How to set your rate (free download)

Hourly consulting rate

You’ve seen a zillion articles that agonize over complicated hourly consulting rate calculations written by people who charge middle-of-the-road prices (the same people who are either afraid to or don’t know how to compete at the top of their market).How to set your rate

If you want to charge mediocre rates, look elsewhere.

If you choose to keep reading, you’ll find out:

  • how I’ve raised my hourly rate over 100% (my current hourly rate is $195),
  • how I typically earn effective hourly rates between $300 – $1,000+,
  • why I actually DON’T recommend charging hourly, and
  • the proven, best way to set an hourly rate (if you decide to charge hourly anyway).

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Dr.Annabelle B.Jamin - May 23, 2011 Reply

I am very interested to put up a consultancy firm,I am hoping to have more information how to start my business.

Thank you…

admin - May 23, 2011 Reply

Thanks for your comment! Please let me know what info would be helpful in starting your consultancy firm.

Marsha - May 26, 2011 Reply

The whole “How do I figure out how much to charge”? is my biggest worry. This was very helpful. I am a teacher (who has done some consulting on the side, and really enjoy the projects that I have taken on). Prospects for teachers are grim these days, and I am considering the consulting route as an alternative to packing my family up and moving for work. Thanks for the advice.

    admin - May 26, 2011 Reply

    Thanks for your comment, and I’m glad you found it helpful!

    With the lackluster economy, I think a lot of people are looking for additional sources of income, and consulting is definitely a good one.

    As you mentioned, it’s difficult to have to move your family for better job opportunities. However, as a consultant, you’re going to have a lot more freedom to choose where you live. I actually have clients scattered across the country, and none in my home state; I do all the work remotely, and have only had to travel once in 4+ years. That may not be the pattern for all consultants, but you’ll certainly have more flexibility being self-employed.

How to lose clients & look incompetent: setting your rate | Start My Consulting Business - July 19, 2011 Reply

[…] If you haven’t already, check out my earlier article on how to set your consulting rate. […]

Find a profitable niche for your consulting business: Part 2 | Start My Consulting Business - September 11, 2011 Reply

[…] to call potential competitors to see what they charge.  I mentioned this technique in my post on how to set your rate.  Don’t limit yourself to looking only at sole practitioners; if there are companies in your […]

Craig - February 28, 2012 Reply

I really like your website. I have recently started a business consultancy and am interested how you work remotely? I would like to live in the countryside but my clients are in the city and I do not like commuting.


    Greg Miliates - February 28, 2012 Reply


    In a lot of cases, working remotely is possible, but it may depend on your niche and the type of consulting services you provide. For the consulting that I do (database & software consulting for law firms), I’ve only had to go on a client site 1 time in the past 5 years. Sometimes clients ask me if I do on-site work, and although I always say “yes,” I find that either the work can be done remotely or that I can subcontract the on-site work to a colleague. In the case of subcontracting my colleague, she’s a CPA (which I’m not), and so it’s much easier to justify having a CPA on site to either do group training and/or work through the firm’s accounting set-up or clean-up.

    In any case, there are a couple main tools I use for working remotely:

    GoToMeeting: let’s me dial in to a users desktop to see what they see. Invaluable for troubleshooting, as well as remote support. Cost is about $350/year.

    RDP/Terminal Server: This is the main way that I dial in to client sites to do on-site work. The client’s IT person or contractor configures it, then gives me the dial-in info. Free.

    Skype: I use Skype for all my phone calls (which costs about $60/year, including my own phone number). Skype also gives you voicemail, and can forward calls to your mobile phone; you can also do screen sharing, but the resolution is subpar compared to GoToMeeting. Skype also offers video calls.

    Dropbox: This is good for getting files to a client site from my machine since GoToMeeting doesn’t have a file upload feature, and RDP sometimes doesn’t map my machine to allow file sharing. Free.

    YouSendIt: Lets you e-mail large files to clients. Free.

    Google Docs: Let’s you store files (any file type, not just docs) in the cloud, and manage and share files between people. Free.

