It is important when setting your consultancy rates and product prices that you do some market research and see what similar services and/or products are selling for. The market rate/price will be your jumping off point. This rate/price should be adjusted for any extra value added services that you have applied to the products or services.

contractor rates

Consultant fees are based on the time, skill, expertise and knowledge required to complete each engagement. As each engagement is unique, it is sometimes difficult to predict the total cost of an engagement. However, consultants can provide an hourly rate and fee estimate once they have consulted with the client and obtained sufficient information on the nature of the engagement, the records available, and the overall organization of those records. If the client can provide organized records then they can minimize their fees.

Generally contractor fees are billed on an hourly (or charge-out) rate, and the hourly rate applied may be unique to each engagement, depending on the nature of the work and the consultant(s) preparing the work. The charge-out rate is established to cover such costs as professional memberships and dues, professional liability insurance, professional development fees and courses, professional library of software and research materials, wages, office overhead, and the like. Consultant fees are also subject to goods and services taxes such as GST (Canada). Unless agreed upon previously, the invoice for services rendered is generally due upon delivery.

In addition to the fees, disbursements may be added to the invoices. Such disbursements may include long distance phone and fax charges, courier charges, travel costs or other professional fees. These other professional fees could include fees invoiced from other consultants who may provide specific and expert services related to a particular engagement. Such services would be agreed upon by all parties before they are initiated.

When doing your rate calculation keep in mind that many items normally covered by employers are the responsibility of the consultant. Some component costs of a consultant's billing rate are:

1. Salaries of professional staff, secretaries, drafters, and technical aids;
2. Sick leave, vacation, and holiday pay;
3. Office and drafting supplies;
4. Printing and copying;
5. Travel (auto and other);
6. Postage, freight, overnight delivery services;
7. Telephone and telegraph;
8. Equipment purchase and/or rental;
9. Office rent;
10. Building and property maintenance;
11. Utilities;
12. Legal services;
13. Accounting services;
14. Technical publications;
15. Newspaper and magazine subscriptions;
16. Professional dues;
17. Attendance at seminars and conferences;
18. Group insurance;
19. Insurance (unemployment, workmen's compensation, liability, fire, theft, etc.);
20. Pension expenses;
21. Taxes and licenses;
22. Business promotion; and
23. Subcontractors.



Below is an estimated comparison of an employee to a contractor in Ontario, Canada - it is obvious that contractors need to charge more in order to recover the additional expenditures normally covered by employers. It is also important to remember that you bring unique talents and added flexibility to the table and that this should be acknowledged financially. There are many benefits to the employers of hiring a consultant such as:

Cost Savings:

It is generally much cheaper and easier to hire a contractor who can start right away rather than training a permanent member of staff. It can be a cost effective way of bringing in new skills and imparting it to existing employees. This is due to the fact that contractors charge a flat rate plus GST or VAT and do not give rise to the same payroll and administrative charges that employees do.

Ease of Hiring:

Recruiting for a permanent member of staff takes longer (typically greater than 4 weeks) and often leads to hiring costs such as agency fees and job posting costs. Further, consultants are invaluable in situations where it is not possible to hire a full-time staff member due to hiring freezes, budget restrictions and other operational or financial constraints.

Flexibility:

Contractors are generally more flexible with their working situation and are typically more willing to take on part-time roles, off-hours projects, short work weeks, telecommuting, working in different locations and traveling for roles.

Increased Employer Rights:

Consultants know that they provide crucial expertise and high quality services and they prove this by being prepared to stake their quality reputation by having no employment rights at all. There are no termination notice requirements and severance costs associated with contractors at the end of a contract and if they perform badly during the contract - they can be immediately let go.

Access to a Variety of Skills:

Contracting firms often have a variety of experts which allows them to provide a wide variety of services and bring invaluable expertise to the jobs worked by their consultants.

Skills and Specialties:

There are many skills and specialties that can only be found in the contract market. Contractors are renowned for being innovative problem-solvers and experts at their work. Consultants are also expert project managers and can guide a company in its planning, budgeting and implementation phases. Further, consultants are used to working within set timelines and project scopes and can be instrumental in keeping projects on time and within the set guidelines. Consultants can also provide critical training and mentoring of your employees.

Project Work:

There is an increased benefit to hiring contractors specifically for project work as they can get up and running quickly and can kick start projects. Further, if the project needs an expert in a particular field, not someone who has general knowledge across a range of subjects they are invaluable. Also, often projects require short term resources, and do not provide enough work to justify a full time position. Contractors are also able to add a level of independence, objectivity and credibility to projects.

product prices

In order to see what the market price for your products is check the following:

Guides and catalogues: such as the blue, red or black books or merchant catalogues.
Website marketplaces: such as those discussed on our selling from home page or check out the SiteSell Make your Price Sell by clicking on the picture below:




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