to the iPad, and also Content Live Private which enables you to have a private shared space with clients or suppliers where content is automatically pushed to their iPads. Imagine how cool it would be to walk into a meeting having just picked up the latest news on them seconds before so you can be the most informed possible, or how you could submit proposals, presentations, service management reports or implementation plans directly onto their iPads. Very cool I say.

http://viewidc.com/flimp3_player.swf?u=p7v6q0mx

Content Live is an application that enables the slickest and simplest way to distribute, structure and control the content. Many organisations will need to work on how they would structure and modify their content to use Content Live to its full potential and this is something we can advise on at Accelerate Performance.

For more information on Content Live or who to engage with for development and structure of content please contact us.