    If you absolutely must be on-site, you could cluster your on-site visits on a specific day or 2 of the week so that you’re not constantly on the road. That’s similar to how I do my client phone calls, so that I get all the info I need, and can then go off and do the technical work at home, in a cafe, or in my office whenever I want–which means I can schedule other stuff during my days (lunch with my wife, volunteering in my kids’ school, etc.).

    You can check out more tools on my Tools/Resources page:

Ali - March 7, 2012 Reply

well,i found every thing helpfull in here,and thank you so much.but my issue is that i graduated in the worst time of this life when the economy was realy down,i have earned a B.H of electrical and telcommunication and a punch of microsoft certifications,i have not worked in the industry so i thought about openin my own business but am worried cause i don’t have that much experience in the industry,what do you think i have to do?

Thanks again for your help

    Greg Miliates - March 7, 2012 Reply

    Thanks for your comment!

    Don’t worry about how the economy is doing. There are always opportunities, and people will always pay for value.

    Since you have a degree in a specialized technical field, and have technical certifications, that tells me that you have specialized knowledge that businesses will pay for. The next step is determining exactly who your target customers are, and what problems they most need to solve. Once you know that, it’s just a matter of finding and snagging clients. That’s not to say it’ll be easy, but those will be the basic steps you’ll need to follow.

    Creating a successful business requires resourcefulness, creativity, and the confidence that your actions will produce results. So, ignore the economy and any other factors outside your control, and focus on the things you can do to begin creating your business.

Travis - March 13, 2012 Reply

Thanks for the great article man! I’m a staff aug consultant in FL and recently finished a contract and have been really thinking about starting my own consulting business. Are there any tips you can offer that’ll help me get started? For example, since it’ll be only me working should I create a sole proprietorship or an LLC? Any info would be greatly appreciated. Thanks in advance!

    Greg Miliates - March 13, 2012 Reply

    Thanks for your comment–glad you found the article useful.

    As for choosing a business entity, I’d be inclined to go with either an LLC or s-corp, since they offer some liability protection and can also give you some tax benefits. You can check out an article I did on choosing a legal entity here:

    Of course–obligatory caveat–I’m not an accountant or attorney, so you’ll want to seek the advice of qualified professionals.

Matt - April 5, 2013 Reply

Not sure if this thread is still being monitored but…I am going to do some consulting for a short to mid time period (maybe the rest of the year). The rate I will be earning is in line with the formula above so thanks for that info. As I will only be consulting for 20 hours a month (to assist a former employer) i am wondering if it is worth forming an LLC, S-Corp, or similar or since the income will be relatively small for the year, is it even worth it. Any opinions?

    Greg Miliates - April 5, 2013 Reply

    Hey, Matt, thanks for your comment! LLC’s and s-corp’s can be fairly equivalent, but it depends on the specifics of your situation.

    One other thing to keep in mind is that when consulting for a former employer, they’ll often have a tendency to still treat you as an employee. So, you’ll want to be clear about the ground rules and expectations going in. Same idea with your consulting rate for your former employer: they’ll typically want to pay you roughly your former salary hourly rate, instead of the market consulting rate for your services. However, even better would be to use value-based pricing for the project, since that has the potential to greatly boost your effective hourly rate.

Nina - April 16, 2013 Reply

I’m planning to work as online consultant since I studied business (international business and HR and management) at university of applied sciences. how can I determine my rate and get clients? I would do business consulting, HR consulting and investment advising. I would like to have clients from many countries since I speak and write many languages.

    Greg Miliates - April 21, 2013 Reply

    Hey, Nina, thanks for your comment! That’s a great question. What I’d first do is target the exact type of markets and potential clients with whom you want to work. Next, you’ll need to find out who your competitors are in that target market, and get an idea of what the prevailing rates are. Those will be a guide for your rates. However, and more important, you’ll need to peg your rates based on the specific, quantifiable value you can provide your clients.

