INTRODUCTION
One of the greatest challenges facing those new to independent practice is deciding how much you’re going to charge your clients for your services. You don’t want to price yourself out of the market, but at the same time, you don’t want to undervalue what you do either.
A good starting place for independents is IABC Toronto’s Salary Survey which includes independent/self-employed hourly rates. IABC Toronto members can download a copy of the results from the IABC Toronto website (http://toronto.iabc.com/) in the Resources section under ‘Career Development’.
Talk to colleagues who are independents, offer similar services, and cater to a similar demographic. This can help you to better determine whether or not the fee you are considering is priced above, below or at the same market value. If you’ve recently left the employ of an organization that is within the market you are targeting, talk to someone you know in the company who can tell you what they currently pay for consultant services in your field.
Many independents often under value their worth, particularly when they are first starting up their businesses. The fear of quoting a price that is higher than prospective clients are willing to pay, frequently results in new independents quoting lower than their counterparts. Be comfortable with what you are charging based on research you’ve conducted before setting your fees. Independents can set their fees in any number of ways:
- by the hour
- by the day
- by the project/assignment
- on retainer
The most important thing to remember when setting your fee is that it should reflect more than just the time you spent completing the assignment. Take into consideration your overhead costs as an independent practitioner (i.e., marketing/advertising your business, equipment and supply costs, professional development).
When confirming an assignment with a prospective client, don’t forget to build in an agreement on additional expenses that will be covered by the client over and above your service fee. This may include things like expenses for parking, photocopying, printing, long distance phone calls, stamps, meals, etc. depending upon the nature of the assignment and what services you are providing. If you don’t specifically outline what additional expenses should be included over and above your fee, the client may assume that these expenses are encompassed in the fee you quoted.
Retainer
A retainer is a set fee charged for professional services and can be offered as an alternative to a client with whom you do regular business. The retainer usually reflects a monthly fee based on the anticipated number of hours of service that will be needed by the client. Commonly used in the legal profession, retainers are a deposit against which the lawyer’s fees are charged as they are earned. If a client has agreed to a retainer fee for a monthly period and the time is not used, often the fee is non-refundable (i.e. you expect to be paid that month whether they used the complete allotted time for the retainer or not). If you wish to pursue a retainer arrangement with a client, ensure you have a contract that outlines whether or not the client is obligated to pay the full retainer amount if indeed not all the time is used. Likewise, if the amount of time a client needs your services surpasses the monthly time accounted for in the retainer, negotiate up front whether this time is logged within the following month or whether you can bill for additional time used beyond the time agreed to in the retainer.
Contracts
It’s a good idea to draft a contract between yourself and the client that clearly outlines what the expectations are for completing the assignment. The contract may include information such as:
- scope of the project
- specific tasks to be completed
- deadlines to be met
- commitment of both the consultant and the client
- expectations regarding regular progress updates
- payment fee (hourly, daily, project-based, retainer)
- additional expenses
- intellectual property
- non-competitive agreements
- confidentiality agreements
- agreement as to what constitutes termination of the contract by either party
- signatures of both consultant and client
Women and Setting Fees
According to a 2006 article in The Globe & Mail, women entrepreneurs tend to shortchange themselves when it comes to setting fees in their own businesses. Reporter Paul Lima notes that women typically charge less for their services than their male counterparts, and typically generate less revenue. The results were based on a 2004 CIBC Small Business Outlook Poll which surveyed Canadian small businesses with one to 15 employees.
Tracking Your Time
Once you know how you’re going to structure your fees, your next challenge is figuring out how you’re going to track your time. Some clients like to receive detailed accounts of the time spent on their project attached to your invoice. It’s easy to get so caught up in your busy work day that you forget to track your time. This could lead to lost paid hours if you can’t recall how much time you spent on what activity.
This becomes even more challenging if you are working on multiple projects at the same time. Be sure to settle on a time management and tracking system that works for you and for your clients. Whether that means tracking your time in 15 minute intervals, ½ hour intervals or hour intervals, be consistent with your approach from one client to the next and decide whether you will be using a manual or online tracking system or a combination of both.
Website Resources
There are several websites that provide independent practitioners with information on setting consulting fees.
Consultant Journal - http://www.consultantjournal.com/blog/consultant-fee-sticker-shock - This website features a blog that covers the topics of ‘What Consulting Fees Cover’, ‘Consulting Fee Rates’ and ‘Sample Consulting Invoice for Consultants’.
Professional Writers Association of Canada (PWAC) - http://www.writers.ca/whattopay.htm - This website offers a comprehensive guideline as to what freelance writers should charge for specific types of writing including advertising material, corporate/business writing, editing, ghost writing, government writing, newsletters, online/website writing, periodical writing, scripts and speech writing.
The Copywriters Coach - Sales catalyst and copywriter’s coach, Chris Marlow - http://www.chrismarlow.com/chris-marlow-articles.html - , features a three-part article on ‘How to Set Your Copywriting Rates’, as well as articles on ‘How To Price A Job Correctly Even When You’re Stumped’, and ‘How To Stop Leaving Money on the Table and Get Paid What You’re Worth Every Time!’.
Zeromillion.com - http://www.zeromillion.com/entrepreneurship/be_ruthless_about_your_time.html - Article: “You Gotta Be Ruthless About Your Time (How To Get It ALL Done)
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