Setting your rate as a fractional consultant is one of the most challenging and ambiguous  exercises to undertake. There’s no structure. No compensation levels. You’re completely on your own! The exciting part, however, is you're no longer waiting on someone else to give you a raise or a promotion. You charge what value you bring, period. 

But understanding how to value yourself can be a consistent challenge. There’s a balance to strike between charging what you’re worth and making sure you’re not pricing yourself out, not to mention deciding how to position your services or knowing when to raise your rates and by how much. 

It can seem daunting enough to keep you from overcoming your fear and launching your business. While there is no one-size-fits-all approach, there are three simple steps you can take to set yourself up for success. 

We break it all down for you in this ultimate pricing guide for your fractional consulting business.

Step 1: Don’t skip the basics 

It can be tempting to build your business plan on big dreams, but make sure those dreams have a solid foundation. Sit down and figure out what you need to earn and what you want to make in the future. 

A good way to think about pricing is: what do you need to make to hit your financial goals for the month? Be sure to factor in how many hours you’d ideally like to work with the understanding that you’ll likely have to put in more time to find clients and grow your business. 

For example, if your goal is to exceed your past salary now that you’re a few years into consulting, that means determining what the monthly breakdown of that new number is, before taxes and including benefits. This approach allows you to determine exactly you want to structure your packaging (more on that in the next step). The experience you’ve gained so far should help you refine your value proposition and allow you to increase your rates, especially as your referrals grow. 

If you get pushback from prospects on your pricing be sure you can highlight how well you know their pain points and exactly how you address those needs and deliver results. 

Step 2: Select the right pricing model 

There’s no one “right way” to structure your pricing and packaging for your fractional consulting business, but there are methods that scale better or are more flexible. We’ll go through the pros and cons of the three options below: hourly, project-based, and retainer. Quick spoiler: we highly recommend getting monthly retainers.

However, as long as you’re fairly paid for services rendered, that matters more than the structures you decide on. Don’t be afraid to mix and match as needed from the four best pricing models we put together below to scale your business and brand.

Hourly

Charging hourly can be great when you’re first getting started with fractional consulting and aren’t sure how long projects will take you to complete. An hourly pricing structure allows you to keep things simple: you set hourly rates, track your hours, and bill clients accordingly.  

However, there is a serious limitation to hourly work if you have deep knowledge and expertise and take on large-scale projects that can go on for weeks or even months. We’ll get into specific pros and cons after we break down how to calculate your hourly rate. 

Here’s how to set your hourly rates: 

• Do a little research to find the average income (salary) for your job, then write it down. For example, "senior marketing director average salary" = $99k 
• Put your average annual income into an hourly calculator and enter '20' in a working week. As a beginner fractional consultant, you won't work 40 hours a week; you'll divide your time between winning and delivering projects. For working weeks in a year, enter '48', if you plan to take off four weeks a year. 
• Going by this equation, a starting hourly rate is around $103 ($99,000 breaks down to $8250 monthly or $2062 weekly, and $103 hourly at 20hrs/week) 

The Mylance community also offers a database and rate calculator to help determine how you should set your pricing. 

Pros

There are some advantages to hourly work, including: 

• Most clients are comfortable with this pricing method 
• It’s perfect for vaguely defined projects in which the project scope might change 
• The longer you take to finish the project, the more you get paid (and if you’re a beginner, you’ll be working some kinks out of your process, which takes time)  
• Easier to compete with experienced consultants early on 

Cons

There are also serious drawbacks to hourly work, especially if you’re more experienced: 

• Your earning potential is limited 
• You might get penalized for quick, efficient work 
• Scheduling issues may arise for clients and consultants if the project takes longer to finish 

Just remember that if you opt for hourly pricing, you can only charge based on the hours you work, not the value you provide. That’s why monthly retainers or per-project fees are often better.

Project rates

A major issue with the per-hour model is that clients feel uncertain about how much they’ll end up spending and uncertainties around projects often lead to cancelation. Clients like project-based rates because they’re goal-oriented: once you solve X problem for them, they pay you, and that specific engagement ends. 

However, projects rarely go according to schedule, which is why project-based pricing is best for more experienced fractional consultants who know how to handle project scope creep or other surprise demands. Although the project-based method is more demanding than the per-hour model, it eliminates all sorts of uncertainties around per-hour billing. Your clients know what they're paying upfront.

Your earnings stay the same– or increase with experience– as you polish your skills and become more efficient. For example, a less experienced writer might charge around $200 per 1500 words and take 20 hours to complete the project. However, after some experience, the same writer takes only 5 hours to write the same piece, increasing their effective hourly rate. 

Here’s how to set your project-based rates: 

• Create a list of project deliverables (or Statement of Work, aka SoW). 
• Estimate the time required for each deliverable to be completed.  
• Add all hours and multiply them by your per-hour rate. For example, 35 hours (total hours needed to complete all deliverables) x $103 = $3605.  
• Multiply it by 1.5 for unexpected follow-up meetings, revisions, etc. Using the same example, $3605 x 1.5 = $5407 for the entire project. 