    Natalya - June 13, 2013 Reply

    Hi Nina, My name is Natalya, I have actually worked in this specific inviroment for the past 5 years – Int’l HR, process improvement, mergers, realigning polcies and proceedures, and I am also bilingual. I am now stay at home mom and looking for ways to get into consulting – would you like to team up?

    Hi Greg, do you think it is a good idea to team up or the start up should be flown solo? I sense there are multiple benefits to having a partner in different state – increased access to more clients for one, but can you think of watch outs or reasons not to?
    Thank you both for reading and posting and your responses.

      Greg Miliates - June 13, 2013 Reply

      Hey, Natalya, thanks for the question!

      This is actually a really good question. When I was first thinking of forming my consulting s-corp, I considered a formal partnership with another consultant, since we had complimentary skills, etc. In the end, I decided not to partner, and it was a really good decision.

      Dave Ramsey (the financial counselor) says that the only kind of ship that doesn’t sail is a partnership. Glib, but true.

      Business partnerships are a bit like marriage, so if you’re not completely in sync with your partner(s), you’re in for lots of trouble and lots of stress.

      What I’ve found works far better was to form my own business entity, then informally partner with other consultants. Essentially, we refer clients back and forth, and now, rather than referring clients away, I’ll keep the client, but subcontract work that I can’t/don’t personally do. That way, I control and keep the client relationship.

Tal - April 19, 2013 Reply

I do regulatory paperwork for small mom and pop enterprises that avoid contracts like the plague. They like doing business with a handshake or just a phone call. Am I missing some liability here for losing income or working on the cheap? Excellent article-just what I’ve been looking for.

    Greg Miliates - April 21, 2013 Reply

    Thanks for your comment, Tal! That’s actually OK if clients don’t prefer to use a contract; for solo consultants, you’ll rarely if ever end up enforcing a contract by using an attorney anyway. More important is to screen potential clients beforehand so you reduce the chances that they’ll be a non-paying, or discount-chasing, or high-maintenance client. People who are easy to work with before the sale are typically easy to work with during the project. If your gut tells you something’s wrong, then it usually is.

Tonya - April 26, 2013 Reply

Thank you! I’m considering leaving a long term full time job to do consulting and this is helpful – actually, it’s very encouraging. I have a few different avenues I could pursue and am going to fully explore this site!

    Greg Miliates - May 7, 2013 Reply

    Hey, Tonya, thanks for your comment–I’m glad you found the article useful!

ImEveryWoman - May 3, 2013 Reply

Great article!!! Thank you soooo much!!!! I own a tax business and only work 4 months a year. I was looking to work as a consultant the other 8 months. I have started 3 successful businesses, and before that worked in management / marketing / fundraising / human resources with the same company as a VP for 13 years. I stumbled on my first consulting job today and my client / friend asked what was my hourly rate. I had no clue! Thank goodness I found you!!! I did the calculations based on model #2 and my hourly rate should be $118 per hour. I will give him a discount being he is a friend and my first client! He has a dermatology practice and a foundation he wants my help with. This is exciting!!! Thanks again! Let me know if you have any tips!!!

    Greg Miliates - May 7, 2013 Reply

    Thanks! One thing I’ve found is that most consultants starting out have a VERY hard time charging market rates–simply because they’re so used to their salary hourly rate. Getting past that hurdle is a huge step, but one that will propel you forward, and literally allow you to earn more and work less.

aeneas - May 15, 2013 Reply

this was very helpful. i have been a manager for five years. over that time i have interviewed hundreds of people. based on my own professional reading and experience as an interviewer, i am looking to start an interviewing consulting business on the side, coaching job seekers how to prepare for interviews. i hold two master’s degrees but neither are an mba. should i consider myself an amateur consultant and pick an hourly rate accordingly? i guess i am wondering if that would be the 3x rule of my current salary as a manager or is it something less since i do not have the mba? does education matter when determining your rate?

