The world of fundraising and development is one of the most interesting sectors in non-profit management.  I have been surprised upon occasion to have someone ask, "Why do consultants get paid so much?"  I believe the question itself displays a lack of understanding as many consultants are challenged to effectively price their services.  Hourly rates are rarely seen as comprehensive coverage for time, expertise, insurance, operating expenses, supplies, technology, communication....and the list goes on.  Everyone I know has at least 1 horror story about the never ending project where your hourly rate should have rivaled minimum wage, but when all was said and done, it didn't even rise to that level. 

So, the question becomes - "How can a consultant effectively price their services?"

I believe that a good consultant has a demonstrated track record with successes and failures.  Often times we learn as much from our mistakes as we learn from our demonstrated strengths.  Equipped with a strong track record, you must also consider that all of the time spent to impact a client does not necessarily qualify as "billable time."  The fundraising standard dictates that you do not take a percentage of dollars raised and further, payment based solely upon the success of a proposal or campaign is equally unethical.  When you invest your time, expertise and network of resources you are due payment regardless of outcome.

Providing insight into your background and expertise is extremely important.  At nearly every interview I have had someone has asked if I have always been a consultant.  No.  I believe that real life, full-time experience is worth its weight in gold when helping people to understand the basis for your philosophy and approach.

I have made the decision not to accept contracts on an hourly basis.  Have you determined your bottom line? Over the years I have found that the investment of time is only one aspect of the full equation. I prefer to base my services on a monthly retainer agreement, with clear deliverables, outcomes and expectations on both myself and the client.  I invest more time in research, editing, preparation, analysis and cultivation than can be reasonably billed.  The principle that you work harder for yourself than you ever do for someone else is certainly true as a consultant, you are forever tweaking and honing your skills to be more effective. The client is not responsible, however, for your personal tweaking!

Here are my tips for how to price a project:

1. Estimate your targeted annual income based upon education, years of experience, expectation of benefits, etc.  After years in the industry, most consultants have a clear understanding of what they could command as a full-time employee, fully engaged in their level of expertise.  Divide your projected annual income by 12, to determine your monthly income goal.  Divide your monthly income goal by the total number of hours you work in month and create a range based on the the diversity of projects and tasks that fit within your skill base.

2. Research rate and salary surveys for your area of the country.  Work that may demand $175/hr. on the West Coast will not command the same rate in the Mid-West where the cost of living is lower, even though gas prices our out of this world!

3. Determine your bottom line threshold.  Based upon your operating expenses, what must you add to your hourly rate to cover both your salary and operating expenses.

4. Price expenses and administrative support services in a reasonable fashion. Although expenses and additional costs are common, plan your work and contract around your strategy for success.  Identify and detail all known expenses while preparing a small contingency for unexpected obstacles and issues.  If you are slippery with fees your credibility and  reputation are on the line, for your client and each individual associated with the project.

5. Create standard pricing for basic service levels.  Clients do not want to guess where your prices fall in comparison to other consultants for a project.  Be prepared for standard requests, reserving the right to adjust costs based on project scope.

6. Determine loss leaders effectively.  There are times when a consultant takes on a project at a lower rate because of the experience, the stakeholders involved or a particular interest and passion for the cause.  Be careful not to undervalue services, by being honest and succinct about the basis for your proposal, rate drop, etc.  Request documentation for donated service established up front.

Best Wishes as you set the course for your contributions to a dynamic industry.  I know from experience, quality consultants are not a dime a dozen, in fact, a satisfied client will let you know, they are worth their weight in gold.