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How to Charge What the Market Will Bear
by John Rossheim


Summary
  • Don't set your contract rates in a vacuum.
  • Pricing data can empower you to raise your fees.
  • There's a downward price pressure in 2001.



    When it comes to setting fees for your consulting services, why not just round up the usual suspects and ask them? Because your friends are ignorant, your clients are sitting on the wrong side of the table, and you're likely to sell yourself short. What you really need to do is analyze your position in the marketplace and establish your rates accordingly.

    Lucky for you, we've rounded up some of the best sources of hard data and sage advice on going rates in various disciplines of consulting and freelancing. Prepare to surf your way to a bigger income.

    Information Technology

    If you're looking for the real deal on IT consulting rates, check out Realrates.com. The heart of the site is its survey of hourly fees reported by consultants as they consummate gigs. You can view the latest week's rate reports for free or download a year's worth for $25.

    In the field, consultants say that even in the superheated market for IT experts, the cooling economy is having an effect. "I'm feeling downward pricing pressure from my clients," says Margarett Langsett, executive vice president at recruiter Virtual Corp. in Flanders, New Jersey. When Langsett recently called an employer to ask that a contractor's $70 hourly rate be increased, the employer balked and said that new talent is being capped at $68 per hour.

    Business Consulting

    Business consultants are feeling similar pressures. "People are going to be hungrier for work," says Marsha Lewin, a Los Angeles–based technology strategist and author of The Overnight Consultant. "But it's not a smart idea to lower your fee."

    A better strategy is to build your best clients' loyalty to you by offering them a little something for nothing. Do this by performing a service and adding it to your next invoice as a separate line item with a big "$0" next to it. This way, when the demand for your services heats up again, you don't have to hit the client with a fee increase just to get back to where you started.

    For hard data on consulting rates, fork over $25 for the July 2000 survey by the Professional and Technical Consultants Association. One interesting tidbit from the survey: For consultants who have been in the business for at least five years, rates appear to be independent of length of experience. Consultants with five to 10 years of experience average $130 per hour; those with 25 to 30 years make $129 hourly.

    Journalism

    For trade and consumer magazine writers, the National Writers Union's media rates database is the labor activist's choice. The catch is that you must belong to the union to view the member-reported database; the sliding scale of dues is $95 to $260 per year. A more economical alternative is the classic reference Writer's Market 2001 and its companion Web site. Site subscriptions are $30 per year; the book-and-site combination is $50. Who pays $4,000 to $6,000 for a 3,000-to-5,000-word story? Travel & Leisure.

    Graphic Design

    The authoritative source on rates for graphic-design projects is Graphic Artists Guild Handbook: Pricing & Ethical Guidelines. The 10th edition of the book, published in March 2001, includes rate ranges for a wide variety of projects. For example, the suggested fee for a full-page color illustration for a medium-sized corporation's annual report is $1,500 to $4,000.

    Marketing and Public Relations

    Public relations professionals seldom find themselves at a loss for words. But that's the state that we induced when we asked the Public Relations Society of America for a resource on standard PR consulting rates. Rates were "basically way too messy for us to get into," due to geographic variation and other factors, a spokesperson told us. Other key PR organizations were also unable to help.

    The situation is similar in the field of marketing. Marcia Yudkin, a Boston-based marketing consultant who recently raised her rate from $150 to $200 per hour, does offer this advice: "People who have the confidence to charge more usually get more. When people do take that leap, they often find business picks up. They get higher-quality clients, and they're perceived differently."



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