    Greg Miliates - May 16, 2013 Reply

    Great question. Generally, your degree and professional certifications matter very little. Personally, I work with attorneys and accounting people doing database/software programming, but am not a programmer/attorney/accountant, and have a B.S. in psychology and an M.A. in recreation (yes, it’s for real); however, my hourly rates are roughly $175.

    The more important factor in setting–and getting paid–your rate is the value you provide to your clients. If there’s little value they get, then your rate will be fairly low; if the value is immense, you can charge what equates to hundreds–or even thousands–of dollars per hour.

    If I were you, I might consider targeting people who are looking for high-paying jobs, since the value of landing that type of job–or negotiating for a higher compensation package–is huge. You can look at what similar consultants charge, but a better approach is to peg your price to the value your clients receive, and maybe pricing yourself at about 10% of the projected value they’d get.

    For example, if you can coach people so they can land 6-figure jobs or negotiate their salary/compensation upwards of 10%, then pricing your services at $1k, $2k, or even $5k+ might be a reasonable investment for your clients to make. Again, you’ll need to consider the value your clients receive from working with you.

      Lindsey Jean Brown - August 18, 2014 Reply

      I loved your comment about the recreation degree – I also have a Master’s in recreation, but a Bachelor’s in sociology and am contemplating creating a P/T youth development/oos time consulting practice.

sonia - August 8, 2013 Reply

Thank you – this was very helpful as I am only just starting off.

    Greg Miliates - August 10, 2013 Reply

    Sure thing, Sonia! Pricing can be a tricky thing–more so because we all get wrapped up in the emotional issues of what we thing we’re worth.

Kate - August 8, 2013 Reply

Hi, I have a question. I have been approached several times with people wanting to start their own product line. I am in the fashion industry with 17 years experience in a niche market. The products they want is outside of my niche market but I’m very knowledgeable with contacts everywhere. Should I still charge my x3 or a little more? I am still at my full time job, so this would be a side business to earn extra $. Thank you!

    Greg Miliates - August 10, 2013 Reply

    Hey, Kate, thanks, and that’s a great question.

    You can do a ballpark 3x rate, since that’s an easy calculation.

    However, I’ve found that it’s better to tie your price to the value you’ll provide to your clients, since you’ll typically end up boosting your effective hourly rate (i.e., the amount you earn compared to the hours you work), and it forces you to highlight the value the client will receive–that way, you re-frame your price as an investment in getting their desired result, rather than a cost for a deliverable.

    The bottom line is that it’s possible to earn far more (anywhere between 50%, 100%, 200%+ more) by pricing on your value rather than a quick 3x rate.

    Here’s an article I wrote on the topic:

lena - September 9, 2013 Reply

great article. would love your insight on my situation. I worked for a health research firm for 4 years, then I moved overseas. They asked if I’d be interested in being their ‘point person’ on the ground to organize logistics for international conferences where I am now based. I took on the role of a consultant with a rate that was calculated using my last full time salary for the organization as a base. I organized one conference last year successfully. They have asked me to help organize 3 short conferences this year at the same rate. I am wondering if I should be negotiating raising my rate, given rise in cost of living, taxes, and if so what is the usual percentage–10%?

Also I asked for the payment to be made in dollars, not local currency. Would that affect the percentage of the ask? And finally if they say no, the rate from last year is the only thing they can offer…how can I turn that into a discussion for future negotiations? I don’t want to burn my bridges as I hope to work for the organization again when I return to the US but want to be compensated fairly.


    Greg Miliates - September 9, 2013 Reply

    Thanks for your comment, Lena!

    Yes, absolutely renegotiate your rate. It’s–sadly–too common for consultants to get hired by their former employer (that’s not the sad part) at essentially their old pro-rated hourly rate, even though the value you provide is far in excess of your hourly rate.

    What I’d suggest is to frame the discussion in terms of what value the client gets from the events/conferences you’re coordinating. Do they get projects/business, new partnerships, market exposure or an “in” to new markets, or some other benefits from these events? Figure out what the client gets, then quantify it as best you can (this might require getting some info from the client).

