Wednesday, June 18, 2008

How much to charge a client

A company had a boiler that was working intermittently. They tried everything they could do but nothing worked. Finally they called in a consulting engineer, who they knew to be expensive but the best in the business.

He arrived and set to work studying the boiler, checking connections, temperatures, and overall operations. He then stepped back, stroked his chin and after a few minutes, made a mark on the side of the boiler. He then picked up a sledge hammer and took a full swing and hit the mark. The boiler gasped and sputtered, then started to work perfectly.

The consulting engineer then gave his bill to the client. The boss was shocked and said "I'm not paying $1000 for hitting a boiler with a sledge hammer." I need to see a detailed invoice.

The consultant's bill:
Hitting the boiler: $25
Knowing where to hit the boiler: $975

Takeaway: When setting billing rates, explain to your client that much of what you are being compensated for is diagnosis. The 10-20-30 years of experience you bring drives to a solution that the client or consultant can then implement. Consultants get a bad reputation when they try to diagnose without enough experience and then try to prescribe solution without enough skill.

SOURCE: IMC USA Daily Tips for Consultants #794: Explaining Your Fees May 19th, 2008

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