Additionally, you can include a specific clause in the contract stating the project rate is based on everything outlined within it. Anything beyond the defined scope will be charged at hourly rates or renegotiated.

Be sure to track your performance with each task to better set your rates in the future.

Pros

Benefits of project-based pricing include:

• Focuses on the project outcome and removes time-based billing 
• Helps you easily achieve your revenue goals  
• More predictable income 
• You’re rewarded for efficiency 
• Typically includes advance payments 
• Easy-to-schedule  
• You'll provide better and more effective client service  

Cons

There are, of course, also drawbacks to project-based pricing: 

• You may lose money if you undercut the work scope 
• You can lose earnings (revenue) if the timeline or scope changes and you’re forced to renegotiate 
• Uncertainty with future projects 
• The constant need to adapt 

In the end, you need to consider how long the project will take you and the value you’re delivering to set a fair price. 

Retainers

When it comes to fractional consulting, retainers are the best way to build reliable income. These can be at any cadence, but monthly retainers are the most common. In this approach, you work with and bill your clients each month for an established, recurring revenue. You'll know for certain that your wages will be secure, immediate, and paid in full. This works best for seasoned consultants because you can predict your future income– and plan your client load– more accurately. 

Before deciding your retainer price, agree on a project scope with clients and charge accordingly. Clients will also expect you to be more communicative and inform them about project progress on a predetermined basis; meet or exceed these expectations to showcase your value regularly. If your clients want to extend the scope of your current retainer, increase the price to justify the increase in work on your end.

Here’s how to set your monthly retainer rates: 

• One approach is to base your charges on hourly rates multiplied by the total associated hours. 
• For example, a fractional consultant with a $103 hourly rate on a client retainer for 42 hours every month would set their retainer charges at $4326.

Be sure to establish firm boundaries around scope creep or renegotiate the terms of your retainer. 

Pros

There are a lot of advantages to retainers: 

• A simple yet effective pricing method for fractional consultants and their clients.
• Easy to extend, leading to long-term partnerships with limited or no additional negotiations.
• Provide accurate, predictable income.  
• Clients will focus more on completed tasks than the total number of hours. 
• If the scope of the project increases or your client is moving slowly, it doesn’t affect you; you continue to get paid and work with that client.
• Enables you to charge more due to higher perceived value. 
• Doesn't require estimation; clients may commit to "x number of months" in advance. 

Cons

But of course, nothing comes without its drawbacks: 

• The potential expectation for discounted rates with recurring work. 
• It’s difficult to raise your rates once the contract is in place. 
• Limited earning power with only 12 months to bill your client per year.
• Potential for scope creep. 

Ultimately, retainers allow for more stability but also put a cap on potential earnings with specific clients. 

Expert call  

Another consideration for adding to your services is the expert consultation call, where you meet with clients for a set amount of time to help them meet their objectives. With fractional consulting, time is a valuable commodity, so you should charge appropriately for any on-call consultations you provide. 

It's a good idea to set up a phone line to take paid phone calls. Consultants from various niches can share their advice, knowledge, and experience– and get paid for it. Expert calls are also a great way to analyze the client's requirements, identify and fill knowledge gaps, and help them make informed decisions. 

How much should you charge for these kinds of consultations? That depends on the approach you choose: charging a flat rate, by the minute, or some combination of those (for example, 30 minutes for a set fee, then by the minute after that). 

Pros

Choosing to add expert calls to your pricing and packaging has advantages, including: 

• You only need video calling software and your smartphone to get started.
• The deliverables are quick and easy to arrange.
• Immediate cash flow.

Cons

There are a few drawbacks, too: 

• Preliminary setup may cost a lot if you want an exclusive phone line.
• Clients may ghost you last minute, causing a loss of income.

To avoid the latter, require a deposit ahead of the call or charge a no-show fee. 

Step 3:  Determine your value

With a better understanding of the different pricing models fractional consultants work with, you can better determine your value based on your expertise and experience. The most important thing is to make sure you and the client are on the same page upfront about expectations. You don’t want to find, several weeks in, that they have a different idea of what constitutes value than you do.

Typically, value is based on: 

• Your industry's market rates 
• Your expertise and service offerings 
• What your competitors are charging 

Let’s get into the details for each one. 

Prevalent Market Rates In Your Industry

The rates clients pay for various skills can also vary significantly; anywhere from $50 to $250 per hour depending on different factors from years of experience to geographic location. Be sure to do your own research around standard rates, especially if you’re in a unique niche or a city with a high cost of living. 

Some standard skill sets and their rates include: 

• Marketing consultants often charge between $25-$300 per hour with an average of $100/hour. While SEO experts may be at the upper end of this range, brand strategists and social media consultants are at the middle and lower end, respectively.  
• HR consultants are charging anywhere from $95 to $195 per hour with an average of $140/hour. 
• Product and Operations consultants charge between $80 - $350 per hour, with an average of $150/hour
• Management and tax consultants often charge around $100-$350/hour for the former and $200/hour for the latter. 
• While the average hourly rate for web designers is $75, they can charge clients anywhere from $30-$80/hour. Flat project rates vary from $500-$5000 per site. 
• The hourly rate for UX consultants ranges between $25-$195 per hour, with $70/hour on average. 

