How Much for a Consulting Fee?

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TLL24
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How Much for a Consulting Fee?

Post by TLL24 »

An investment research firm has contacted me inquiring if I would be interested in speaking with them about the industry I’ve worked in for over ten years and said they would compensate me at an hourly rate for my time. However, they asked me to propose the hourly rate. I’ve never been contacted for something like this before and am willing to speak with them. It sound like at least one hour of my time, but potentially several hours. I have no clue what rate to propose though. At a minimum, I figured the same rate that I earn now. Anyone do this before and have a suggestion?
wertdaman
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Re: How Much for a Consulting Fee?

Post by wertdaman »

At least double the rate you earn as a W2 employee. Might want to go really high to cover any added hassle on your part of this is income that you claim on taxes. I would say $250/hr as a minimum agnostic to the industry or your pay.

Just my opinion, I've never participated in this type of arrangement.
sport
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Re: How Much for a Consulting Fee?

Post by sport »

You may be better served to offer your expertise at a flat rate, with the number of hours not to exceed some number. For example,
"my price is $2500 and I will give you up to 3 hours of my time".
stan1
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Re: How Much for a Consulting Fee?

Post by stan1 »

Make sure your employer will allow you to speak to them. Sometimes it doesn't matter. Other times it is a very big deal and the answer might be "no".
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Re: How Much for a Consulting Fee?

Post by nisiprius »

I've heard of a rule of thumb of 3X your hourly wage when working as a regular W2 employee.

When I lost my W2 job and was offered a 1099 position at a startup, my hourly rate at the startup was 1.7X what my hourly wage had been. (Since I was already semiretired and was happy with the opportunity to get paid for doing interesting work on my own terms with regard to hours, working at home, etc. I didn't stress over the possibility that I was being underpaid.)
Last edited by nisiprius on Fri Jul 23, 2021 6:31 pm, edited 1 time in total.
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adamthesmythe
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Re: How Much for a Consulting Fee?

Post by adamthesmythe »

I've been approached a number of times and in each case it has been a company asking as an intermediate. They wanted a resume and, as in your case, a proposed rate. In the end nothing came of it.

I think there are companies trying to build a stable of potential consultants.

My guess is that it will not amount to anything so it doesn't matter what number you give.

(I now reply to these solicitations saying that I deal with principals only.)
mdavis6890
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Re: How Much for a Consulting Fee?

Post by mdavis6890 »

I think you go way, way high. Maybe $10k for a few hours session. I mean, if they need the experience you have, it might be a total bargain for them. And if not, probably they are wasting your time anyway and it would never have gone anywhere.

Hey, doesn't Warren get $1/2 M for lunch?
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TLL24
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Re: How Much for a Consulting Fee?

Post by TLL24 »

adamthesmythe wrote: Fri Jul 23, 2021 6:28 pm I've been approached a number of times and in each case it has been a company asking as an intermediate. They wanted a resume and, as in your case, a proposed rate. In the end nothing came of it.

I think there are companies trying to build a stable of potential consultants.

My guess is that it will not amount to anything so it doesn't matter what number you give.

(I now reply to these solicitations saying that I deal with principals only.)
They did also ask for my résumé. It sounds like this is similar to what you have experienced.
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TLL24
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Re: How Much for a Consulting Fee?

Post by TLL24 »

stan1 wrote: Fri Jul 23, 2021 6:06 pm Make sure your employer will allow you to speak to them. Sometimes it doesn't matter. Other times it is a very big deal and the answer might be "no".
Good point, but that is not an issue in this scenario at all.
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TLL24
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Re: How Much for a Consulting Fee?

Post by TLL24 »

sport wrote: Fri Jul 23, 2021 5:51 pm You may be better served to offer your expertise at a flat rate, with the number of hours not to exceed some number. For example,
"my price is $2500 and I will give you up to 3 hours of my time".

Interesting idea. Have you, or do you know someone that has done it that way?
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Re: How Much for a Consulting Fee?

Post by CalPoppy »

TLL24 wrote: Fri Jul 23, 2021 7:23 pm
sport wrote: Fri Jul 23, 2021 5:51 pm You may be better served to offer your expertise at a flat rate, with the number of hours not to exceed some number. For example,
"my price is $2500 and I will give you up to 3 hours of my time".

Interesting idea. Have you, or do you know someone that has done it that way?
I rarely bill hourly and instead have a day rate (although I also offer a half day rate when appropriate). I’ve also arranged for monthly retainers.

Even with a high hourly rate, it can be hard to bill enough (for short sessions of say 1-3 hours) for value of one’s experience and expertise.
Last edited by CalPoppy on Sat Jul 24, 2021 10:56 pm, edited 1 time in total.
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Re: How Much for a Consulting Fee?

