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How to Find the Best Consultant for Your Business at the Right Price

  • Dr.Tayfun Aykaç
  • May 20, 2021
How to find consulting prices

Wouldn’t it be nice if you could send out a bat signal for a project and only the right candidates responded – and all in the same price range? Unfortunately, in the real world, finding the right-priced consultant with expertise in your industry can be challenging. 

And in today’s fast-paced economy, independent consultants play a significant role in helping businesses stay nimbleMany consultants provide industry insights or bring a fresh perspective to an existing challenge. Experienced consultants can recommend strategies, educate about new markets, and help with execution.

But consultants in the marketplace come with a wide range of skills, qualifications, and prices. Consulting fees can vary – even within an industry and area of expertise. 

As a busy executive, how do you compare consultant prices and find the best consultant for your industry and project, locally or globally?

Follow the steps below to find out how much to pay for a top independent consultant. 

Time and Materials-Based Consulting Fee

Most consultants charge a daily or hourly rate. Travel expenses, print collateral, or other expenses are separate costs based on a rate card. This is known as a time and materials-based fee

What’s right for your project and budget? 

1. Know the Market: First, find out how different consultants price their services in the marketplace. Learning the average consulting rates by industry and function can help you hire the right people. 

2. It’s All About the Baseline: Estimate how much you would have to pay one or more full-time employees to do the same job. Include the following costs to arrive at an accurate number: 

  • Base salary
  • Total benefits 
  • Onboarding costs
  • Training and upskilling requirements
  • Certification costs (like Six Sigma)
  • Bonuses and incentives payouts (if any for the role)
  • Vacations and leave allowances.

Remember, some senior roles need higher-level security or regulatory clearance. Some hires add to your company’s risk profile. These are added costs. Factor in if applicable.

3. Get a Ballpark Figure: Let’s face it. You may not have the time for so much detail. Estimate how much a full-time employee would cost to do the same job using their base salary. You will get a ‘back of the envelope’ estimate. Assume 40 hours per week and four weeks in a month for working time.  The number of working hours = 160 hours/month. Your employee hourly rate estimate = (Annual Base Salary/12 months) / 160 hours.

A good rule of thumb is that the cost of a good consultant is 2 or 3 times the salary of a full-time employee in the same role.  

If your consultant charges a daily fee, estimate 8 hours of work in a day to calculate the hourly rate.

4. Calculate Total Project Cost for the Consultant: Figure out the realistic amount of time to execute your project. Use personal, professional, or online consultant networks to find an expert project manager for help. 

Your total project cost = (Consultant price per hour or day *Number of Consultants*Number of hours/days required) + Total cost of materials or expenses.  

Types of Consultants Who Use Time and Materials-Based Fee

In the consultant marketplace, a time and materials-based fee is the most common type of fee structure. 

Industry Experts or Subject Matter Experts (SMEs)

What if you know how to solve a problem but do not have the in-house knowledge to do it? An industry expert or Subject Matter Expert (SME) can come to your rescue. These consultants bring years of domain and functional expertise to your project.

Industry Experts or SMEs can: 

  • assess your readiness, 
  • advise on market positioning and pricing, 
  • prepare regulatory submissions
  • help you flag and address potential issues beforehand.

For example, take the capital-intensive, regulated automotive manufacturing industry. There is a big drive towards sustainability and smart cars. Disruptions like car subscription services threaten to transform entire business models. An expert automotive consultant can help you stay competitive.  

Project Managers 

Many companies hire external project managers for large-scale or cross-divisional projects. Good project managers must be excellent relationship-builders and target-oriented achievers. 

Flat-Rate or Fixed-Price Consulting Fee

Most likely, if you’re paying a flat rate, the project is a one-time deal. However, fixed-fee project scopes can be more complex, fluid, and less defined. 

To figure out the market price, send a request for proposals to multiple consultants. If this is your first time working with a specific category, solicit bids from top-tier, mid-tier, and low-tier consultants. Or compare profiles and fees of top consultants using our pricing tool to get a sense of the average daily rate of an independent professional based on their industry or functional expertise. 

