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Consultant Fees - What is a Consultant Worth? - Page 5


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  Post Number #33  
Old 1st June 2005, 09:01 AM
wslabey

 
 
Total Posts: 118
What is a consultant worth these days

The answer is whatever the customer is willing to pay for the perceived benefit. It seems that nothing changes, just how it is packaged.

It all tends to be driven by what is the current hot quality theme. It cracks me up that Six Sigma became the hot ticket after Jack Welch threatened to club trainees to death (just kidding) if they didn't use the expensive training. Motorola started Six Sigma but never made the people use it to save money. GE, built an excellent structure to encourage its use and other companies copied at least the Green, Black and Master Black Belt concept.

After years of being on my own consulting for myself and about 10 other good individual life changed due to family medical issue. The time and dedication required to run a small business becam impossible to do well. I now find myself working at a fairly innovative supplier to the auto industry that still believes in vertical integration. I am not making what I did 15 years ago, but I don't have any platinum airline travel cards and don't miss the traveling all over the world (it's just a long ride to work). Our firm would be very hard pressed to pay anything more than $50 an hour for a consultant. $250 an hour consulting rates would be looked at by our executive committee as extortion and whomever recommended hiring him or her would be considered irresponsible.

I think the big fees are still possible at major companies where high level execs are your audience / sponsor. However, working with the supply base everything seems to be scaled back, including consulting fees.

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  Post Number #34  
Old 1st June 2005, 10:06 AM
D.Scott's Avatar
D.Scott

 
 
Total Posts: 1,592
Quote:
In Reply to Parent Post by wslabey

Our firm would be very hard pressed to pay anything more than $50 an hour for a consultant.
I guess it is possible to find someone for $50 an hour. There are some guys down at the local bar who would probably do it for $10 an hour.

Having been in the consulting business you must surely be aware that a consultants value can't be judged on a cost per hour. The very reason you are consulting is that there is nobody inside the company who has the knowledge. The alternative is to throw some of your own people at it and try to figure it out for yourself at a cost of whatever their combined wages are. You may even decide to send someone to school at a cost of a few thousand plus expenses, and the employees wages while away. The fact is, you bring in a consultant because you need some specialized help for a short term. If you need something done and will lose a $100,000 contract without it, cost of getting it done suddenly becomes a lesser consideration. If, at the end of it all the job is done right, management will accept the cost and congratulate itself for getting it done. If, on the other hand the low cost consultant does a botch-up job, the irresponsible person who hired him/her had better hide.

When it comes to consultants, it is just like everything else; you get what you pay for. By all means, shop for a consultant. Find the best one you can on the subject and verify he/she is the best. Pick the consultant that will realize the best benefit to your company - and I'm not talking dollars per hour.

Dave
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  Post Number #35  
Old 1st June 2005, 11:24 AM
AllanJ

 
 
Total Posts: 309
There are many people calling themselves "consultants". Indeed, I suspect the supply exceeds the demand. In the quality world, much that these people offer is a commodity and subject to the laws of supply and demand. The fact is that what they offer is readily available from any number of sources and cannot justify premium fees. But, there are a few people around (I stress a few) who by virtue of their experience and ability can deliver superior value for money. They have a franchise, as a result and are generally worth their fees.

If a client is concerned about the cost of hiring the right consultant, they are forgetting the benefit they wish to receive. Like any other expense, clients must consider the return on their investment. Of course, when it comes to consultants, management is wary because of the horror stories of rip-off and poor service. For that reason large firms tend to patronise the more famous consultancies and pay high fees. What they forget, of course, is that in the end regardless of how the consultant is employed, it all comes down to the individual doing the job. Size of firm is not an infallible indicator of integrity, reliability or quality, as events of recent years has demonstrated.