Post by CalPoppy »

TLL24 wrote: Fri Jul 23, 2021 7:21 pm
adamthesmythe wrote: Fri Jul 23, 2021 6:28 pm I've been approached a number of times and in each case it has been a company asking as an intermediate. They wanted a resume and, as in your case, a proposed rate. In the end nothing came of it.

I think there are companies trying to build a stable of potential consultants.

My guess is that it will not amount to anything so it doesn't matter what number you give.

(I now reply to these solicitations saying that I deal with principals only.)
They did also ask for my résumé. It sounds like this is similar to what you have experienced.
I’ve received a couple of these requests via LinkedIn and responded by offering a short call to “see if I’m a fit for what they are looking for.” No response, which told me all I needed to know.
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Re: How Much for a Consulting Fee?

Post by sport »

TLL24 wrote: Fri Jul 23, 2021 7:23 pm
sport wrote: Fri Jul 23, 2021 5:51 pm You may be better served to offer your expertise at a flat rate, with the number of hours not to exceed some number. For example,
"my price is $2500 and I will give you up to 3 hours of my time".

Interesting idea. Have you, or do you know someone that has done it that way?
Many years ago, an attorney asked me to be an expert witness. They offered a fixed amount which would cover a certain number of hours. Additional hours would be at the same hourly rate.
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Re: How Much for a Consulting Fee?

Post by carolinaman »

Are you seriously interested in doing this and what rate would you be happy with? Rather than shoot for the moon with some of these suggestions, why not propose a rate you would be happy with.
2 or 3 times your average hourly salary should be a minimum, but beyond that it is what you think your time is worth for you.
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Re: How Much for a Consulting Fee?

Post by NewMoneyMustBeSmart »

TLL24 wrote: Fri Jul 23, 2021 5:40 pm An investment research firm has contacted me inquiring if I would be interested in speaking with them about the industry I’ve worked in for over ten years and said they would compensate me at an hourly rate for my time. However, they asked me to propose the hourly rate. I’ve never been contacted for something like this before and am willing to speak with them. It sound like at least one hour of my time, but potentially several hours. I have no clue what rate to propose though. At a minimum, I figured the same rate that I earn now. Anyone do this before and have a suggestion?
This used to be interesting for me. I used to charge $250 and got a lot of consults. That was with GLG.

Now there are 2 or three that mail me incessantly. With my rate at $600 I don't get called much. Which is fine. But they still ask me to accept or decline the consult.

That just puts me in a group for the client to pick, and it prices me out of being selected.

So I don't bother to respond to their requests unless it's interesting.

You will likely not get called on at $600. $200-$400 seems to be the sweet spot. If this is not one of the buy-side 'research' firms, then my information my not be useful for you.
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kenoryan
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Re: How Much for a Consulting Fee?

Post by kenoryan »

Depends on your expertise. If you are an authority in a niche specialty and have published extensively, you can charge whatever you want. I know that my brother who is a professor charges $5000 just to talk to any company. But his advice is good and they do benefit sometimes in millions so 5K is chump change.
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Re: How Much for a Consulting Fee?

Post by HENRYGRUGER »

TLL24 wrote: Fri Jul 23, 2021 5:40 pm An investment research firm has contacted me inquiring if I would be interested in speaking with them about the industry I’ve worked in for over ten years and said they would compensate me at an hourly rate for my time. However, they asked me to propose the hourly rate. I’ve never been contacted for something like this before and am willing to speak with them. It sound like at least one hour of my time, but potentially several hours. I have no clue what rate to propose though. At a minimum, I figured the same rate that I earn now. Anyone do this before and have a suggestion?
Over the years I have "consulted" for Attorneys, in my areas of expertise.

I have done both suggested methods...hourly rate and Fixed Fee for X hours. It depended on the amount of research time I had to spend to give them what they wanted.

As a collegiate educator, I am paid @$250/hr.when I teach live classes, and $150/hr. for writing,so my fee was $300 per hour or $2500 Fixed Fee, for 10 hours. Remember, depending on the fee, you will have self employment taxes due on the amount received, so charging your W-2 employee rate is at a minimum, 15.3% too low!

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Re: How Much for a Consulting Fee?

Post by RickBoglehead »

NewMoneyMustBeSmart wrote: Sat Jul 24, 2021 10:12 pm
TLL24 wrote: Fri Jul 23, 2021 5:40 pm An investment research firm has contacted me inquiring if I would be interested in speaking with them about the industry I’ve worked in for over ten years and said they would compensate me at an hourly rate for my time. However, they asked me to propose the hourly rate. I’ve never been contacted for something like this before and am willing to speak with them. It sound like at least one hour of my time, but potentially several hours. I have no clue what rate to propose though. At a minimum, I figured the same rate that I earn now. Anyone do this before and have a suggestion?
This used to be interesting for me. I used to charge $250 and got a lot of consults. That was with GLG.

