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Rates for Consulting Services?
Hello! I’ve been offered a job doing consulting for a makeup manufacturer and I was curious what the pay range is for consulting work? I would be helping with product development. I’m sure the rates vary somewhat widely depending on experience level, location, etc. But really any feedback would be very helpful. Thank you!
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9 Replies
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You just have to figure out how much time the project will take and how much money you want to make an hour.
If you have a $100,000 a year job, that means you make $50 and hour. (2000 working hours in a year)
But you should also figure in benefits like health insurance, 401K program etc. If you worked at a job and made $100,000 a year your real compensation is probably more like $130,000 a year which is $65 an hour. Then there are business expenses like rent, equipment, insurance which could add another $10,000. So, if you see yourself as a person who should make $100,000 a year, you would charge $75 an hour.
Of course, some consultants would just double this figuring they won’t work an entire 2000 hours in the year.
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@Perry, where are those salaries? My stuff is already packed :smiley:
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@em88 - lol! When I started as a formulator back in 1992 in Chicago, my salary was $26,000 a year. 17 years later, my last year working for the same corporation, I was making ~$120,000 plus a number of incentive bonuses. I think the head of R&D at the time was making around $400,000 plus bonuses.
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@Perry god almighty! on this side of the Atlantic, you’d have to work in the sales and marketing department to earn that sort of money
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This is super helpful thank you! Does anybody have experience with contract consulting and those rates? As opposed to a full time position. Thanks again!
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@Bill_Toge - The folks in New York and California do even better. Of course, it costs more to live there.
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I doubt that many Consultants will share their hourly rate here. As one myself, my fees are structured to be competitive and as such are confidential.
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abbreviated from pm, but snippet posted because it might benefit some youngster.
-snip-
Depends on:- what your providing how technical (i.e. whats the supply vs demand like)
- how sensitive they are to failure e.g. value at risk (more sensitive = higher price),
- how sensitive they are to timing (hard deadlines, or short deadlines, = higher price)
- whether or not “padding” is possible (taking a cut on “subcontracted” services on the backend, billing out fluff hours etc),
- whether or not your performing “work” or consulting (doing research, presenting a finished product).
- and how many hours can be expected relative to a ‘reasonable’ schedule.
-snip-
I generally avoid padding (preferring to take my “wins” on stuff I already know how to do (or have done), and billing out at a fixed project rate (e.g. if I know it will take me an hour, and it will take someone else, eight, I negotiate eight-hours worth “per project” rate).- repost addendum-
client don’t care because his alternative, is eight hours of work of uncertain quality
if you need the full eight, its because you don’t know what you’re doing. Uncertain risk, vs certain cost. Certain cost, will win out.-snip-
the hourly rate, is cut a couple of different times (haircuts); so you really need to understand how to structure it, in order to make it work.-snip-
there are several haircuts:- once for administrative overhead (administrative cost as %/hours) - you can do this either for potential billable hours, or total hours
- once for utilization (how many potential billable hours you converted to actual billable hours) - low utilization, REALLY jacks up your “hourly rate”.
- once for discounting (how often you cut your rates) aka profit margin
- once again for taxes.
- once again for “billings collection rate”.
- repost addendum-
you can find approximates for each of these stages of haircut, fairly easily, or by estimating your cost structure, and plausible revenue. don’t pick unrealistic percentages; do discount for time off etc. realistically, hours worked, vs potential billable hours, vs actual billed hours, vs billable hours collected, is where the key variation exists. these numbers will change as you gain more clients and can be “more selective” in who you do business with.
-snip-
DO NOT, take low paying consultancy jobs. Its simply not worth your time. You’ld be surprised, at how much charging a premium rate, really changes your clients attitude to your time (and your expertise).This is a very common mistake for people starting out, but the numbers, are the numbers. And if you’ve gotten to the stage where you have SOME knowledge in order to consult (excluding shit consultancy jobs), you should be able to make a real living.
At the end of the day, you’re a line item. You’re not even an employee. You are a cost of doing business.
- repost addendum-
thats consulting in a nutshell.@Perry
good back-of-the-envelope explanation
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@Perry, in many countries in the EU the salary is less than half of what you got in ’92.
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