What's a good charge-out rate for a management consultant?

[LeRoux Strydom]

So I have landed a gig to do some local (SA-based) management consulting & due diligence work for a New York-based investment firm. What would be an acceptable charge-out rate to these folks? Would an inclusive flat fee or hourly rate plus expenses be more palatable? The target industry is resources/metallurgical.

TIA to the PPOT brain trust.

[RPKESQ]

I charge different rates according to the engagements contract. Make sure you have a contract that your lawyer has vetted.

On a no set period engagement I charge $250 per hour with expenses.

On an engagement that is contracted for 9 months or longer, I will charge a lower rate. If the work is really interesting I will go as low as $180/hr plus expenses.

[stomachmonkey]

When I do this kind of consulting I charge a daily rate plus expenses and travel time with a travel time being a minimum of 1 hour. Definition of a day needs to be stated in the proposal, 8 hours plus lunch or whatever you and client agree to.

I avoid flat fee's until I know a client well enough.

Some clients are buttoned up and flat fees are fair for both parties. Some have no idea, no plan, can't make decisions which kills you on the flat fee.

[Seahawk]

As others have stated, it depends on the contract and the type of work.

I often brief companies on potential UAS strategies and how they can penetrate the UAS market: $3k for each day, plus expenses.

On longer term consulting deals in DC I charge between $150 to $250 an hour based on whether or not I like the work or I feel there is long term profit potential: I'll, "buy-in" for the long term and charge less once the legal underpinnings are in place.

My company is small and we have a lot of great ideas (six total employees and growing): I just signed with another firm for some independent research and development work on a product my partner and I came up with. I agreed to $100 an hour since we keep intellectual property and management control: it is a killer app that I very much want to manage.

Once we get on a government contract, my hourly rate will go up, but I wanted a buy in with these guys so I made it work.

My advice is don't spook the heard but also assign a proper value to your work.

[porsche4life]

Dang Paul $100 an hour in retirement isn't bad.....

[Seahawk]

Originally Posted by porsche4life

Dang Paul $100 an hour in retirement isn't bad.....

Two kids in HS...start late, you'll need scooters late

I don't complain about a single thing. Plus, I like the work. Even though I don't fly much anymore, I make airplane noises in the car.

[LeRoux Strydom]

Thanks for the inputs so far, very valuable. The type of work will be market readiness assessments of a product and assisting management to close some deals. The client is considering a major capex investment in the industry via a local company they already own.

$3k a day sounds good but highish? This will be a short-term gig, maybe 2-3 months total.

[stomachmonkey]

Originally Posted by Seahawk

My advice is don't spook the heard but also assign a proper value to your work.

This is critical.

The value/quality of your work is often judged by what it cost.

You don't ever want to be the $25 lawyer.

You can be cheaper, for a reason, such as retaining the IP.

[stomachmonkey]

Originally Posted by LeRoux Strydom

Thanks for the inputs so far, very valuable. The type of work will be market readiness assessments of a product and assisting management to close some deals. The client is considering a major capex investment in the industry via a local company they already own.

$3k a day sounds good but highish? This will be a short-term gig, maybe 2-3 months total.

Don't know the cost of living in SA but that sounds high to me.

[Seahawk]

Originally Posted by LeRoux Strydom

Thanks for the inputs so far, very valuable. The type of work will be market readiness assessments of a product and assisting management to close some deals. The client is considering a major capex investment in the industry via a local company they already own.

$3k a day sounds good but highish? This will be a short-term gig, maybe 2-3 months total.

I work 15 days a year at that rate...very specialized, focused audience.

The rest of the time RPESQ and others, as well as my, advice applies for an hourly rate. Again, you might want to research the local market.

[LeRoux Strydom]

Oh, I know the local market very well. That's why I said $3k/day is high. I want to know what a New York-based investment firm might think is an acceptable rate.

[Hugh R]

I charge $200/hr for what I do on the side. $250/hr in NY seems very reasonable. I'll bet the lawyers are double that.

[Seahawk]

Originally Posted by LeRoux Strydom

Oh, I know the local market very well. That's why I said $3k/day is high. I want to know what a New York-based investment firm might think is an acceptable rate.

My bad...I should have figured you knew. But with what you're paying, me...

The NY firm will know the local price, best tweak your figure around that.

BTW, we had a SA Au Pair...she was as fine a young woman as they get. No issue with looking you right in the eye and telling you what was on her mind. Great young woman.

[MRM]

A couple of thoughts. You're dealing with a New York outfit, so you're probably expected to base your fees off of their rates with a geographic adjustment. For instance, when my firm does local work for a New York firm we charge the New Yor firm's midwest rates. You might want to call and ask them if they have a Pretoria rate. Considering you're doing due diligence work for an investment firm, your US rate would be $250 an hour, minimum.

I know corporations are used to their consultants working a daily rate. I can't figure out how that works for anyone unless the consultant is traveling and is getting paid a daily rate for doing the job as he is out of town, but apparently it does work. I'd strongly prefer an hourly rate in your position.

Another thought is to ask them what their budget is for the project - what they are budgeting for your expense. If it sounds right, you might agree to that as a flat fee, but otherwise I'd do it on an hourly basis.

Is there more work like this to be had? If so, as others have said, pricing is essential. You can't devalue yourself by being too low, but you don't want to price yourself out of the market. You don't want to be the Wallmart of consulting, and you aren't going to be successful charging like Saks 5th Avenue; what you want is to price like Target - the value brand. You pay a little more than you would at Wallmart but you get a lot more for your money.

[Willem Fick]

PM Sent.