Now there are 2 or three that mail me incessantly. With my rate at $600 I don't get called much. Which is fine. But they still ask me to accept or decline the consult.

That just puts me in a group for the client to pick, and it prices me out of being selected.

So I don't bother to respond to their requests unless it's interesting.

You will likely not get called on at $600. $200-$400 seems to be the sweet spot. If this is not one of the buy-side 'research' firms, then my information my not be useful for you.
This ^^^. I dropped out of all these networks after tiring of inane questions and a 20% acceptance rate after being solicited.

Some have very high opinions of their expertise. :oops:
Last edited by RickBoglehead on Sun Jul 25, 2021 3:17 pm, edited 1 time in total.
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Re: How Much for a Consulting Fee?

Post by GmanJeff »

I too have worked with a few of the firms mentioned and received $500/hr. Whether that is too much or too little to ask may depend in part on whether other SMEs are available to speak to the same topics for less, and on how many hours of consulting time are to be expected for a given engagement.

I also receive much less, $125/hr., for an occasional part-time role as an instructor. Not much heavy lifting is involved, and the rate reflects that.

As noted in an earlier post, remember your rate is pre-tax, although the other side of that coin is that your associated expenses, if any, are probably deductible.
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Re: How Much for a Consulting Fee?

Post by BogleFan510 »

adamthesmythe wrote: Fri Jul 23, 2021 6:28 pm I've been approached a number of times and in each case it has been a company asking as an intermediate. They wanted a resume and, as in your case, a proposed rate. In the end nothing came of it.

I think there are companies trying to build a stable of potential consultants.

My guess is that it will not amount to anything so it doesn't matter what number you give.

(I now reply to these solicitations saying that I deal with principals only.)
Same happened to me. The firm has an option for the money to go to a charity, so I selected a reasonable rate and will donate any pay. I also did not give permission for them to market my resume for prospective clients, so I expect that will limit the contacts. The 'project' seems to be 'on hold' for now.
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Re: How Much for a Consulting Fee?

Post by neverpanic »

TLL24 wrote: Fri Jul 23, 2021 5:40 pm An investment research firm has contacted me inquiring if I would be interested in speaking with them about the industry I’ve worked in for over ten years and said they would compensate me at an hourly rate for my time. However, they asked me to propose the hourly rate. I’ve never been contacted for something like this before and am willing to speak with them. It sound like at least one hour of my time, but potentially several hours. I have no clue what rate to propose though. At a minimum, I figured the same rate that I earn now. Anyone do this before and have a suggestion?
First question: What is your time worth to you?

Second question: If you're willing to sell your time, what price are you willing to offer the market?

Many years ago, no matter what I was doing, my hours were worth $50/hour to me, so I was willing to sell those hours to others for $100-150/hour. I think 2-3x your rate is probably within the realm of reasonability.
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Re: How Much for a Consulting Fee?

Post by HopeToGolf »

My experience has been mixed. I have charged and been paid $900-$1000 per hour. The initial bids were like $150-$400. I’ve been used by the same firm multiple times and in one case the client came back for 2 additional hours after the first hour. That said, the same firm has said yes to my background for a consult and allegedly the client said yes to the rate but then I didn’t hear back. I advised my wife who was pitched $250 per hour to tell them $600 (with a plan to take $400-$500) and they said yes. Recently, two weeks ago, I was pitched $250, I told them $1000, they countered with $400 and I told them no thanks. If I lowered my rate to something like $400-$500 I think I would have more engagement but I value my time for these consults and my expertise and experience a bit higher. I also realized I saved the money in the funny money account instead of spending it. While I might “waste” hours a week on surfing the web, reading forums, etc. and could make $400-$500 instead some weeks, the consults are a bit like work, I take them pretty seriously and have even prepped a little for a couple. Presumably, the mindless hour of surfing makes me better at my real job and the consults would take away from my free time and make me less effective….at least that’s what I tell myself.

In the end, charge a number that makes sense to you and is “worth it.”
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Re: How Much for a Consulting Fee?

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TLL24
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Re: How Much for a Consulting Fee?

Post by TLL24 »

Thanks for the input. I reached out to a few friends in my industry too and was getting consistent feedback that something around $200 per hour was what they’ve experienced or heard of. I couldn’t justify that amount being with it to me and proposed $400 per hour. They agreed to $400. I’m happy with that and since this is my first experience I feel like I am going to learn a lot about how it works and can be more aggressive on the hourly rate in the future.
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Re: How Much for a Consulting Fee?

