What are you worth? Figuring out the fine art of setting fees
Colvin, who runs Safety Training Dynamics in The Woodlands, Texas, with his wife Rosemary, says you should feel comfortable charging between $60 to $100 an hour for safety and health services.
The $100 standard is more common in urban areas and when working with government agencies; the $60 range is typical in middle America, he says. But the pay scale is really broader than this range, stretched by consultants with widely different goals. Colvin knows one certified safety professional, newly retired, who charges $25 an hour. "He just wants something to do, and he’s just out to cover expenses," explains Colvin.
At the other end of the spectrum, Colvin describes hard-charging consultants doing environmental business with foreign governments who pull down $150 to $175 an hour. "There’s money to be made; it’s a matter of what you want to do to get it," he says.
For starters, one thing you shouldn’t do is just arbitrarily pick a fee that you think is the industry average, or reflects what you paid consultants back in your corporate days. This is the most common mistake Colvin sees when it comes to deciding fees. "People set fees without justification, with no rhyme or reason," he says.
Actually, you should weigh a variety of factors when setting fees. Colvin offers these considerations: ·
- What’s your reputation? What kind of name recognition do you have through writing, speaking, or networking in an industry or professional association? Keep in mind your name may be worth something locally, but not if you try expanding your market beyond your home base. ·
- You can’t ignore the going rate for consultants. "You can’t be out of line with the competition," says Colvin. So how do you discover what competitors are charging? Network, network, network, says Colvin. ·
- The size of your potential customer naturally comes into play. Small businesses just don’t have any money, says Colvin, while Fortune 500 companies have the deep pockets, but remember, "they’re more demanding," he says. ·
- Itemize the expenses that you need to cover. Overhead can run the gamut of everything from business cards and office furniture to your line of credit and the money you pay accountants, attorneys, and marketing consultants.
What about charging for travel? It depends, says Colvin. Some companies have a hard time paying you to sit in an airplane, he says. If you’re giving a one-day out-of-town workshop, for instance, he suggests billing the client for three days of fees (covering two travel days) without getting into travel specifics. ·
- What’s your income goal? If you want to maintain that $50,000 or $90,000 salary you had in your industry job, use that figure along with your expenses as a starting point for determining what your fees must cover over the course of a year, says Colvin. ·
- Is your area of expertise a hot button issue? Right now behavioral safety is hot. A few years ago it was ergonomics. Before that, asbestos abatement rode a wave of interest -some would say panic. "If you’re at the right place at the right time, it’s almost like naming your fee," says Colvin. ·
- Speaking of location, where is your market? Colvin says "you better believe" fees vary around the country. ·
- Another obvious consideration is experience. The difference between 25 years and five years in the profession is worth something, says Colvin.
Put all these factors together and you still can’t arrive at a hard and fast fee, says Colvin. He often comes in with three bids: The "Cadillac" option that covers everything; the bare-bones bid that’s basically a wham-bam canned program; and something in-between.
When it comes to negotiating, it has to be a "win-win for everyone," he adds. "You can’t expect one guy to take a beating." Along these lines, Colvin says you shouldn’t sell yourself short. When a potential client calls, don’t just be grateful for their interest, but seize control of the situation, ask about their budget and explain your fees, he says.
Don’t undervalue your time, either. For a half-day job, Colvin charges three-quarters of his day rate because "my day’s pretty much shot."
One more bit of advice: Don’t low-ball customers just to get your foot in the door, expecting to make money by lengthening the project once it’s yours. "That catches up with you," says Colvin.