    Once you have some semi-solid–or at least believable–numbers, you can peg your price to that. Generally, clients find it an easy decision to invest 1/10th to get the value you’ve outlined. For example, if they’ll get $100,000 in new sales per conference, your price could be $10,000.

    And, yes, get payment in dollars (or whatever the client’s home currency is).

    If you focus on the value they get, it’s far easier to justify your pricing. The client doesn’t care about your living expenses, taxes, etc.

Jared - October 14, 2013 Reply

Is it expected that travel expenses are included in the consulting rate? I have been asked to be a consultant on a project with potential for additional projects. To begin, they are paying the travel expenses. I am setting up the contract and need to set the rate. Is it typical that the travel expenses are paid by the customer seperate from the consuting rate?

    Greg Miliates - October 16, 2013 Reply

    Great question. The short answer is, yes, travel expenses are to be paid by the client; however, they are NOT part of your consulting rate. Your consulting rate is completely independent of travel expenses.

    As far as setting your rate, I’ve found it best to always tie my pricing to the value the client will derive. Hourly rates are OK starting out, but you’ll reach a ceiling effect, and won’t be able to charge more than $X/hour eventually, which puts a limit on your revenue.

    Instead, it’s far better to separate your time from your pricing–that way, you can earn far more revenue, and your revenue can be less dependent on your time.

      KM - October 31, 2013 Reply

      Could you elaborate the difference between hourly rate and ‘pricing’ as you mention it here? How can I dictate my price outside of using an hourly rate?
      Great post!

        Greg Miliates - October 31, 2013 Reply

        Sure thing. An hourly rate is one way of pricing your consulting services. However, there are other ways of pricing your services which can allow you to earn more revenue and/or increase your effective rate (your effective rate is how much revenue you earn divided by the # of hours you worked).

        For example, nowadays, I price most of my consulting work on a per-project basis. So, if I price a project at $3,000 and it takes me 10 hours to do the work, my effective rate is $300/hour.

        I’ve also found that since clients don’t care how many hours it takes you to achieve a result, invoicing them with all your time entries actually makes it more work for them. They feel the need to review your time entries, etc. Instead, I invoice them with a single line item for the project.

        So, hourly and per-project are 2 ways to price your services. There are other ways (monthly retainers, daily or weekly rates, revenue sharing agreements, etc.), but generally, moving away from hourly rates will typically earn you more revenue–and motivate you to work more efficiently.

Suleman Bacha - December 4, 2013 Reply

Thanks for such informative article. I was looking for the very same advice which I think you generously provided. I’ve a question. I was working with an environmental consultant group for two years. Now I have left the job and trying to begin my own business/consultancy set up. I am also thinking about some other options such as to be freelancer service provider to a variety of firms, say “individual consultant”. What do you think is the best option for me and what implications could I bear for both? Thanks

    Greg Miliates - January 7, 2014 Reply

    Thanks for the question. If I understand correctly, it sounds like you’re struggling with whether you should go out on your own or as a subcontractor for other firms. Unless you already have clients and consulting work and/or have a big cash reserve to pay your bills while you build your business, you’re nearly always better off starting your business on the side, part-time, while you have a day job that pays your living expenses.

    For your situation, it’s probably going to be quicker to get subcontract work from other consulting firms. However, as a subcontractor, you’ll generally earn less and have less control than working independently.

TheCosmopolitan21 . - January 27, 2014 Reply

Nice page Greg and very good advice, thanks!

Carla - July 18, 2014 Reply


I have been asked by an organization to be a paid consultant on various proposals for a government agency. They thought I would be a good fit since I understand the culture of that government agency and worked in management prior to resigning for maternity reasons. The organization asked me to get back with them on my hourly rate. I am new to consulting and this will be my first paid consultation. How much should I charge and do you have a contract you recommend me to use?

    Greg Miliates - July 23, 2014 Reply

    Hey, Carla, thanks for your comment!

    To answer your question, how you structure your fees and pricing depends on a number of things: whether you want to charge hourly/fixed-price/performance-based/revenue-share/etc., the type of project, type of client, etc.

