Comments on: Tips on negotiating a great consulting rate

By: seo

seo — Tue, 31 Jan 2012 17:54:49 +0000

Thank you, I’ve recently been hunting for info about this topic for ages and yours is the best I’ve found so far.

By: ‘Cos I’m worth it’ « KindredHQ

‘Cos I’m worth it’ « KindredHQ — Sat, 14 Jan 2012 18:37:22 +0000

[...] The Single Founder – general advice [...]

By: Mike Taber

Mike Taber — Sun, 04 Dec 2011 17:05:06 +0000

I think my situation is a bit different in that I went into software consulting, even though I’m a person who can build my own software. If I had to do it all over again, I wouldn’t do it at all. Consulting can be great money but at the same time, the fact that I have the ability to build products which I can then sell to people. With software, I can put in the effort once and reap the rewards from what I’ve built for a long time.

I don’t know anything about medical marketing, but it sounds like a business where you would always find work. Personally, I would have wanted more passive revenue streams, but consulting isn’t like that. As a consultant, either you are making money or losing it. You can’t even go on vacation without knowing that you’re losing money. There’s always the risk that some of your clients don’t pan out.

If I had to think of some things I’d do differently, I can name a couple. First, I wouldn’t hire people until I had a very repeatable business model. Second, I would stockpile a lot more cash as quickly as I could while consulting. Third, I would try to do a better job of getting repeatable clients with smaller sales levels rather than a few large sales. The latter model means you’re constantly trying to find new work because your old clients don’t need you anymore.

By: Jamie

Jamie — Sun, 04 Dec 2011 15:38:46 +0000

Dave,
I am just starting my business as a medical narkrting consultant. I am very excited about my decision and am now beginning to nail down all the ins and outs of the business. Although I have been in medical sales for nearly 20 years this is my first step into consulting. I have no doubt I have the knowledge, but I am concerned about self-employment. It takes on a full set off issues I’ve never had to deal with, self employment, health care, etc. I am seriously considering speaking to a physician who has an enormous amount of ability and drive for growth and asking to become a permanent member of his staff as basically his marketing department. I could see it lasting a s long as five years pretty easily, and possibly morphing into something even more challenging down the road. Mark my words someday the entire medical community will know of this guy. I guess my question is I am taking a leap of faith, but have you found that through it all it’s been something you would never change. If you could go back and change something what would it be?

By: Dave

Dave — Fri, 14 Oct 2011 21:46:55 +0000

Thanks for the tips. Still relevant two years later!

By: Mike Taber

Mike Taber — Fri, 23 Sep 2011 20:09:27 +0000

You might ask some leading questions as to whether they’re interested in renewing the contract. The fact is that good people are hard to find. If you’re decent at what you do, they will be reluctant to let you go for a few dollars more to take a chance on the next guy, who could be all over the map. You also have experience working with whatever it is at this point, so asking for more money isn’t out of the question. It might be out of their budget, but you won’t know unless you ask. The thing to be careful of is making sure you’re not trying to be greedy. Some simple justifications may be in order, such as looking around a bit to find other things that are either more interesting, or if you’ve talked to some recruiters and they’ve told you that you can make more money doing other things.

So long as you broach the subject with respect for their position and yours, they generally can’t complain. If they want to renew, the worst outcome you could expect from asking for more is that you don’t get it. If you do, then you’re making more money, plain and simple. If not, then you’re making the same as before. But I would certainly keep my options open if you think you can command more based on your experience. As I said, just don’t get greedy. People sense greed and it will rub them the wrong way.

By: Luke

Luke — Fri, 23 Sep 2011 04:41:33 +0000

Excellent read. I recently started negotiating a long term contract with a new client. I’m nearing the end a trial project with the client and so far the client is happy with the work. However, the final outcome will of course play heavily on the clients overall outlook. Do you believe it would behove me to hold off negotiating a long term contract until the end of the trial run, if I believe it will end on a positive note? Or should I attempt to sign before the final results of the “trial agreement”, knowing the client is obviously interested in retaining my services at this juncture since they’re already sitting down to talk a longer term relationship.

By: Greta

Greta — Wed, 11 Aug 2010 22:01:06 +0000

Thanks for the invaluable information! I am selling my business (a food processing establishment). The new buyers want to hire me to consult with on a short term basis to set up their new facility and train them on the equipment/processes etc. An engineer by trade, I have never consulted and feel a lot more confident now in making demands rather than selling myself short.

By: Thomas

Thomas — Tue, 25 May 2010 16:46:20 +0000

Thank you for the informative response. I failed to mention that they paid for some client-requested training, based on my agreement to repay them if I didn’t stay 6 months after the training. I know. Bad move on my part. I’m learning the hard way, here…

I will have to wait until July to ask for the raise in order to actually have the leverage of possibly leaving. I’m not sure I could stick to my principles and be willing to pay back the $3k for leaving before the 6 months are up.

Thanks again, Mike. Your insight and openness have been invaluable to me.

By: Mike Taber

Mike Taber — Mon, 24 May 2010 23:44:56 +0000

Personally, I wouldn’t wait. I’d use this as an opportunity to say “Hey, if the client finds me to be so valuable, then I think I deserve a raise for sticking around through December because nobody consulted with me about whether or not I even wanted to stay.”

If you don’t address the situation now, you’re going to be a less than stellar employee for the next 6 months and feel as though you’ve been taken advantage of for the entire time.

I would come up with some solid facts about why you deserve the raise. Cite things like your work ethic, the fact that you’re a known quantity now, as opposed to a risk of hiring someone new, etc. Obviously, having another job opportunity certainly gives you additional leverage.

But I think I’d definitely bring up the fact that you hadn’t taken into consideration the additional expenses of SE Taxes, medical insurance, etc. As an independent contractor, generally you should be able to walk whenever you feel like it. Make sure you have a definitive number in mind when you ask and just say “$36/hour would make me happy.”

If they do it (and I suspect that they will), then great. If not, find something else. You’re not doing yourself any favors by sticking around.

As a last ditch effort, you could simply ask the customer if they would consider hiring you full time. Typically, with contract agencies, there’s a policy in place that states the customer is required to pay $X if they hire a contract worker directly. Sometimes it’s a fixed dollar amount, other times it’s based on the rate, and occasionally it’s based on the cost of finding a replacement. However, it might be barred completely.

Given the discrepancy between what your salary is and what the contract agency is making from you, it might be worth it for the customer to break that contract and hire you directly. They’re not likely aware that you’re being paid so little, and if they were, they probably don’t realize that you’re paying your employment and medical insurance yourself.

The numbers you threw out (at least to me) seem too far out of whack to justify. Someone is making a killing and for you to ask for an extra $6/hour is very little for a sales rep to give up as opposed to going completely without while they find a replacement, and then risking the inability to find someone the customer likes at a similar price as what you are being paid.

It’s not unusual to pay 2X salary for a consultant. What is unusual is to pay 2X salary for an independent contractor for a 6 month basis. Really, it should only be 1.5x at the most because the money and income is basically guaranteed to the agency.

I think if I were the customer, I’d be really upset if I learned I was paying 2x what the person working for me actually costs. There’s something to be said from their standpoint for flexibility on a short term basis, but for a lengthy contract, that’s just not right.