Sorry this is so vague but if you're an academic asked to do consulting work for a major corporation, how do you go about picking a fee? Any pointers would be appreciated #academicsky
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The key is recognizing the worth the corporation will derive from your consultation. As a general rule of thumb at this point in time base your fee on around $1,200 per year of experience you have accumulated multiplied by the number of weeks the consultation is expected to last.
Whenever people want to hire me for whatever purpose, my fee is always one million dollars an hour.
Sure I've not been hired yet, but hey you asked.
( this is a factual response, btw even though i personally find it funny )
A somewhat vague answer, but it’s much easier to lower your fee than to raise it. Don’t undersell yourself. They can always say “no.” And you can always counteroffer.
Through a little trial and error, I determined my sweet spot is between $350 - $450 per hour. Plus, client pays travel, meals and lodging. When consulting, you meet other consultants and quickly get a feel for going rates. I’m selective and only take on interesting and challenging work.
Generally it starts with a proffer followed by rounds of negotiation. There are no set rules other than what the client will bear. So it greatly depends on skill of both parties in knowing what they're worth...
I’d say you will end up around $500/hour, so aim at $1000 ($1200 so it looks like you really estimated it) and give them a chance to be happy about their negotiation skills.
I once asked a prominent attorney what his hourly rate would be for a weekend. He told me. So, when he needed my expertise, that's what I asked for- and I got it.
Ask colleagues. Add in insurance costs, personal expenses, tax burden, and then submit. You can always negotiate down, but rarely up.
Look at the value that you are creating for the corporation, considering everything that you bring to the table including formal education, special skills, and life experience. What is it worth to you to dedicate the time to them instead of yourself?
Alan Weiss' consulting guides, which may or may not be relevant here, strongly encourage a value-based project fee. The larger the profit for the corp, the more you can charge. Would need a lot of back and forth discussion with the people in charge and expectation/goal setting.
Estimate how much time it will take you to complete the work. Then double it. Then multiply it by an appropriate hourly rate.
Add in appropraite expenses, mileage etc.
Do not itemize this information in your quote.
I learned the hard way. I was approached by a major law firm to be an expert witness and off the top of my head came up with $50/hour, roughly twice what I was earning as an ass. prof. AN interesting experience, but I was told later I would have been taken much more seriously if I had asked for $100
Depends on the corporation. Find out what they pay their other subs per hour or per project, then determine whether you’re the same value add or not (adjust to your value add) and present a figure. Know that you’re probably worth about 5 times more per hour than the university would ever admit to
Professor in a European high-wage country -> my guess would be 170-200 EUR/h, though for some sectors (think banking/pharmaceuticals) it might be higher than that.
Yes, I'd think a grand or two a day is quite unexceptional by consultant and sales engineer standards. Reasonable to charge £500-750 just for a couple hours' work. A friend of mine in academia who speaks Klingon charged hundreds for consulting on that. The company's paying for /expertise/, not time
Just to add to that, this is about or a little lower than my rate, and I always charge by the day, since as an academic I can’t actually think “by the hour”—meaning not that I can’t divide a day into hours, but the cost of getting my head in and out of a project and on to the next is significant too
Ask as much as possible due to 2 reasons.
1. These big guys don't care about money.
2. The more you ask the more professional they think you are its dumb I know but works subconsciously.
I'm not a freelancer but I am looking to move departments and I said 'a silly number' and it wasn't silly enough. Could've gotten them to agree to like another 20% easily. You have nothing to lose!
Pick a number that seems absurdly high and then add 30% to it. Also, keep in mind tax obligations which make your take home after invoicing like 44% of what you invoice for.
My advisor was highly sought after for consulting. He picked what he thought was a reasonable fee, and he got way more calls than he wanted. So he doubled it. Still too many calls. So he doubled it again, and finally the amount of work he got was about what he wanted.
I feel you could start with your current salary from your institution. Be sure to incorporate bonus, healthcare and retirement additions to salary. Solve for hours and you have your baseline fee for estimating consulting work.
Compute your hourly pay based on your salary (dollars/2080). Raise that amount by about 15% because you will have to pay both parts of the payroll tax. I start there, so I make at least as much as I do on my day job.
Consider all the other costs in your employment- health care, pension contributions, union dues. That adds up to 5/4ths hourly wages. If the additional work is 1099, add 40% self employment tax.
Arbitrarily & high. If the number doesn’t make you feel like a fraud, you aren’t charging enough. In a different profession, my competitors were charging five times what I did. I tripled my fee and had more work than I’d ever dreamed. “If he charges that much, he must be good.” It makes no sense.
