Ask HN: How to Set Consulting Rate?
11 points
14 days ago
| 6 comments
| HN
I found a niche in New York and consult in the hospitality sector with a focus on the hospitality industry. I have a full-time job, but picked up two consulting gigs with a recurring income totaling about half my post-tax W2 income from my full-time job. I'm struggling to set my "consulting" rate. How do other consultants set their rate on here?
juneyi
14 days ago
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I've read, as a general rule, 2x what you'd be earning if you were in a salary position is a good place to start. You can then factor in reputation, demand, etc, and increase or decrease from there.

If it's extremely technical, I've seen 3x as a starting point and somewhere between 4x-5x in strategic positions at C-suite or similar level.

take it with a grain of salt as these are just baseline values. Everyone is going to greatly differ based on location, industry, level of expertise, $$ of value that it may impact. good luck!

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GianFabien
14 days ago
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By rate I think you mean $/day or $/hour. There is a more lucrative approach:

Charge for the value you deliver not the time it takes. E.g. you increased the client's sales by $500,000 for a net profit of $100,000 - charge $20,000. You saved the client $150,000 by doing something differently - charge $30,000.

When you consistently deliver measurable value to clients, you won't be staying in a full-time job for long. Consulting will be far more fun.

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brtkdotse
14 days ago
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Value pricing is just entrepreneurial fan fiction unless you happen to be in a niche where that is possible.

Run-of-the-mill dev work is not it.

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philomath_mn
12 days ago
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100% my experience. You would need a combination of the right project for the right client where the affect on bottom line is both observable and observed.

Most of companies who are considering a consultant are organizationally incapable of telling you how much money is saved or generated. On the other hand, most companies have a sense for how much an hour of work should cost and would be comfortable discussing the project in those terms. So you'd seriously be limiting your options if you focused on the former.

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b20000
12 days ago
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what an hour should cost…

in my experience this is based on nothing and might be based on what HR thinks which is irrelevant

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philomath_mn
12 days ago
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Not saying that is how things should work, but that is often the reference point for those making decisions on the client side.
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b20000
11 days ago
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yes and it is incorrect because as a business you need to carry the cost of doing business
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sloaken
13 days ago
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Well spoken.

I have had many jobs where they ask "How did you impact the business bottom line?" during annual review process.

Usually the only impact will be noticed at least a year after the evaluation.

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muzani
14 days ago
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Yeah, your rates are set by what the other guys charge. They won't pay $30000 when someone else is happy to do it for $100/hour and get it done by the weekend.
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porushpuri
14 days ago
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Very true
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kirubakaran
13 days ago
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Might be somewhat tangential, but I found this book extremely helpful:

The Secrets of Consulting : Gerald Weinberg

https://www.goodreads.com/en/book/show/566213

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gadders
13 days ago
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I can't believe this comment is 12 years old already, but here you go: https://news.ycombinator.com/item?id=4247615
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juneyi
13 days ago
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this is great information actually. much better and specific than anything else I've seen. thanks for sharing
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paulcole
13 days ago
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Whatever you’re charging now increase it by 25% on your next 3 leads. If all balk at the price, dial it back a bit, find a rate people agree to and repeat the process. If you get sales at the new rate, increase it again until people say no.

Or undercharge and underdeliver. That’s been my life’s philosophy at work. Hard to cut the guy who charges the least even if he’s just OK.

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nnurmanov
12 days ago
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My approach. IMO, people are better estimating monthly costs than hourly costs. Hence, set a monthly cost and divide it to 160 (hours per month with 5 days 8 hours and 4 weeks). You can add 30% or higher for any risks.
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