What Consultants

Really Charge In 2023

What Consultants Really Charge in 2023
A few years ago, I was talking with one of our coaching clients, a talented consultant named
Sarah. She had just finished writing a consulting proposal for a prospective client and was
thrilled about the opportunity. She'd priced the project at $65,000, a number she felt
confident the client would accept.

As we discussed the proposal, I couldn't shake the feeling that she was undervaluing her
expertise. So, I decided to challenge her on the price.

"Sarah," I said, "let's talk about the impact this project will have on the client's business.
What's the value you're creating for them?"

She took a moment to think, then listed the outcomes her work would create: increased
efficiency, improved processes, and higher revenues.

As we continued to explore the implications of her work, it became apparent that Sarah's
consulting services would deliver far more value than she initially thought.

As her coach, I encouraged her to reconsider her pricing. I explained that charging based on
estimated hours often doesn't accurately reflect the value a consultant provides. Instead,
I suggested she adopt a value pricing structure, which takes into account the tangible and
intangible benefits her clients receive from her work.

Sarah was skeptical at first. After all, she'd spent years charging based on estimated hours
and the idea of changing her pricing model was daunting. However, as we discussed the
merits of value pricing, she began to open up to the benefits of this approach. Not only
would it allow her to capture the true value of her services, but it would also differentiate
her from competitors who were still stuck in the time-for-dollars mindset.

$300,000
Revised fee

$65,000
Initial price

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With renewed confidence, Sarah went back to her proposal and re-evaluated the fee. Taking
into account the value she would create for her client, she boldly increased her price from
$65,000 to $300,000. I could sense her nervousness, but I assured her that she was making
the right decision.

A few days later, Sarah called to let me know she'd won the project. Her client recognized the
value she would bring to their business and agreed to the higher fee without hesitation.
Sarah was elated, and so was I. It was a proud moment for both of us, as it marked the
beginning of a new chapter in her consulting business.

Since then, Sarah has continued to thrive, adopting value-based fees for all her projects.
She's become a sought-after consultant in her field, commanding fees that truly reflect the
impact of her work. As for me, I've made it my mission to spread the word about value pricing
to other consultants who, like Sarah, are most certainly undervaluing their expertise.
I've written this guide, What Consultants Really Charge In 2023, to help you understand how
consultants are pricing their services — and to make the case for why you should switch
from hourly billing to value pricing.

Through the pages of this guide, you'll learn the principles and practices that have helped
Sarah and countless others transform their consulting businesses. It's time for you to charge
what you're truly worth and unlock your full potential as a consultant. Let the journey begin!

“Earlier on in my career, I wish I had fully understood the win-win nature of value-based
pricing. When you first consider pricing based on value creation you naively think it is
simply a way to charge more, but the deeper truth is it forces you to structure your
engagements to create value rather than deliver services. When done properly, everybody
wins, and increased fees are simply a delightful consequence of putting your focus on the
client and the question of how can you help create more value.”

Blair Enns,
Author of Pricing Creativity

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Consulting Fees Data:
How Consultants Set Their Fees
Before we get into how to raise your fees, let's look at the data on how consultants
are setting their fees in 2023.

It's useful for you to have a clear understanding of the current landscape before
venturing into the unknown.

Here’s how consultants set their fees 1

37% use a project rate

26% use a value-based rate
21% use an hourly rate
13% use a monthly retainer
3% use a performance-based model

80% of consultants are actively looking to increase their rate.1

42% of consultants have never tried value-based pricing because

they don’t know how.1

Over 80% of consultants have lowered their fees in order to win a client.1

Overpaying is one of the top concerns of professional service buyers.2

On average, a 1% price increase translates into an 8.7% increase in operating profits.3

Implementing new prices is as much a communications challenge as an operational one.3

The final point about communications versus operations emphasizes the dual challenges
consultants face when altering their fee structures or introducing new pricing models,
such as value pricing.

1
Consulting Success Fees Study
2
Inside The Buyer's Brain, Third Edition
3
McKinsey ‘The Hidden Power Of Pricing’

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Let’s break down these two challenges:

1. Communications Challenge:
When a consultant decides to increase their fees
or shift to a value-based pricing model, they
must communicate this change to their clients.
This involves articulating the rationale behind the
price change, demonstrating the added value
clients will receive, and managing any pushback
or objections. Clients need to understand and
appreciate the value they are getting for the
price they are paying. If a consultant fails to
communicate this effectively and justify a higher
fee, they risk losing the deal.

