You’re not charging enough for your consulting services.
At Actionable, we can say this to you with an exceptionally high degree of confidence.
How can we know this?
We’ve worked with thousands of consultants over the last fifteen years, and we know what folks are charging.
If you are a sole practitioner or part of a duo, that means that either you alone or you and a partner are doing it all.
By doing it all, we mean you’re handling everything – from marketing, to sales, to program design and delivery, to invoicing and accounts payable.
Even if you pay a nominal cost for something like a CRM software or an accounting package, you’re still the one doing all of the heavy lifting.
Let’s say that you’re bringing in $250,000 a year as a sole practitioner – that’s amazing.
Not only are you doing well, but it feels great to be making a quarter of a million dollars a year doing what you love and working in area where you can make an impact.
However, you’re likely thinking of this profit as your personal income, not in terms of revenue for your business.
You know that personal income and business revenue are two very different things, but there’s a common trap that sole practitioners fall into.
Oftentimes, they are under the impression that because they do it all for their business, they don’t have any expenses.
There’s nothing wrong with this approach to running a freelance solo consultancy—until you have the desire to scale it.
Scaling your business doesn’t necessarily mean growing it into a massive unicorn; it could just mean the ability to take a vacation and still get paid, or the ability to leave behind a legacy in your business so it can continue to operate after you’ve retired.
There’s no problem with being a one-man show—until you need to hire.
Then, it’s tough to quantify the value and time you’ve spent performing a certain function that you’re now looking to hire someone for.
Let’s say you run a six-month leadership program; you might spend a third of your time on marketing and sales, a third of your time on design and delivery, and the remaining third of your time on administrative work.
If you hire someone to do the administrative third of the work, what would it cost you to hire a high-caliber person to perform the work? $2,000? If you wanted to hire a marketing professional, what would that cost you?
$4,000? If we say, for the sake of this exercise, you’d hire someone to handle the design and delivery work, what you have to pay that person for each project?
$12,000 If you could add all those payments together, (to $18,000) is that more or less than what you’re charging your clients?
Let’s also assume you’re completing thirty of these projects a year.
If we multiply $18,000 by thirty, we’ll get $540,000 for the year.
If you’d like to earn $250,000 per year, add that in: $790,000 per year. Each of your thirty programs should cost the client $26,333.
Is this more than what you’re charging, or less?
This is what you should be charging (at the very least) if you want to build a scalable business.
Charging more allows you to add necessary expenses: expenses involved in offloading some of the time you spend on the administrative and operation tasks associated with running your business.
This is the time that you don’t get paid for.
Your time is not a free expense.
If you want to scale your freelance consultancy, consider outsourcing certain elements of your business to those with a more dedicated administrative or operations-focused skillset.
But more importantly, recognize that you deserve to be paid for your time and your talents.
As the owner of the business, your time is exceptionally valuable, because you’re the only one who can deliver what you can deliver.
Your clients know that, and it’s why they’re your clients. They’ll be happy to pay for that delivery.
Actionable is on a mission to help boutique consultancies scale their business by giving them the tools to prove and amplify their impact.
If you’re interested in focusing on impact, we’d love to show you how we can help. Book a time to talk with us.
We can’t wait to meet you.