My business consulting rate depends on several factors including travel, type and intensity of work, flexibility of scheduling, and payment terms. It currently varies between $2,650/day and $3,800/day plus expenses. These are ten-hour days, invoiced in half-day increments (more detail below).
If you'd prefer flight instruction instead of business consulting, my rate is $45/hr for basic single-engine instruction and $55/hr for instrument work. I am not currently teaching multi-engine or aerobatics. My work schedule tends to support refresher training more than ab initio students.
Background information and one-off rate
These are market rates based on my applicable experience level in each type of work. For context, my on-target earnings in the last full-time role I held was ~$275k (plus an equity incentive), as a sales director for a small enterprise software company in 2008-2010.
The most recent Charles Aris compensation survey (Jan, 2015) shows 25th-75th percentile total compensation for Sr Director / VP candidates with big 3 experience (McKinsey, Bain, BCG) in 2014 ranged from $300-450k annually. The up-front cost of hiring one of these candidates can be much higher when considering the cost of conducting the search.
When converting an equivalent compensation plan to daily consulting rates, remember to consider both load factor and profit, as most of those candidates are unlikely to leave stable paychecks and support structures without additional upside. Independents also pay employment taxes, self-provide insurance (health, life, liability, E&O, etc), and pay many business expenses out of pocket which would otherwise be employer-provided.
A high consulting fee doesn't guarantee a high-quality consultant, though clients likely won't find a great consultant that charges below-market rates. My work is generally subject to mutual NDAs; I do not collect logos and rely entirely on word-of-mouth reputation and pedigree (and, more recently, this blog).
Many strategy consultants lack leadership sense and/or operating experience; you can develop your own perspective on my skill level before we meet by reading this blog and comparing to my turn-of-the-century Navy evaluations here and here.
During an active contract, I'll send weekly emails to the client executive. These emails include a list of accomplishments from the week and billable time consumed in half-day increments. I invoice monthly, preferably net 15
One-off work (requiring no prep or follow-up by me) is billed in half-day increments at a rate of $1,200 for five hours of work.
- Live sessions such as white boarding are payable upon completion (check or Square); rescheduling fees are zero outside of one week, $300 outside of 48 hours, and $600 within 48 hours
- Business plan / pitch deck reviews are payable half up front and half when scheduling the review meeting. There is no penalty for rescheduling a review meeting, though it's subject to mutual availability
Helpful tips on controlling consulting fees:
1. Start small
I never charge for coffee unless we're discussing ongoing, contracted work. While it's sometimes possible to draft a written proposal after little more than several emails and phone calls, I often meet with potential clients a number of times over coffee or breakfast/lunch before we know each other well enough to focus our work together.
Sometimes it's helpful to conduct a handful of one-off white boarding sessions rather than trading contract SOW red-lines, particularly if the white boarding is sequenced towards an executive sponsor who would approve any subsequent proposal.
These (or any other one-off work such as business plan or pitch deck review) are payable immediately, and will be credited back towards any subsequent project work during a rolling six month window at a step-function rate of 1:10 (ie for each ten days you're invoiced, you'll receive up to one day's credit from one-off work, if you have any credits available)
So if you engage me in five days of one-off services across a few months, then engage me for a 50-day project later that year, it's likely you will end up receiving some/all of those first five days for "free".
And if you end up not engaging me in a larger project in a reasonable time frame, the one-off work was a complete business transaction where neither party feels it owes/is owed by the other.
2. Understand cost tradeoffs between your org and mine, and design our work together appropriately
Local and travel rates are specified in advance and remain set during the duration of each contract. Travel is expensive, but wasted time and re-work is more expensive.
- The lowest rates are available to client work which meets these criteria:
- In town (Pittsburgh, PA or the immediate area)
- 2-3 days/week flexible workload
- Clearly defined problem with a solution locus of control inside the client
- Modest analytic and political considerations
- Dedicated team members at appropriate allocation (ie 2 days/week)
- Regular senior leadership engagement (CEO or board-level) and C-level participation
- Invoiced monthly, payment net 15
- The highest rates are reserved for the rare client which meets these criteria, perhaps staffing me onto an externally led M&A team:
- Travel requiring overnight stay
- 5+ days/week (leaving no room for other clients or biz dev)
- Open-ended problem requiring solutions outside the client's locus of control
- Highly technical analysis and/or political considerations
- No dedicated team resources under my exclusive selection and control
- No direct exposure to senior leadership and/or C-level support
- Invoiced monthly, payment net 90
Conclusion: When designing our work together, it's important to distinguish between explicit and implicit costs. Sometimes, it will be easier/faster/better for your organization to have me do things for you. Other times, it will be more appropriate to flex your organization to meet my needs.
3. Focus on managing scope, not rate
Instead of attempting to negotiate daily rates, it's much more effective to focus on appropriate scoping of work: a single day of wasted work is more costly than a month of $100/day savings. We're going to explore some dead ends together, but with good communication we'll keep it to a minimum.
Scoping should deliberately balance the recognition that excessively frequent check-ins create unnecessary interim work product, and too-infrequent check-ins risk getting too far ahead of the client.
Formal steering meetings at kick-off, mid-point, and conclusion of each phase are typical. Participation should be as broad as it needs to be, but not moreso: higher participation rates increase the preparation and follow-up time
"Best practices" for daily hygiene include:
- Committing to small check-in meetings every ~8-10 working days, supplemented by weekly status emails
- Having an assigned executive assistant to handle internal scheduling for meetings, calls, etc
- Assigning designated point people for data collection, with immediate escalation path for issues/delays to designated senior executive level for resolution
- When work required at client site, have dedicated team room with printer, internet access, and phone. Room should be securable, or secure storage space for documents provided.