Not many Lawyers charge $1,000 per hour but Lawyers are also Doctors and yes, a lot of Lawyers did write a thesis or two AND treatises while studying for Juris Doctor credentials, followed by the MPT and Bar exams to become a licensed Attorney-at-law.
It might help to consider it like
[(the hourly wage for your work) x (the time the work will take as a whole including thinking process)] x (the uniqueness of your added value) x (responsiveness via phone etc)
It would be very useful to find someone on the buying side and ask them what the market price range is. Otherwise always base quotes on a calculation. Don't pull a number out of the air. Choose a fair hourly rate then calculate the amount for the work so that you feel more confident about it.
Thanks, Andrew. I have in mind a scenario where the buyer wants the benefit of 2–3 decades of highly technical training and domain-relevant experience. They wouldn't just pay for an hour of time, you know.
True. For very high value contributions you can charge a purely value-based rate. But from a psychological perspective I have found that it feels better when there is some element of calculation. It could also be measured in days, weeks or some other scale.
Don't just offer a single hourly rate. Give them two or three options to choose from and let them pay more for a better experience if they have a higher budget. For instance, you might offer a standard rate as well as a higher "expedited" rate to complete the consulting project sooner.
I've never charged less than $200/hour, and that was low bono. When I was in private practice, I'd charge anywhere between $350 and $1,000/hour, depending on the work and the client.
I can’t add much over what has already been said in terms of value
I would add - apply a DHT (Dick Head Tax).
This is applied as an estimate of a) how many unpaid conversations you anticipate
b) how much the conversations make you want to bang your head against a wall.
As a consultant I concur with the DHT approach and would add c) calling in a panic because he didn't bother to even read the last report's summary page until too late.
Hourly billing rate x estimated time to complete. Hourly rate should reflect level of input/expertise, value for the client, and maybe term of commitment. Longer term = usually lower hourly rate. Ask around among professional services firms/people you know what a proper rate would be.
When negotiating a fee, I always suggest putting one pinky finger to my lips and proclaim"one BILLION dollars", then cackling insanely. Never works, but then...
They hope to save money compared to big consulting firms. If it just a call or meetings for a few days you can pick the same as consulting. Projects have to come in under the budget allocated - usually less than consulting.
This is a good question, all of my suggestions are wacky like pretend ur the opposition and low ball them to see where it will go but good luck and I hope you make a ton!
Without looking at what you do: You are hired because of your specialized expertise and are most likely competing with the value a management consultant would bring them. A professional consultants would cost them >$200 per hour. You should be able to ask for 70%-80% of that as a minimum.
I assumed they seek out academics if and when they need something their regular cast of vanilla management consultants don't or can't offer, and that this might justify charging more? But maybe not…
Large consulting firms can offer a very large set of skills. But: Your skill might be hard to come by, OR they hire you to have your specific reputation on board in a project. In both cases, you can indeed go higher.
The possibility of reputational damage needs to be a factor, obviously, like if they plan on using your name in an ad campaign for a pyramid scheme or whatever…
Normally, it's a bit more boring: Whoever initiated the project wants to be able to say they hired the best experts. Academia types come with titles ("Prof.") that ooze reputation, and avoid the stigma management consulting has in certain circles. You get the best advice, and other people know that.
Consultant level, minimum of £1,000/day and that was from 8 years ago when I retired. Low level project manager contractors were getting £450 - £550/day. As a senior-ish PM I was charged out at £1,200/day by my company.
High. High, mate. banish imposter syndrome and see your hour with them as a culmination of decades of work. they owe you for that, not just your hour with them. In UK terms i might expect, depending on the company, between £250 to a thou an hour. Go for it. good luck.
Doing freelance journalism I'd generally charge an hourly rate, something like $200. Could be more or less depending on how much I cared about their cause. If I did a flat rate I'd base it off the hourly, +25% in case I went over my own estimate. None of these were rules, though!
No personal experience, but friends' experiences indicate to me that academics underestimate how much the corporation will pay. And if you come in too high, corporations are used to negotiating. So I'd recommend going with "ridiculously big."
Corporations in major metro areas pay their IT consultants between $100/hr for a semi competent body in a seat to $250 for someone who really knows what they are doing. If they are desperate for a specialized skill, they will pay whatever the consultant asks. Forget “academic”
Gelman gave me this advice which I thought was good: Pick an amount that you'd be ok with if they refused, but also that you'd be ok with if they accepted. (The advice seemed terribly obvious after the fact and I feel silly telling an economist this, but...)