2. Operational Challenge:
Changing pricing structures isn't merely a matter of
announcing new rates. It may require an operational
shift as well. For example, in transitioning to value
pricing, a consultant needs to reassess how they
quantify and deliver value. This could involve
changing their approach to projects, investing in new
tools or skills, or even restructuring their business
model. Additionally, they need to establish new
systems for tracking and demonstrating the value
they provide, to justify a higher fee to their clients.

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This point from McKinsey underscores the importance of effective communication and
careful operational planning when implementing value pricing. There are many different
pricing dynamics at play. However, I think the data above is summarized by pricing expert
Casey Brown:

"Ironically, although I still love data and spreadsheets and their role in informing our
decision-making, what I have found is quite the opposite, which is the biggest reason
companies and individuals who sell their services like consultants are not making more
money with pricing isn’t a better spreadsheet or a better understanding of the data. It’s
the confidence or the fear that guides our decision-making."

Casey Brown,
CEO of Boost Pricing
‘The Art of Pricing Irresistible Consulting Offers’

The reason you aren't raising your fees isn't a lack of data or information.

The reason you aren't raising your fees is that you lack confidence and courage.

I get it. There is comfort in using a "safe" fee model like hourly billing where you stick
with convention and don’t rock the boat.

However, are these "safer" fee models really all that safe?

You could trap yourself into a lifetime of mediocre revenue.

That doesn't sound safe to me.

This guide is dedicated to helping you gain the confidence and courage to charge
what you deserve, based on the value you create for your client.

Not only will this approach earn you more money, but your clients will actually
be thrilled to pay your higher fees.

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The Most Common Pricing Methods
For Consultants Explained
We’ll look at how to raise your fees shortly. First, let’s assess the most common pricing
methods consultants use.

The Hourly Method

The hourly method is when you charge by the hour for your consulting services.

You set an hourly rate, track your hours, and then bill your client by the hour.

This simple, easy method is great for beginners who are working on their first few
consulting projects. (However, if you’ve developed deep expertise in your field, I recommend
you DON’T use the hourly billing method. We’ll explore the alternatives in a moment!)

So, if you’re a beginner and you want to use the hourly method, how do you actually
come up with your hourly price?

Step 1
Open Google and search for the average salary
for your position. Write that number down
Example: “senior marketing manager average salary” = $98K.

Step 2
Enter the average salary in a salary to hourly converter
For work hours per week, enter “20.”

As a beginner consultant, you’re typically not working 40-hour weeks.

You’ll spend just as much time winning projects as you do delivering them.

For work weeks per year, enter “48” (or however many weeks you want to work – simply
start at 52 and subtract the number of weeks you want to take off).

You can also use our Consulting Fees Calculator if you have a target income in mind.

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Step 3
Round your new hourly rate up or down in $25 dollar increments
Example: A salary of $98,000 equates to a monthly pay of $8167, weekly pay of $2042,
and an hourly wage of $102. After rounding, $102 = $100 per hour.

Whatever number you’ve obtained by this process is your starting hourly fee. If you feel
like it’s too low, raise it by $25. (Still not happy? Raise it again!)

But don’t lower your fee below the one you’ve calculated. Consultants are notorious for
undercharging — especially when they charge by the hour.

Every time you successfully complete a project, increase your hourly rate by $25.

Eventually, you’ll get to the point where charging by the hour is no longer the best method
for you or your clients. At that point, most consultants move on to…

The Project-Based Method

One of the issues with the hourly method is that your client feels uncertainty around how
much they’ll end up paying you. And uncertainty around a project will stop your client from
moving forward.

Using the project-based method eliminates this uncertainty.

The project-based method is a strong pricing method for beginner and intermediate
consultants. It’s a bit more complex than the hourly method. But it removes a lot of the
uncertainty around hourly billing, because your client knows upfront what they’ll pay.

Here’s how you set your consulting fees using the project-based method.

STEP 1 STEP 2 STEP 3 STEP 4

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 Step 1
Create a list of deliverables for the project

Think about everything your client gets as a result of this project — the “inputs.”

Example: Branding Consulting Project

Design themes research

Competing design analysis
Presentation of results
4 logo options
1 design theme applied to business card and print materials
Complete website redesign with new brand identity
Application of new identity to 3 web ads and 3 print ads

Step 2
Estimate how long each deliverable will take

This is where your past experience comes into play.

If you’ve ever used an app like Toggl to track your time, then you’ll know how long you
spent on similar deliverables in the past. If you don’t know the exact number, estimate.
Add an extra hour or two just to be on the safe side.

