Many salaried people think what a consultant charges is outrageous. But, if they thought about what constituted the pay that a consultant gets, they would change their minds. First, a consultant must continually market himself if he hopes to succeed. Second, he has no job security because he can often be terminated with short notice unless he has a contract. And, he must pay for health insurance out of his own pocket, as well as more in federal income taxes because he is an independent worker.
Assess your abilities before you begin to set your charges as a consultant. Determine the level of your skills and what a client can expect from your advice. Also, go to Wall Street Journal's Careerjournal.com to see what consultants in your field charge clients in various parts of the country.
Decide whether you will charge for the entire job or by the hour. Or, choose a monthly retainer if the job is going to take awhile to complete. You can also charge clients a daily fee and in some cases, you can be paid a percentage of what the client will save by taking your advice.
Factor in your costs of doing business. For example, bank charges, accounting services as well as marketing and advertising expenses to market yourself are legitimate costs and should be included when you set your price. Also to be included are fringe benefits that salaried people receive, such as paid vacation, health and disability insurance, as well as the cost of your automobile.
Don't forget that you should be making a profit. Most consultants will add an additional 10 to 20 percent to his fees to cover a reasonable profit for his work. Don't be shy about this addition, because a client expects you to make a profit from your efforts as much as he expects the same for his company.
Check what other consultants charge for similar services in your community after you have considered all the above. If your charges are much lower or higher than what other consultants charge, you'll need to make adjustments.