Types of Consultants Who Use Flat-Rate Fee

Consulting Firms 

Management consulting firms often charge a flat rate or fixed price for their services. Engaging a top management consulting firm like McKinsey may be the right move when you need to justify large-scale cost optimization or transformation programs, restructure your organization, or execute rounds of employee layoffs. 

KPMG, PwC, or Deloitte are top contenders for financial and tax services. They frequently audit deals and finances and provide an auditor’s stamp for mergers and acquisitions (M&A). 

You need a management consultant if you do not know the exact problem your company faces, the solution to your issues, or lack the in-house expertise to solve it yourself. 

Management consultants are skilled problem-solvers that help:

  • set vision and strategy, 
  • offer pricing consulting,
  • develop five-year or ten-year business roadmaps
  • assess and identify issues in your company before recommending solutions. 

Sometimes as a client, you pay a flat fee for their expert advice and guidance. The firm will factor in time for a senior partner and 2-3 consultants on the back end. 

Top global management consulting firms can easily charge millions as a fixed fee for a project. 

Independent Consultants 

Independent consultants often prefer the time and materials-based fee structure. But, those who are go-to experts in their niche can be in high demand. They may charge a flat fee instead of an hourly or daily rate. 

Why hire an independent consultant?

The main benefit of working with independent consultants is that you have access to on-demand, flexible support tailored to the specific problem you are trying to solve. Most independent consultants are also hands-on when tackling projects and have an entrepreneurial mindset. They know that true value comes from building strong relationships and trust with their clients. 

As seasoned professionals in their roles and fields, independent consultants bring years of experience to the table – without the hefty overhead. For example, consultants in the COMATCH network have an average of more than twenty years of experience.   

Their value lies in the quality of their insights.

Think about it. 

A senior oncologist may offer an accurate diagnosis much faster than a student in medical school. Which opinion carries more weight? Most people would value the expert’s advice due to their experience. 

Creative Consultants 

A flat rate is standard for branding, design, and other creative jobs. Here, you pay for the creative output: brand identity, logo, advertising campaign, website, or other. Execution of a campaign is billed separately. 

Retainer-Based Consulting Fee

Sometimes, clients need a steady stream of deliverables over a longer time. Work usually averages out over the contract period. These projects can take a few months, a year, or more. 

Sometimes, you can negotiate a discount based on the consultant’s regular hourly or daily rates. This is a fair ask because you will engage them for a longer time. Retainers give you a predictable spend per month to plan your budget better. Any consultant can charge a retainer if the work extends over many months.  

Milestone-Based Consulting Fee

Sometimes consultants are engaged to help with project implementation. If the project is more complex and takes longer to complete, a flat-rate fee structure may not work. You and the consultant can fix a price based on achieving mutually acceptable project targets/milestones.

Success-Based Consulting Fee

Success-based consulting is a risk-sharing model. This means your consultant has skin in the game. A portion of their fee is tied to the success of the project.  This fee structure works best when metrics to measure success are crystal clear, i.e., sales, cost savings, ROI, employee engagement. Since consulting fees are tied to outcomes, you and your consultant must define what the “success” will look like. Otherwise, this type of model can lead to conflict after the project concludes. 

A digital marketing consultant may take 5-20% of your total digital ad campaign spend in addition to a flat fee to design the campaign. 

You may hire a supply chain consultant to help you cut costs. They may also take a payout based on the percentage of savings on top of a flat fee for initial analysis.

Conclusion 

Hiring an independent consultant can feel like an expensive leap of faith into a dense fog. Qualifications, consultant prices, ability to execute, certifications, references, and prior wins play a big role in finding the right person for the job. But consultants price their services in a variety of fee structures. An apples-to-apples comparison can be hard. 

Based on your project, you will have to figure out the right type of fee agreement with your consultants. The most common ones are time and materials-based fees, flat-rate, or retainer models. Others include milestone-based or success or performance-based fees. And fear not. The good news is that if you need assistance with figuring out what and how to pay consultants, there are consultants to help you with that as well. 

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