Example:

Design themes research = 6 hours

Competing design analysis = 4 hours
Presentation of results
Presentation of results = 3 hours
1 design theme applied to business card and print materials = 3 hours
Complete website redesign with new brand identity = 6 hours
Application of new identity to 3 web ads and 3 print ads = 3 hours

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 Step 3
Add up all the hours, and multiply that by your hourly fee

Example: 30 hours X $100 = $3000

Step 4
Multiply the total by 1.5

Projects typically take longer than you think.

You also have to factor in your time spent marketing, making revisions, etc.
Example: $3000 X 1.5 = $4500 total for the project

After you get the total, adjust the fee to a number you would feel good about.
(But don’t adjust downwards. You want to arrive at a number that feels good, rather
than one that feels safe).

If you don’t feel like you are being compensated fairly for the value you’re providing,
you won’t do your best work.

If you’re a consultant with 2+ years of experience, neither the hourly method nor
the project-based method is likely to serve you well. Instead, consider switching
to a higher-leverage pricing model like value pricing. I’ll discuss that next.

“Clients don’t take you seriously – and thus they don’t listen to you – unless you charge
enough for them to notice. And when you set the price, it needs to be high enough to make
you nervous that you won’t get it. Keep raising it until you’re nervous, and use round
numbers, too ($20,000 and not $19,840)”

David C. Baker

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Pricing Best Practices: How To Raise
Your Fees Using Value Pricing
So, how can you shift away from hourly billing or time-based project fees, and instead
maximize your fees using value-based pricing?

First, you have to understand why your clients are paying you.

Clients are not paying you for your time, your deliverables, or even your expertise.
They are paying you for the results and outcomes you create for them.

This is the key mindset when it comes to value pricing: understanding that you are paid based
on the value, results, and outcomes you create. Until you understand this principle, you can't
put it into practice.

The power of the value pricing approach is leverage. If you can deliver a million dollars worth
of value, you’ll find many opportunities to earn $75,000, $100,000, or even $200,000 for that
work. Even if it only takes you three weeks to deliver.

The best way to discover this value is by asking deep, penetrating questions to your
prospective clients. These questions "peel back the layers" and reveal the value they’re after.

Now, how you conduct the value conversation depends on your industry, your offer, and your
relationship with the prospective client. But here are some meaningful questions that
uncover value:

Imagine 12 months from today, you’ve achieved your goals and are thrilled with
your progress. Describe what your team/life/business looks like?

What is your number one priority for this business unit during the upcoming fiscal year?

What options have you looked at to achieve this…?

What is the main value you are looking for by doing X?

Is there anything you or your employees are doing that

may be getting in the way of achieving this result?

If you don’t fix it, how long can you manage and stay with things
the way they currently are?

Is there any reason you wouldn’t want to move forward implementing X …?

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When you’re asking these questions, don’t be shy to challenge the prospective client on their
responses. The more you dig, the more you can help them find the core issue - and the greater
the value you will be able to help them discover and enjoy.

In the next section, I'll share some examples of how consultants in our coaching program have
implemented these practices to raise their fees.

“Most people don’t know that the highest paying are usually the most courteous,
respectful and pleasant. And the people that you have to sweet talk into doing the deal
you have to keep sweet talking to keep them around. You pat yourself on the back
convincing them but then you have to convince them over and over again. It’s not the
game that any consultant should ever be trying to play”

Perry Marshall

Success Stories
For Raising Consulting Fees
You might be thinking, this all sounds great in theory — but where are the examples
of how consultants have implemented this successfully in their businesses?

So now, I'll share a few examples from participants in our Clarity Coaching program
on how they used value pricing to increase their fees and income.

Kristen’s Sam’s Damien’s

175% Fee Increase $250,000 Project 500% Gains

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1. Kristen’s 175% Fee Increase
Kristen Gallagher – the founder of Edify, a software and consulting firm for high-growth
tech companies – felt limited by her reliance on referrals and word of mouth. She craved
growth, but her efforts to connect with new clients had proven fruitless. That's when she
turned to our Clarity Coaching Program for help.

Upon joining the program, Kristen discovered that the key to raising her fees lay in adopting
the right mindset. She learned that sales were about adding value for her customers,
removing any hesitation she had about reaching out to new prospects.

In addition to the mindset shift, our coaching guided Kristen to increase the contract value
of her consulting projects. This crucial step, along with the program's support, enabled her
to restructure her fees and raise the price of a new client project from $20,000 to a
whopping $55,000 – an impressive 175% increase.