If you work with local companies, know that your location can be critical in how much to charge. Clients in coastal areas and cosmopolitan cities often have massive budgets and can pay you more. If you’re working remotely, set your charges based on what's typical at your client's location– not yours.  

Evaluate Your Services And Experience 

Once you know the going rates (market rates), determine where you stand within these ranges. 

As a fractional consultant, you likely have more experience and expertise than an independent marketing consultant at the beginning of their career. It's still wise to set a competitive rate when you’re starting out until you work with a diverse range of clients to begin charging more. Once you have a few years of fractional experience and examples of delivering value to clients under your belt, you can raise your rates accordingly. 

At every stage in your fractional consulting journey, consider what makes you stand out, or your personal value proposition. What makes you unique in your field? Highlight that in addition to communicating tangible skills that enhance your service offerings and any certifications or specific job roles with known brands that verify your expertise. 

You also want to include intangible skills like responsiveness, flexibility, a strong history with deadlines, and adaptability to clients' needs in your value proposition– bonus points if you have these in client testimonials with permission to share. These are all appealing in a fractional consultant. 

Discover What Your Competitors Charge 

Once you know the average industry rates for fractional consultants and your value based on your experience and knowledge, you can check your competitors for further rate adjustments (or ideal rates). 

Wondering why you should compare and compete with others? Chances are you’re not the first fractional consultant your clients have hired, especially if they’re a team looking to scale their business quickly for maximum value. Any company or organization that regularly engages consultants and contractors will know the current market rates and will perceive your worth based on the range you fall in. 

When looking at and analyzing your competitors, be realistic. Avoid comparing yourself to notable thought leaders featured in the Top 100 or Top 500 Forbes list unless you're part of that cohort. But also don’t undervalue yourself because you’ve just started on your fractional journey.  

Look for fractional consultant websites that offer the same services as yours and have similar industry tenure, experience, and target clients. Are your consulting charges on par with theirs? 

Don’t underestimate the value of community, either. Join networking groups or niche-specific Facebook pages to find other fractional consultants and what they’re charging. If you’ve got even more specific questions, speaking directly with other fractional consultants is an excellent way to learn more. You can ask them what they charged when starting, how often they raised their rates, how they up-skilled, and more. 

The Mylance community is a great place to do exactly that.

Advice and stories from top consultants 

If you’re unsure of what pricing model to choose and how exactly to value your services as a fractional consultant, here are a few real-life examples from a Mylance community AMA that can help you decide.  

Jake Jorgovan on the project-based approach

Independent serial entrepreneur Jake Jorgovan found a client who needed an SEO-friendly website. Instead of giving hourly rates like most previous projects, Jake applied the project-based (fixed price) method where the work scope is already defined.  

According to Jake, he ended up quoting the project for around $4250. It only took him 5 hours at most to create the website and the client left happy and satisfied– giving him a big boost in income vs. if he had billed by the hour.   

Matt Griffin on the hourly approach 

Matt Griffin– expert designer and the founder of Bearded Studio– believes hourly pricing is one of the best, go-to options for some consultants. While it’s basic, it protects their interests and helps them earn more, especially for skill sets like design that often involve a lot of back-and-forth and revisions. 

He used a per-hour pricing model to scale his business and manage his office workload. It's a good option for those who are efficient and keep thorough records.  

Deb Zahn on monthly retainers 

Deb Zahn, an experienced healthcare management consultant, loves monthly retainers and always seeks opportunities to use them. Flexibility alongside guaranteed income isn’t always found easily as a fractional consultant.  

She negotiates retainers whenever working as an advisor to CEOs. This position requires flexibility and ongoing support and helps make sure ultimate deciders feel her value. She feels this pricing method works best when she can manage clients' expectations easily.

Set your rates like a pro

Regardless of the pricing method you choose for your fractional consulting business– hourly, project-based, or retainer– make sure to be confident about your rates and understand that all clients care about is the result, not the time you take to finish the project. 

Always consider your needs, the value you provide, and your expertise when setting your rates. Be sure to scale up your pricing as your experience and client portfolio grow.  

We hope this ultimate guide has given you everything you need not only to succeed but to grow your business into the one of your dreams.

Mylance

This value-added article was written by Mylance. Mylance specializes in identifying the highest quality, most curated leads for your fractional business. We use 5 different criteria to identify companies and decision-makers who are likely to need your expertise:

1. Matches your niche / unique expertise.
2. Likely to have the budget.
3. Gaps on their team in your function.
4. Are fractional-friendly.
5. Have warm connections from your network.

To apply for access, submit an application and we'll evaluate your fit for the service. If you’re not ready for lead generation, we also have a free, vetted community for top fractional talent that includes workshops, a rates database, networking, and a lot of free resources to support your fractional business.