Consultancy, and how to set fees.

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Maharg123

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Hi All, Can any of you offer me any advice? If you saw my "Introduction" post yesterday you will know a little about me.

I'm looking for advice from someone who has experienced or has knowledge of, setting fees for consultancy services.

My wife and I have been preparing a new business for the last eighteen months (and beyond). This doesn't mean we've been doing nothing, it just means that we have been in the 'beginning' process and the business is now evolving and taking shape. In the early stages, the focus was on providing a physical service, which is easier to set a fee for as people can see something tangible for their money.

Here's my question,

However, as we move forward we believe there will be many situations where the client will be paying for our advice, rather than our actions. The business is aimed at the property / furnishings market. Whilst we have easily been able to set fees for products and work we have carried out, we're unsure how to add in a fee when our contribution to the project has been purely advice and guidance. We think that in our location (which is Southern Spain) it would be difficult to hit people with a fee-based upon just our verbal input. Even though, we know that without our input their project would not have got off the ground, let alone be completed.

Our gut feeling is that if the fee were added into the cost of product and installation, it would be quite acceptable by the client. However, as a stand-alone fee, they may well balk at it.

Has anyone got any advice, please? Have any of you had dealings in this matter with the English speaking communities of Spain?

So, the ultimate question, is how do we get our value in payment without the customer saying "But you didn't do anything?" Maybe I'm being too cynical, forgive me if that's the case but I truly have no history in this field so it's hard for me to judge at this point.
 

djbaxter

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1. Consulting is often just that: offering advice to a client based on your knowledge and experience. "But you didn't do anything." "Yes I did. I gave you good advice based on my knowledge and experience gained over many years."

2. The fee will probably vary depending on several factors, including the type of consulting, your qualifications, the prevailing fees charged by others in the field, how saturated the market is for your type of consulting, etc. But basically you need to weigh those factors and arrive at an hourly rate which will be your set or standard fee. For larger jobs, you might think about offering a flat fee rather than an hourly rate (that's basically what I do).

3. Again depending on your niche and your circumstances, one thing that helps is to keep your overhead as low as possible which in turn may allow you to undercut your competitors and still make a profit. If you don't need a big fancy office don't for one. If you are able to operate out of a home office, do that instead. Find ways to advertise that don't cost an arm and a leg. Find ways to save on office expenses, like using Vistaprint instead of more expensive brick-and-mortar printers for your business cards and stationery. Do an inventory of what you actually need to offer quality advice and services to your clients instead of what big corporations suggest you need.
 

Maharg123

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Thanks for taking the time to respond djbaxter. I take on board all of the points that you have made and certainly understand their validity. However, they don't really attend to my real question. Possibly I am slightly blinkered by my location ( on a mountain top in rural Spain). However, it's how to justify the cost in the client's mind is my issue. I know if the cost was absorbed into the final amount it would be fine, it's itemising it is the problem.
 

djbaxter

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Doesn't my point #1 address that?

Alternatively, why do you need to itemize it at all if it's a standard part of your service? Perhaps the problem is how you're structuring your invoices.
 

Julia Sta Romana

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My aunt and uncle have a consulting business and I have asked about this before. I don't know if this would apply to the type of consulting that you do but what they do with their consulting services include:
  • needs analysis (on-site visit)
  • verbal consultation
  • written plan on how to implement the advice they provided
  • consultation (on-site and online) during the implementation process
  • monitoring up to 6 months after implementation to ensure that the desired results are achieved.
They're usually paid on retainer for ongoing projects or for one time projects, they usually provide charge based on the expected costs on each of the activities mentioned above.

Hope this helps.
 

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