2. Sam’s $250,000 project

Sam Schutte, founder of Unstoppable Software, knew his company offered valuable
software solutions. But he struggled with low hourly rates and hours of unpaid work for
proposals that didn't pan out. Desperate for a more profitable fee structure, Sam turned
to our Clarity Coaching Program to help him increase his fees.

In his coaching sessions, Sam learned essential strategies to reach prospective clients and
overhaul his fee structure. He discovered the importance of targeted marketing,
productizing his services, and adopting an upfront fee structure, which eliminated the
problem of working on projects he never won.

These crucial changes allowed Sam to create more specific service packages, add ancillary
services, and, most importantly, increase his fees by an astounding 80%. This shift led to
more customers paying monthly retainers and closing big projects at significantly higher
rates than before. In one memorable case, he closed a $250,000 project – more than
double what he would have charged previously.

3. Damien’s 500% gains

Damien Wilpitz, founder of Experimental Design Consulting, knew his services provided
immense value to biomedical research scientists. However, he struggled to communicate

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that value effectively and charge what his expertise was worth. Seeking a solution, Damien
turned to our coaching program and community.

During the program, Damien learned to frame his value proposition, clearly conveying the
long-term benefits of his consulting solutions. This understanding enabled him to reverse
engineer his financial proposals and charge what his ideal clients would happily pay for the
value he provided. Additionally, Damien developed a mindset of confidence, crucial for
requesting higher fees.

By shifting from an hourly rate to selling the value of his services, Damien raised his overall
rate for projects from around $10,000 to between $35,000 and $60,000 – a remarkable
increase of up to 500% – while simultaneously reducing the number of hours worked per
project.

Kirsten, Sam, and Damien are no different from you.

They are entrepreneurial consultants who want to do great work for their
clients — and build an amazing business while doing so.

One of the most significant ways they were able to do that was through
implementing a value pricing approach.

In the final section of this guide, you'll get a 4-step action plan for implementing
value pricing in your consulting business.

“The number one thing is to avoid trading time for money. Focus on value and tie
it to the desired outcome. You never want to be considered a cost, but rather
should be viewed as an investment. I’ve found that taking a stakeholder role
is also rewarding and exciting.”

Elliot Begoun

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Take Imperfect Action
To Start Seeing Results
Are you ready to implement value-based pricing into your
consulting business, but not sure how to start?

Follow this action plan and try using value-based pricing on your next consulting project.

1. Practice the ROI mindset

Charging higher fees begins in your mind. Start by thinking about
– and communicating – the value that your work creates.

How can you use your expertise to…

Make money for your clients?

Help your clients achieve better results in less time?

Save money for your clients?

Save your client's time?

Boost your client's emotional well-being or status?

Remove stress and problems for your clients?

When you're hyper-focused on creating these forms of value

for your clients, it will be reflected in your pricing.

2. Ask meaningful questions

You cannot price based on value without first having the value conversation. And the
value conversation is built around deep, meaningful questions that uncover the value
your client cares about.

Asking those questions will help you and your client discover the results and outcomes
they are looking for. (Need some recommended questions to get the conversation started?
Take another look at the Pricing Best Practices chapter of this guide).

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3. Present strategic o�erst
With value pricing, you don't need to present only one offer.

Clients appreciate choice. Provide them with 3 options, each offering a substantially
different level of value, and priced accordingly.

4. Practice makes perfect

Like anything else, value pricing takes practice. You might not get it right on your first try.

But don’t stop.

You will get it to work – and when you do, you’ll find that you’re able to earn
significantly more while working fewer hours.

Value pricing is the best way to raise your fees and provide
greater results and value for your clients.

Now you know what consultants are charging in 2023 – and more importantly, you know how
you ought to be charging if you want to build a successful consulting business while creating
greater outcomes for your clients.

The Next Step For Consultants

Committed To Raising Their Fees
Since you’re reading this, I’m guessing you want to escape the hourly billing trap and start
charging based on the true value you create for your clients.

As you’ve learned in this report, the better you understand the value you create for your
clients, the more you can justify higher consulting fees.

I have a lot more to share with you about how to dig deep into uncovering the value your
prospective clients care about most… and how to create a fee structure and offerings that
will make your consulting business much more profitable.

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My team and I have developed a series of interactive learning experiences to help consultants
learn and master the art of value pricing (and the other critical aspects of building a thriving
consulting business in 2023).

I’ll invite you to join me in those as soon as they become available.

So please keep an eye on your inbox, and I’ll be in touch soon with
more resources on this topic.

Here’s to raising your fees and building the consulting business of your dreams this year.

To your success,

Michael Zipursky
CEO at Consulting Success ®

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