Last edited by AllanJ; 1st June 2005 at 11:26 AM. Reason: Typo
  Post Number #36  
Old 31st August 2005, 01:55 AM
Helmut Jilling

 
 
Total Posts: 4,358
Quote:
In Reply to Parent Post by Aaron Lupo

Hmmm this is a loaded question I say any penny you pay a consultant is too much! J/K

Actually I have seen consultants charge from 600/per man day to 30K for the year to help them implement a system. I guess what it boils down to, get what you can from where you can. If you know a company with deep pockets can afford to pay more than charge them more (I know that sounds unethical, but who said consultants had any ethics. Once again JUST KIDDING!) and on the flip side cut the smaller companies some slack. I think Hfowler was pretty much right on most charge 800-1600 per man day plus expenses.
I charge my clients 1200-1500 per day, and probably save them 10 times that much. Therefore, I don't need to work under a contract. We have a simple agreement. If they think they are getting their money's worth, then they can invite me back. So far, most of them invite me back. See, I can do all that and still have ethics!
  Post Number #37  
Old 14th September 2005, 02:11 PM
nielsmx

 
 
Total Posts: 5
If people ask me what my Project Coaching costs, my standard reply is "If it would cost, I wouldn't do it".
I devised a project management approach to help projects generally deliver successfully, in 30% shorter time, based on PDCA and ROI (see web site in member profile). After having coached more than 30 projects in 12 organizations, I dare to work on a no-cure-no-pay basis. I think any consultant should be prepared to do that.
If people think I am expensive (charging some $2000 per day plus travel), I suggest that we split the profit.
We calculate the average time overrun of 5 previous projects. Then we add the overrun percentage to the current project. Then I suggest to split the profit of every day saved. The result (after some calculation by the client): they pay me by the day.
Example of savings at a recent client: 40 people in the project plus missed/gained profits per day: $70,000 per day. If I can make them save many days, by coaching several days, who's talking about my cost?
Remember that the consequential gains of your advice usually is (or should be) way more than the direct implementation cost. Why else would you do it anyway?
  Post Number #38  
Old 14th September 2005, 02:28 PM
Jim Wynne's Avatar
Jim Wynne

 
 
Total Posts: 14,155
Quote:
In Reply to Parent Post by nielsmx

If people ask me what my Project Coaching costs, my standard reply is "If it would cost, I wouldn't do it".
I devised a project management approach to help projects generally deliver successfully, in 30% shorter time, based on PDCA and ROI (see web site in profile). After having coached more than 30 projects in 12 organizations, I dare to work on a no-cure-no-pay basis. I think any consultant should be prepared to do that.
If people think I am expensive (charging some $2000 per day plus travel), I suggest that we split the profit.
We calculate the average time overrun of 5 previous projects. Then we add the overrun percentage to the current project. Then I suggest to split the profit of every day saved. The result (after some calculation by the client): they pay me by the day.
Example of savings at a recent client: 40 people in the project plus missed/gained profits per day: $70,000 per day. If I can make them save many days, by coaching several days, who's talking about my cost?
Remember that the consequential gains of your advice usually is (or should be) way more than the direct implementation cost. Why else would you do it anyway?
Welcome to the Cove, nielsmx . There's another way to look at this, of course. Unless you're in possession of a magic elixir then we must assume that you're teaching the organization something they should be able to do for themselves (i.e., implement common sense), and your fee represents waste in addition to the money that's already been wasted by not using common sense.
Quote:
In Reply to Parent Post by neilsmx

Why else would you do it anyway?

One possible answer:
Quote:
In Reply to Parent Post by neilsmx

$2000 per day plus travel
  Post Number #39  
Old 14th September 2005, 02:56 PM
Statistical Steven's Avatar
Statistical Steven

 
 
Total Posts: 1,068
First and foremost fees charged are a function of supply and demand. If there is a glut of consultants with similar skill sets, the rates go down.

I do statistical consulting and have rates that vary depending on the length of the engagement, and what other consultants would charge the client.

I could have charged one client 5x what I did, and they would have paid it since I was one of the few people who knew their process, and could help them meet a critical deadline. So it is all relative.
  Post Number #40  
Old 14th September 2005, 03:02 PM
nielsmx

 
 
Total Posts: 5
Yes, it is about implementing common sense. But common sense apparently is not trivial. The trick is how to help people to use the common sense. If using common sense saves a lot of cost and helping the people how to use their common sense (because nobody taught them before), then spending money on a coach is not waste.
It would be waste if the coach would not succeed.
Some people find the function of a Project Coach strange. One CEO told me: "I hired professionals. These people are supposed to know how to run a project." Well, if that were the case, most projects would run smoothly.
In sports, people know the value of a coach.
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