    Generally, hourly rates limit how much you can earn per hour. It’s possible to earn an effective rate of $1,000/hour (e.g., you charge the client $2k and only work 2 hours on the project), but very few clients will agree to paying you $1,000/hour for projects where you track & report your hours worked.

    If you can, it’s better to scope the project/work, then do a fixed-price or recurring retainer.

MRSM - August 14, 2014 Reply

I am setting up and managing a clinic for a physician that does not live in the same state. Since I am a non-physician I am not able to share the profits. I read similar situations and the recommendation was to work as a consultant for the physician. Since I am not able to base my fees on the profit do you have any other suggestions? I don’t think the physician will agree to an hourly rate because because I work 15 hour days.

    Greg Miliates - September 17, 2014 Reply

    Great question. First, my guess is that it IS possible to structure your fee arrangement so that you receive a share of the profits–it just depends on whether the physician is willing to do that. Next, I’d strongly urge you to peg your pricing to the value the physician receives from your services, instead of an hourly rate. For example, does your work lead to increased revenue, or lower costs, or preventing huge liabilities? Those are all things you can use for the basis of your value, and thus, your pricing.

Sham - February 27, 2015 Reply

This I have been looking for to start my business. Very good info.

Sham - February 27, 2015 Reply

Hello all

Beth - March 18, 2015 Reply

Can you explain how to setup a retainer with a client

    Greg Miliates - March 23, 2015 Reply

    Hey, Beth, sure thing! Briefly, retainers work best when the client wants recurring services–for example, marketing, tech support, content writing, etc.

    From there, you’ll want to identify and quantify all the areas of value the client will receive from your services, and clearly define exactly what the deliverables will be. That’s a REALLY brief overview of the process, and there’s a lot more to actually implementing each of those pieces (identifying value areas, quantifying value, defining deliverables), but that should at least give you the basic framework.

Amy - September 4, 2015 Reply

Hi Greg! i really appreciate your website and all your insightful information. I am 2 months away from graduating with an MBA in Strategy and Management. My bachelors degree was in art with a concentration in quilting and women’s studies. I am also a certified yoga instructor. I’m at the end of my program and I LOVE LOVE LOVE the real-world consulting that I am required to do now. I am working with some great businesses. I put out a social media blast when I was initially looking for businesses to work with and had a very positive response and I went with the best 2 that fit my needs for the reports. There was another 10-15 businesses that I had to turn down.

My questions are thus:
1.) I want to jump right into strategic planning consultations. However, my real world experience is very little. I have all the schooling and textbook understandings down, as well as very thorough templates to base my reports on. What is the best way to go about a career in consulting, fresh out of school, with very little real world experience? Should I seek out internships? Work with a consulting firm? or maintain my miserly day job and start consulting on my own on the side? I’m considering offering a discounted rate to all the businesses that reached out to me on social media and perhaps work with them to build up my portfolio and experience, and then see where that goes.
2) I like this idea of charging per project as opposed to an hourly rate. When charging per project, you consider the value you bring to the company and charge accordingly and often times make a much higher hourly rate. However, strategic planning consulting may not have a clearly defined financial outcome, especially when working with certain functional areas . It really depends on how well the company executes the plan and var ious other market factors. Do you have any tips on how to charge for a strategic plan consultation?


    Greg Miliates - October 12, 2015 Reply

    Hey, Amy, great questions. For question #1, you’ll want to focus on a specific niche market–that way, you’ll be able to target very specific problems and create benefits tailored to that market.

    For your question #2, another approach to pricing (instead of value-pricing), especially where the outcome is more vague, is to use day or weekly rates. That way, the client commits to a larger use of your time, and neither one of you is worrying about watching the clock.

mirabella - January 4, 2016 Reply

Hi Greg,
I am a senior analyst at a fortune 500 international organization. I am great at what I do, but I am looking for a more flexible position . I would like to enter the consulting world. What would your recommendation be?

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