The hourly formula is when you charge by the hour for your consulting services. Set an hourly rate, track your hours, and then bill your customer by the hour. Once you know how much you earn now and how much you'll have to pay, you'll have a good idea of how much you'll have to charge to maintain a certain quality of life and start your business. This last piece of advice may seem silly, but sometimes it makes sense to charge what everyone else charges for consulting.
First, you charge an initial setup fee that covers the cost of starting a consulting relationship. Regardless of the type of consulting business you operate, deciding how much to charge clients can be a difficult balance. If your consulting practice is relatively new, you can use your old salary as a general indicator of how much you should be charged per hour or project. If, on the other hand, you've been working for five or more years and have a lot of specific experience in the industry and testimonials from satisfied customers, you can charge for the highest range.
For example, if you're working on a project with changing priorities and deadlines, it might make sense to charge by the hour. New consultants are less likely to charge as much as those with a higher level of experience, as companies may be less willing to hire beginners for a consulting project. You may think that charging too much will put you out of business before you can even hang your tile. If the scope of the work means being available when needed, consider charging the customer a monthly advance in which you'll perform a specified amount of work for a specified amount of money in advance, or for a daily rate.
Over time, you'll reach a point where charging by the hour is no longer the best method for you or your customers. There are several approaches you can use to determine how much to charge clients for their consulting work. Charging for your consulting services by the hour is especially useful if the job involves a lot of in-person meetings and consultations. The process of choosing how much to charge as a consultant can be overwhelming, but it can be a rewarding experience that allows you to measure the true value of your work and your business.
For example, if you're a marketing consultant who specializes in helping telecommunications companies run hyperlocal advertising campaigns, you could justify charging a higher fee when they hire you to work on a similar project.