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One question that often comes up within the Trainer Talk community is how to charge for consultancy work compared to charging for training.
Unfortunately, there isn’t a magic formula or one-size-fits-all price, but I thought it might be helpful to discuss some of the things you might want to consider when setting your rate.
Consultancy versus training: What’s the difference?
In my experience, consultancy work involves analysing a problem faced by a client, advising on how to solve it and then, in many cases, implementing the solution. There’s usually plenty of client interaction and the work delivered focuses on the bigger picture and how training can be used to address this. The consultant is likely to be integral to creating the training brief.
Training may come later in the process, usually as part of delivering the consultant’s solution. A trainer provides knowledge but isn’t necessarily accountable for what is done with that knowledge post-training. In addition, trainers usually fulfil rather than create a training requirement and may even be able to train remotely without much client interaction.
Of course, this is a simplistic overview. In reality, consultancy and training often overlap and many trainers find themselves delivering a consultancy service too.
Should you charge more for consultancy or for training?
The answer is….it depends.
On the surface, it seems logical that consultancy rates might be higher. After all, if you’re involved in looking at the bigger picture and providing a long-term learning and development strategy for a client, the benefits of your services will potentially profit their business for months or even years to come. This value should be reflected in your charges.
That being said, you will need to consider factors such as:
- How much time you will be spending on a consultancy project
- The level of interaction
- The value to the client
- The seniority of the proposed learners
- Your location
- Competition for the work
Also, is the work for an existing training client? If it is, you probably won’t want to start charging a different rate for consultancy than for training.
What do other people do?
A number of years ago, companies such as TrainerBase and Training Zone ran surveys to try to establish some average consultancy and training rates.
The last data I could find comes from 2011 when Training Zone received survey responses from 88 learning and development professionals about their consultancy and training rates. Some of the key takeaways from this survey were that:
- Day rates for consultancy ranged from £0 to £1,000+
- Nine percent of respondents did not charge for consultancy/training design if they were going to be delivering the training too
- Day rates for training ranged from the £1-£199 bracket to £1,000+
- One respondent had been advised by their accountant that they should earn at least £610 per day to make freelance training viable, otherwise they would be better off in-house
- However, 77% of respondents charged below this rate for consultancy, and 45% were below this rate for training
- The largest group of respondents – 20% – charged £500-£599 per day for consultancy, but only 18% charged this much for training
- Because of the vast range of day rates, the average rates worked out at £455 per day for consultancy and £720 for delivery
- 34% of respondents billed the same for consultancy and training
- As might be expected, average rates varied based on the location of the trainer – 38% of the respondents were in London where the average day rate was just above average at £485 for consultancy
- Rates for consultancy and training were higher when trainers were working with senior managers and executives
We must remember that this data is almost six years old and comes from a small cross section of the training community. Respondents were anonymous, which may have helped with the accuracy of the data. If nothing else, it does show how factors such as your location and audience can affect your day rates.
Price versus value
I personally believe that it’s far better to concentrate on the value you provide to your clients.
If, for example, you are asked to rework an existing training programme and create templates that could be used for future training events, you would be adding a long-term value that will potentially continue long after your involvement in the project is over. It’s important to build this into your rates.
Different pricing models
There are a number of different ways that you can set your consultancy and/or training rates – only you will know what feels like the right fit for you and your client:
- Set a day rate
Many people use this as a starting point. This is certainly something that I cover in my Online Programme – How to Create a Successful and Profitable Training Business. Many clients feel comfortable with a day rate but remember that it can put a cap on what you can earn and you may end up earning less the more efficient and experienced you become.
- Charge per project
Clients and freelancers like the ‘per project’ pricing model because the costs are fixed and agreed from the outset. When setting a per project rate, you might want to use your day rate as a starting point to estimate how much time you think the project will take. If you’ve done similar projects in the past that will help you to build up a more accurate time frame. Remember to add some extra time for unseen emergencies and to make it clear in your contract that the fees will change if the project changes significantly. When charging per project, concentrate on the value to the client.
- Charge a performance-related rate
Some consultants charge a fixed fee with a performance-related bonus on top or even make the whole fee contingent on measurable results being achieved. This can be a high risk approach for the freelancer but, because of the level of risk, consultants using this model are often able to charge higher rates.
- Charging what your competitors are charging
If you know what your competitors are charging, it can be a good indicator of what the market will bear and what your clients might expect to pay. As highlighted above though, competing on price can mean that competitors drive each other’s prices down, damaging the overall marketplace. If you do look at what your competitors are charging, you might want to use it as a base line from which you can grow your rates based on the unique skills and experience you have to offer your clients.
Whatever pricing model you choose, I always recommend that you create a payment plan for your clients where the payments are staggered rather than paid in their entirety at the end of the project. This will help your cash flow and ensure that you still receive some compensation for your efforts, even if a client has to cancel a project mid-way through. A staggered payment plan will also help your clients to manage their budget.
What is your experience of charging for consultancy work versus training? Do you have different rates for both? What pricing model do you think works best for you and your clients?
I’d love to hear your thoughts and experiences in the Comments below.