I think it was useful for me because even though I *know* I shouldn't think this way, I still have difficulty with feeling like my labor has an intrinsic value that I must discover or calculate.
Here is what I do: I calculate my hourly wage (more or less accurately). I then double it. That's the price if the work seems fun and interesting. If it doesn't seem that fun, I triple or quadruple it.
Som f.d. konsult är mitt perspektiv att i många branscher faktureras i regel halv eller hel dag, om man inte har längre åtaganden över tid. 20tkr ex moms för halvdag och 30 för heldag kan vara en utgångspunkt.
Du vet säkert redan detta, men om inte ... Statens ramavtal ger max 1200/timme för ämnesspecifika konsulter. Det är ju alltså lägsta priset man tänka sig kan, för expertis som är lägre än den du verkar prata om. Kan kanske fungera som något slags referenspunkt? Menar alltså att du ska ta mycket mer.
Throw out a number much higher than you think you’ll get and let them know it can be negotiated. I’ve offered these positions before and academics always undervalue themselves by about $100/hour.
I charge based on the company’s know revenue. A start up or mom and pop? Flat fee based on the estimate of hours needed. Half upfront and maybe a taste of some shares. A Fortune 1000? $200-$800/hr.
Depends a bit on the level of effort. A smaller effort, say 10% FTE for a few months should be high. Depends on industry as well, but take the annual salary of that job, divide by 2000 to get hourly, then multiply 3 is a good start. My opinion.
What do they pay other consultants? Consultancy isn’t different if you come from academia or from construction. They’re paying for your expertise. Don’t undersell your expertise.
In addition to the other good comments here, find out what your consultant peers are charging. If you're really good, you'll be able to get 25% to 50% higher than their fees. I did a survey of my customers, and 25% said they would pay much more for the best. So, we became the best in our region.
The downside of my survey is 25% of our customers said they did not care how good we were. They were looking for the lowest cost alternative. We did not accommodate them, and after 5 years, they were no longer on our client list.
This might be an over-simplification, but I would ask myself what value do I bring to the corporation with this consulting work? I would say a minimum of $500/$600 per hour.
Self evaluation. What do you think you’re worth. Take that number and multiply by a minimum of 3. I used
To be a contractor and all my bids were either time and material or a minimum of 3x the material price.
Minimum….
Erik, major corporations routinely pay legal fees starting at 500 per hour for junior level attorneys. I recommend you ask for more than that to make it worth your while. Maybe 600 or so.
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Sure I've not been hired yet, but hey you asked.
( this is a factual response, btw even though i personally find it funny )
Ask colleagues. Add in insurance costs, personal expenses, tax burden, and then submit. You can always negotiate down, but rarely up.
Add in appropraite expenses, mileage etc.
Do not itemize this information in your quote.
Not for booze if you like a drink.
Tier Two: If the work is for good and not evil, then take the monetary hit to make a difference and be a role model.
1. These big guys don't care about money.
2. The more you ask the more professional they think you are its dumb I know but works subconsciously.
The right way to start a price negotiation is by saying the biggest rate you can possibly say without bursting out laughing.
It's worked for me when I've stuck to it.
They can always talk you down.
They'll seldom talk you up
Social pressures to under value our labor are significant and real
And when they refuse, point out that all their lawyers charge at least $1,000 per hour and have never been anywhere near a PhD thesis.
[(the hourly wage for your work) x (the time the work will take as a whole including thinking process)] x (the uniqueness of your added value) x (responsiveness via phone etc)
I would add - apply a DHT (Dick Head Tax).
This is applied as an estimate of a) how many unpaid conversations you anticipate
b) how much the conversations make you want to bang your head against a wall.
DHT from 20-300%
As a rule - small NGOs with a worthwhile mission = low DHT
Publicly listed companies = moderate DHT
Governments = DHT ++++
You’ll always work more than remunerated consulting, but it’s good to guess how much more
Triple that rate, and donate half to the charity.
(I find it easier to ask for more money when I’m also asking on behalf of a good cause 😊)
Minimum 500 hour consulting gig? My rate could be as low as $100/hour depending on the required deliverables.
So many factors in this type of work.
Ultimately case by case.
I've never had anyone balk at the price.
(lägst 1 130 kronor exkl. moms per timme)
Terrifying.
😱
... Look at the market for what you do.
Corporations pay much much higher than educational institutions.
To be a contractor and all my bids were either time and material or a minimum of 3x the material price.
Minimum….