Post by RickBoglehead »

An "expert network" is not consulting. An expert network is most often private equity firms that are thinking of investing (or taking over) a company in an industry they know little about, so they want an expert to gab about it. If you're lucky, that's 1 - 2 hours of phone chat. Set your rate at $900 an hour, and you'll get no engagements.

I've been a consultant for a good part of my career. I charge companies based on the length of the engagement, and never sign up for "brain dumps", i.e. a few hours of work. Never. If you want me, engage me. My shortest contract period is 1 week, but most are 3 - 6 months, and the hourly rate is lower for 6 months then it is for 1 week, by a small percentage.

I participated in a handful of "expert networks" over the years, and found them largely a waste of time. I pulled out of every one of them.

Funny story - I was retained by company X as a full-time interim SVP Marketing for 6 months. On site, fly in for the week, home for the weekend. Great rate. Prior to the engagement, the company violated their loan terms due to business dropping off (which is why they brought me in), and the private equity firm had to either up their investment or let the debt holders take over the business (this was a well known company with revenues over 1/2B a year). So the private equity firm (one of the top in the US) asks the expert network to get an expert to help them assess if they should put more money in (because the other partners don't trust the partners already involved since business results are down). Guess who gets an email asking to be the expert... Yup - do I want to be an expert for the private equity owner, that hired me as an expert when they screwed up the company? The CEO and I got a good laugh out of that one.

The private equity firm lost their investment after declining to put more cash in. Banks too over, and company was sold to a large public company and rakes in the cash year after year, because the new owners let them do their stuff without interference.

PE firms are on my list near used car dealers.
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Re: How Much for a Consulting Fee?

Post by Kagord »

How does a non compete clause play into this, in upper/executive management, I've always had to sign this?
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TLL24
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Re: How Much for a Consulting Fee?

Post by TLL24 »

Kagord wrote: Mon Jul 26, 2021 9:43 am How does a non compete clause play into this, in upper/executive management, I've always had to sign this?
I don’t have one. No issues with my current employer regarding this.
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Re: How Much for a Consulting Fee?

Post by DarkHelmetII »

TLL24 wrote: Fri Jul 23, 2021 5:40 pm An investment research firm has contacted me inquiring if I would be interested in speaking with them about the industry I’ve worked in for over ten years and said they would compensate me at an hourly rate for my time. However, they asked me to propose the hourly rate. I’ve never been contacted for something like this before and am willing to speak with them. It sound like at least one hour of my time, but potentially several hours. I have no clue what rate to propose though. At a minimum, I figured the same rate that I earn now. Anyone do this before and have a suggestion?
I stipulated $1000 / hr minimum one hour (so they couldn't get away with 1/6 of $1000 for 10 minutes). Worked for the initial engagement for which I was engaged, actual consult was ~ 45 to 50 minutes however with all the paperwork, emails, scheduling, quick prep, probably spent another 45 to 60 minutes. For subsequent inquiries $1000 / hr was too steep.

YMMV.
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Re: How Much for a Consulting Fee?

Post by Picasso »

NewMoneyMustBeSmart wrote: Sat Jul 24, 2021 10:12 pm
TLL24 wrote: Fri Jul 23, 2021 5:40 pm An investment research firm has contacted me inquiring if I would be interested in speaking with them about the industry I’ve worked in for over ten years and said they would compensate me at an hourly rate for my time. However, they asked me to propose the hourly rate. I’ve never been contacted for something like this before and am willing to speak with them. It sound like at least one hour of my time, but potentially several hours. I have no clue what rate to propose though. At a minimum, I figured the same rate that I earn now. Anyone do this before and have a suggestion?
This used to be interesting for me. I used to charge $250 and got a lot of consults. That was with GLG.

Now there are 2 or three that mail me incessantly. With my rate at $600 I don't get called much. Which is fine. But they still ask me to accept or decline the consult.

That just puts me in a group for the client to pick, and it prices me out of being selected.

So I don't bother to respond to their requests unless it's interesting.

You will likely not get called on at $600. $200-$400 seems to be the sweet spot. If this is not one of the buy-side 'research' firms, then my information my not be useful for you.
I do a lot of these consults and one of the project managers I have a good relationship with told me that the cutoff for a client having to pay extra is $500/hr. So the rate at which you maximize revenue without getting screened out due to cost is $499/hr.
DarkHelmetII
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Re: How Much for a Consulting Fee?

Post by DarkHelmetII »

I once got $1000 for one hour. This appeared to be the exception as several others did want to pay that much. Just make sure you factor in total time eg prep for the call and anything else.
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