Pricing structure

We recently asked over 25,000 consultants about their approach to pricing and fees as part of our 2017 Consulting Fees Study.

Below you’ll find the results from our survey as well as my commentary and observations.

The most common pricing structure and approach for consultants is project based pricing.

However, when you combine hourly rate and daily rate pricing (both are often, but not always, driven by number of hours involved) the ‘Hourly’ driven approach has the majority at 41.3%.

Consulting fees based on a monthly retainer equal 15.1% of the total.

Average Project Value

43% of consultants who participated in the survey earn $5000 or less per project.

About 15% earn $5,000 to $10,000 per project.

13% of consultants earn between $10,000 and $20,000 per project.

13.9% of consultants charge on average between $20,000 and $50,000 per project.

8% of respondents charge $50,000 or so per consulting engagement and about 6% charge over $100,000 per project.

A whopping 80% of consultants would like to earn higher fees. While about 20% are happy with that they are currently making as a consultant.

Annual Consulting Income

The chart represents monthly income.

Almost 50% of all consultants who responded to this survey are earning less than $60,000 per year as a consultant.

However, 22% earn up to $120,000 per year and 20% earn up to $240,000 per year.

A minority of this group currently earns between $300,000 and $1.2M or more per year.

Consulting Profit Margin

54% of consultants run a high margin and usually very profitable consulting business and enjoy a 60% or greater margin.

The largest single majority, at 25.5%, enjoy an 80% margin or better. Few businesses have such a great margin.

About 22% of consultants run their consulting business at a 30% or lower margin.

Consulting Experience

23.7% of consultants have been consulting for over a decade. 35% or so have been consultants for over 7 years.

Close to 40% are new to consulting and have been consultants for less than two years.

Location of Consultants

A large majority, almost 60% of all respondents are based in North America.

While Europe, Asia and Africa being the next largest with about 33% collectively.

Deeper Insights

The next thing I did was look deeper into the data and cross-reference different categories. Here are some additional insights for you.

Consultants earning over $20,000/mo are split almost equally between project based fees and hourly and daily rate pricing structure. This is the same for consultants earning $10,000/mo or less. On question we’ll look at in a further study is “The intensity and number of hours worked to generate a certain level of income.” I believe we’ll see consultants using a project based fee approach will conduct their work with more freedom, flexibility and less time intensity.

While consultants who try to figure everything out themselves and don’t take the time to really learn how to grow their business the right way or are not committed to consistently implementing are the ones that struggle.

Another interesting finding is that many consultants are earning well into six-figures in their first 1-2 years as consultants. And this study showed that there are plenty of consultants who have been consulting for over 10 years and yet still struggle to create a high-level of income.

Why?

My observation from coaching and working with hundreds of consultants is that those that focus on their marketing and have a clear plan of action are the ones who most often reach six-figures, then into mid-six figures and then create million dollar consulting businesses – and this can happen quickly.

While consultants who try to figure everything out themselves and don’t take the time to really learn how to grow their business the right way or are not committed to consistently implementing are the ones that struggle.

The consulting industry continues to grow as we see the number of consultants who are new remains strong.