How long is a piece of string?
It is impossible to give a one-size-fits-all answer but this article will explore some of the pricing issues in the world of independent consulting in the international development and social impact spaces.
The issue of fees might be uncomfortable to some IC-Hubbers, as many of us went into this field to make some form of positive social impact that isn't easily measured by the free market. That said, just like with any form of social impact work, your consulting journey needs to be sustainable. It is your livelihood and fees are part of that!
Note that we're talking about our experiences with fees, which are mainly based on daily rates. Some consultants (e.g. copywriters) may charge hourly rates and others price based on a product (e.g. for a training workshop, you may charge per participant).
No, but seriously, how much can I charge?
Okay, we know you might very quickly be looking for a ball-park figure.
For international consultants working for organisations headquartered in higher-income countries (e.g. international NGOs or UN agencies), 300 USD is what we've heard of and consider a standard starting daily rate. We'd consider around 1000 USD to be about as high as you get until you're in the category of star keynote speaker at a large development conference. We don't know anyone personally who consistently charges that.
For our peers (international consultants working for international NGOs and UN agencies), I would say 350-650 USD to be the range for consultants with 5-10 years of career experience.
We also know that for EU development cooperation consultancy assignments, experienced experts (10+ years experience) can earn 800 EUR per working day (update: some other contacts in EuropeAid contractors suggest this figure is closer to 500-600 EUR). Junior experts (3-5 years experience) can earn around 400 EUR (update: some other contacts in EuropeAid contractors suggest this figure is closer to 200-250 EUR).
Factors that influence your rate
Type of client: NGO clients tend to pay less than governments, UN agencies and private-sector clients. International NGOs tend to pay more than national NGOs. We nonetheless know many small NGOs (in high-income countries) can pay international consultants 300 USD daily rates. I've heard of the World Bank and Swiss development donors paying 800 EUR daily rates and flying consultants business class. This "administrative instruction" from the UN Secretariat in 2013 gives an outdated but interesting overview of UN consulting bands and rates for different skill levels (from 180 USD to 980 USD).
Location of assignment: Home-based assignments may (but by no means always) pay less than assignments involving travel, as travel assignments tend to pay per diems (which tend to be high for UN and large institutional donor clients) on top of your fees (NGO clients in the UK often reimburse expenses instead of paying per diems). Similarly, assignments based in your own country may command lower rates than assignments that bring in international consultants from abroad. Assignments in higher-risk countries (e.g. conflict zones) may pay more than those in lower-risk countries. NGOs based in lower-income countries hiring local consultants will likely pay less than those based in higher-income countries, as rates are also influenced by prevailing domestic market rates.
Expertise and experience: Your perceived level of expertise and experience relevant to the assignment will influence how much clients are willing to pay. If you are considered an expert in your field, you will likely command higher fees. In EU development consulting, fees may be based on the number of years of work experience - which they may ask you to prove through work completion certificates or sharing past contracts.
Length of assignment: You may command a higher rate for shorter consultancy assignments. Just like bulk discounts of any kind, you may offer discounts to clients who give you a guaranteed minimum number of working days or the promise of regular work.
"Impact" or complexity of assignment: Consultancy services which could be carried out by in-house staff but which are outsourced for convenience (e.g. everyday administrative tasks like bookkeeping) may generally pay less than tasks where external expertise is sought because it doesn't exist in the organisation (e.g. niche thematic expert). A one-off or occasional exercise to contract a consultant to develop a long-term organisational strategy may pay more than drafting a regular blogpost. A consulting assignment that involves the consultant coordinating a team will likely pay more than an individual consultancy.
Pricing strategies
Predatory pricing: Going in at a lower-than-market rate to "beat the competition". See below why we don't recommend this.
High-value (Veblen-esque) pricing: Or as one IC-Hubber told me once, "Quote the highest price that you are able to say without laughing". She told me she was getting 800 USD per day from UNDP HQ. In other words, quote high to convey that you're a high-value consultant.
Value pricing: Per the meme in our Facebook group, "If I do a job in 30 minutes, it's because I spent 10 years learning how to do that in 30 minutes. You owe me for the years not the minutes." Quote more for projects where you consider your service to be delivering greater measurable value to the client; even when the time commitment on your side is lower. If your research work for a UN agency or international NGO could help them land a multi-million-dollar project, it's worth more than just the hours they're paying you for.
Time/cost-based pricing: Quote the price that you consider your time to be worth, multiplied by the amount of time the task will take you.
Billing for days plus expenses: As we discussed in the Impact Consulting Podcast, some consultants bill solely for working days, while others bill for working days plus certain administrative costs (e.g. printing and phone credit) plus overhead.
"Anchoring" bids in price negotiations: This goes a bit beyond the scope of this article, but there's plenty of literature out there on how to negotiate (prices, wages, etc.). I found this podcast episode to be particularly informative. One aspect of negotiation theories is that the first number quoted will serve as the "anchor" bid; the higher your opening bid, the higher the final negotiated price is likely to be.
Our lessons learned about fees
You won't likely lose work from offering a higher rate: A lot of people are nervous about "going in too high" and losing a client due to quoting too high. This might be the case when bidding cold in response to a fully open call for proposals. But when in direct negotiations with a potential client who is serious about working with you, the worst-case scenario from "going in too high", in our experience, is that the client will counter with a lower offer.
There's little to gain from predatory pricing: On one of my first assignments, I quoted a 150 EUR daily rate. My client later told me they would have paid me more than twice that amount. That person, who had been a consultant herself and became a mentor to me, also made the point that it's important for the client to see you as an expert. Having a respectable daily fee is one indicator that you're a high-value consultant. If I were to go back and do it all again, I wouldn't start below 300 USD.
The whole package is more important than the rate: Many consultants seem to focus far more on daily rates than on the number of working days. It's critical to understand how much work is involved in the total amount of fees. 30 working days billed at 300 USD per day yields about the same amount as 25 working days billed at 350 USD.
It's not all about the money: Look at the bigger picture. Is the assignment a one-off or will it lead to future work or allow you to expand your network or acquire new skills? Is it in line with your vision and mission? Does it lend itself to your skillset and experience? Is it interesting? Is it a good client?
Keep it simple: It's easier for the client if your financial proposal isn't split into various line items (see above point "Billing for days plus expenses").
How much are your fellow IC-Hubbers charging?
We asked the members of our network this question: What was your average daily rate for consultancy work in the last year (in USD)?
We got 29 responses. This is what you said:
Conclusion
There's no right or wrong pricing strategy - only one that's right for you. L personally started with a predatory pricing strategy seven years ago which I now look back on as a mistake. M has also undersold herself in the past.
We now both pursue a strategy where we fix a daily rate that we're happy with and generally refuse work below that rate, providing discounts on occasion for greater numbers of working days and projects that are especially aligned with our missions and visions.
What's your pricing strategy? Let us know in the comments section or via the IC-Hub Google and Facebook groups (IC-Hub members only). Our IC-Hub Start-up Incubator Course also incudes a bonus module on how to set your fees.