.png)
Tips on How to Determine the Consultancy Daily Rate
One of the questions that I get to hear a lot among fellow consultants is how to charge for consultancy services. How do you determine the fee for service? What should be your consultancy Daily Rate? Can you apply the same rate for every client? Should you leave it to a client to set the rate for you? Is there a standard way to calculate a fee?
Generally, clients vary in their preferences for consultancy fee payments, ranging from:
Per hour
Per day (daily rate)
Per project (including staggered payments per milestone delivered)
Retainer, particularly for long-term projects
No matter what formula you use to calculate your fee, you should ensure that you get a fee that is commensurate with your time, knowledge, and skills.
https://foundr.com/articles/building-a-business/how-much-to-charge-for-consulting offers a useful guide for calculating a consultancy Daily Rate:
Stepwise,
Determine what salary you would like to make.
Take that sum and divide by 52 (the total number of weeks in a year)
Divide the sum again by 40 weeks, being the number of hours per week.
Take the number and mark it up between 25% to 50%.
Presumably, your daily rate will cover all your business costs, including overheads, benefits, insurance, and taxes.
An additional tip is to ensure that your rate is revised yearly to factor in inflation but also as your worth increases.
Tips for Successful Consultancy Partnerships
As with any business, independent consultants may require partnerships from time to time. Partners could be fellow individual consultants or a company.
Here are a few of the things you should consider while entering a partnership, to increase both the value of a partnership and mitigate the potential risks.
§ Ensure that you ascribe to the same values.
§ Choose a partner with complementary knowledge and skills.
§ Select a partner with a similar track record
§ When not sure, get references.
§ Clearly define each partner's role and responsibilities
§ Select the right business structure
§ Put it in writing.
Once you settle for a suitable business partner, take the next step to write up a mutually agreed Partnership Agreement. This should cover the key elements of your partnership, such as:
· Communication expectations and structure to address both routine and emerging issues.
· Scheduling expectations. These could include periodic team meetings, sales and marketing meetings, quarterly reviews, and annual meetings.
· Financial obligations and implications
· Decision-making structure
· Ownership/Shareholders
· Financial resources
· Partnership dissolution clause.
At the end of the day, honesty is the glue that holds together a partnership, and this is best advanced through communication between the parties. Honest, open, and frequent communication is key to partnership.[1] It is important for all parties to communicate in a timely manner; remain accessible and deliver their part of their bargain often. Once you have ticked all these boxes, hope for the best!
Tips on Maintaining Ethical Standards in Consultancy Practice
What is unethical behavior or professional practice? Variously, it refers to knowingly engaging in conduct of a character likely to deceive or defraud the public, or solicitation, obtaining any fee or compensation by fraud or misinterpretation. (lawinsider.com). Yet, Ethics is the new badge of honor that a consultant must wear to remain afloat.
A consultant’s reputation is their greatest asset. Yet, as in any business practice, a consultant will face several ethical pitfalls, including some manifesting in creatively many ways, including:
· Demands by clients for Kickbacks before jobs are awarded, or release of cheques.
· Inflated contract sums
· Shoddy tendering processes
· Bribery and corruption
· Maintaining objectivity
According to Mark Hass [2]Ethical Dilemmas also involve engaging in Conflict-of-Interest situations, such as in
Handling sensitive information such as technical or trade secrets, information from third parties about the client; financial data; personnel data, and market strategies.
2) Maintaining independence and Objectivity.
A consultant is hired to bring to an organization an external perspective, whether technical or advisory. It is therefore expected, by both parties, that there should be some level of independence in judgment, Yet it is often a classic mirror of ‘He who pays the Piper calls the tune’.
In this milieu of independence and objectivity, it is important to clearly negotiate and agree on the terms of engagement with your client right from the onset. Such negotiation should include privacy, confidentiality, and disclosure clauses, to protect both you and your client.
The Costs of Unethical consultancy practices are dire:
· Adverse effect on brand image and the firm’s credibility
· Blacklisting by reputable clients
· Cancellation of ongoing contracts
· Loss of money to the firm
· Loss of clients and partners
· Deterioration in your health
Institutions such as the World Bank try to enforce standard Ethical requirements on potential contractors, broadly under their procurement policies and guidelines, including for consultancy services. These broad Guidelines cover Fraud and Corruption.
In their guidelines, for example, the Bank commits to sanction any individual or firm, at any time, indefinitely, or for a period of time, that contravenes its guidelines and procedures.
Consultancy contracts with the bank include this clause and are also explicitly included in the online contract management platforms, with the Bank publicly listing sanctioned firms, with a public listing of Non-Responsible Vendors (www.worldbank.org).
(Ref: Guidelines: Selection and Employment of Consultants Under IBRD LOANS and IDA Credits and Grands by World Bank Borrowers. Jan 2011. Revised Jan 2014)
Such vendors include:
1. Ineligible to receive Bank Group Contract wards or to bid on Bank Group solicitations for the period listed.
2. Excluded from conducting business with the Bank Group or representatives of other vendors for the period listed.
3. Precluded from having discussions with the Bank Group concerning the Awarding of Contracts for the period listed.
The Bank goes on to list the ineligible firms- the vendor names, address, country, ineligibility period, and grounds for ineligibility. The latter range from falsification of invoices to fraud and collusive practices; fraud and obstructive practices; misrepresentation of company information(Procurement- World Bank Listing of Ineligible Firms and Individuals).
Adam Shauevitz, President at Strategic Sourcing Dynamicsoffers some golden nuggets to help navigate the murky waters of Conflict of Interest, indeed, unethical practice:
1. Accepting compensation only from a client, not a third party.
2. Leveraging your personal relations to benefit the client, not yourself.
3. Saying ‘no’ to a project timeline that you cannot deliver.
Some companies invest in Ethics and Compliance training or orientation for their business consultants. The training cover culture, policy, and even legal expectations for the consultants.
Ethics is everything. Following some of the tips above will keep you on the narrow path of ethical consultancy practice. Let me finish with this,
‘When they go low, we go high Michelle Obama