One of the greatest misconceptions about consulting is that we are selling time based on an hourly charge out rate, rather than the value we offer and the outcomes we deliver. Unfortunately for those who are not consultants there is often the perception that we charge these excessive fees per hour in order to provide advice. It is also these same people who you often find yourself justifying your fees or charge out rates to because they do not see the value of what you are offering to them.
There are consultants who some would consider to be expensive, but they also excel at what they do and they would have clients who would vouch for the fact that they deliver outstanding value for money. These consultants tend to charge a higher hourly rate but due to their expertise and experience, they are able to complete the task or activity in less hours due to their knowledge and expertise they possess. This is why hourly rates can be very misleading when clients are trying to compare apples with apples or in this case, charge out rate v charge out rate.
What also confuses this is that there are also those consultants who take advantage of clients by not being clear on expectations and scope, not focusing on the key outcomes or taking on jobs that they really don’t have the expertise to deliver. It is these consultants who tarnish the industries reputation and make others question our hours and value as well as the outcomes we deliver. This is unfortunate but also the reality of consulting.
From our business perspective, our clients value what we do, we are always clear on our scope, our expectations and the deliverables. We are open and transparent with our costings so that clients can see what is involved from our team to deliver their outcomes. Our consultant rates are dependent on the consultant’s individual knowledge, experience and expertise. We find that you are soon able to identify if your rates are too low, as we cannot keep up with the demand for those services by that consultant, or if your rates are too high because you are struggling to win work for them. In a lot of ways the market will determine what you are worth and this will be reflected in your rates.
So why is everyone so fixated on selling time rather than value? Maybe it is because traditionally most consulting firms have been driven by billability and timesheets or the number of hours worked. From my perspective, this is a very archaic and input based approach. Some of the best consultants I know are those who don’t work 14 hour days and they have a great work / life balance. The difference with these consultants is that they understand the concept of value. They have the knowledge, experience and expertise, but they also know the importance of planning, prioritising and focus. Whether it is work or play they are focused on achieving an outcome and deliver it.
I personally look forward to the day where consulting firms do away with timesheets and focus on outcomes. This will drive the right behaviours within your teams and organisations, and actually reflect the true value of what you are offering to your clients!