Consulting is an incredibly lucrative field, generating over $100 billion in revenue annually. There are thousands of small and independent consulting firms populating the market. Everyone wants to set a precedent and be the best, but many would-be consultants struggle with pricing their services.

New consultants often tend to undercharge for the services they are providing and struggle to establish a consistent rate for their services. It’s important for consultants to determine how to price their services early on. Some consultants work on a retainer basis, meaning they receive a lump sum or monthly fee for their services. They don’t work on a specific project. It’s more like they’re on-call for regular clients. A retainer agreement may specify how many hours per month the consultant is available for.

Some consultants also work on a project basis. In this scenario, the professional agrees to deliver a finished project for an agreed-upon rate. Difficulties can arise here when changes need to be made to projects. It’s essential to be very specific in agreeing to do work on a project basis. Consultants should either include arrangements for modifications in the initial agreement or be prepared to absorb some extra costs as a project evolves.

Hourly billing is the most common way consultants deliver their services to clients. This arrangement works well for consultants and clients at every level. When working with a young consultant, clients tend to be more comfortable with hourly billing as opposed to project- or retainer-based pricing. Established consultants can charge higher hourly rates based on reputation and experience.

The biggest concern for beginner consultants is the temptation to compete on a price basis only. While setting low prices will get attention, it may attract the wrong type of client: someone who sees price, not value. These clients will likely not stick with consultants as their careers develop and prices increases.

Regardless of the price the consultant finally settles on, it is important to deliver on the goals established for the customer. It’s important to remember that a great consultant will believe in themselves, and in turn, the client will believe in them too.