How much do consultants charge per hour

WHAT DOES BUSINESS CONSULTING COST?

An overview of fees, costs & prices for management consultancy

One of the questions that we have to answer our prospective customers almost every day is the question of costs. In short: what does it cost Business consulting? And as is so often the case with short, specific questions: The answer is often not that simple. Because the price range varies from less than a hundred euros per month to five-digit amounts per day.

Whether you are yours now Piggy bank slaughter depends on many factors: the scope and type of advice, size of the consulting company and team and billing model are usually decisive.

Different billing models influence the costs

Sure: The way in which the prices are calculated determines the amount on the invoice. There are basically four approaches: The project, the monthly flat rate, success-based or time-dependent.


Project - one-time and firmly budgeted

According to the definition of the Gabler Wirtschaftslexikons is a Project a time-limited, relatively innovative and risky task. Most companies and departments have a certain budget available for the respective projects, so if necessary, part of this budget is planned for management consulting.

This means that the project business is usually firmly budgeted and management consultancies offer fixed price offers for a certain scope of consulting within the framework of a project. These fixed prices result from estimated and empirical values, the task and the resulting consulting service.

Pros and cons: Similar to project budgets, the budgets for advice are planned, approved and set. In the end, however, no one can guarantee that the budget will be sufficient for your project.





Monthly flat rate - recurring fixed amount

This model is particularly interesting if you plan to work together over the long term. Here, an amount is usually determined on the basis of experience and estimated values, the approximate duration and time intensity and the scope of the consultation, which is due monthly. This model is particularly interesting for medium-sized companies that are not overwhelmed by costs and still have a permanent partner.

This model is usually linked to longer terms or periods of notice, which can have positive effects for both parties: The consultant has a little more planning security and can usually grant a discount.

Pros and cons: As tempting as the flat rate principle is, it just doesn't fit all companies. As a consultant, you run the risk of working more than expected and losing work elsewhere. The other extreme also occurs, of course: Once you get used to the fixed amount, less and less service is provided, although the costs remain the same.

Success-based - only those who perform are paid

A success-based billing model means nothing other than that money only flows when success can be measured. Sounds great at first: Those who make a difference earn well and if not, then you have nothing to fear. But as simple as it sounds, it is often not. First of all, the parameters must be determined: This can be sales, it can be cost savings or the number of vacancies.

The basic rule is: those who take the risk will cost more if they are successful. For small and medium-sized companies in particular, it can be very expensive if it is successful and all the more expensive if it fails, because the important work was not done successfully. And to be honest: Many of the providers who have a “pay for success” model do not make a serious impression.

Pros and cons: Many management consultancies do not get involved in a success-based billing model because there are simply too many factors that influence success. If you have found a provider, you should be very sure that it is the right one for you.

Time-dependent - every hour is counted

Probably the simplest model is based on a simple calculation: hours times the hourly rate. In this way, very different amounts come together and nobody is bound.

This model is particularly suitable if you only need management advice sporadically. For example, if you have a specific problem of a manageable scope.

The decisive factor here is of course the hourly rate that is used as a basis. And this hourly rate can of course vary - depending on the experience of the consultant, industry and specialization.

Pros and cons: This is a very simple model. It is therefore understandable for all parties and, as a rule, very transparent. If there are billing errors, you can see that immediately. The problem with this is that the advisor watches the time. And she too. This can of course affect the quality of the advice.




FINALLY, THE HOURLY RATES DECIDE

Whichever billing model you choose. Or agree. Ultimately, it is the consultants' hourly rates that are decisive. Because even if they are not openly shown directly in the offer, they are the basis of almost every calculation and every offer.
So if you take a look at the hourly rates, you will quickly see that there is a wide range. From 40 euros to 400 and pretty much everything in between. The explanation lies in the following three factors.

Type of advice

Numbers and dates of the BDU - Federal Association of German Management Consultants have shed some light on the darkness: The type of advice given is a key factor that influences the hourly rate. Include here Strategy consultant among the most expensive, followed closely by Organizational- and process consultants. On the other hand, IT and HR consultancies are somewhat cheaper on average.

Seniority of the advisor

It is actually perfectly clear that the experience and previous success of a consultant have an impact on his hourly rate. The consultant with 15 years of experience and guru status in his field can of course ask for more than the junior consultant who is thrown into the deep end. This can essentially be divided into three segments: the project leader or manager, the professional or consultant and the junior consultant or analyst.

Danger: Some management consultancies are inventive when it comes to job titles. The junior consultant quickly becomes a professional business analyst and the hourly or daily rate skyrockets.

Size of the company

The size of the company is also crucial. And this does not mean your company, but the consulting company. Because if you have to pull a large administrative apparatus behind you, you have to finance it somehow. The stark contrast to this is the freelancer. Accordingly, they can ask for significantly less because they do not need a personnel department, the tax return does not cost that much and much more.

BUSINESS CONSULTING FOR 99 EUROS PER MONTH (?)

While researching this article, we came across some providers who want to sell professional management consultancy for 99 euros per month. We're sticking to the same thing: You can't afford sensible and serious advice for 99 euros, because even a freelancer can do without a maximum of two hours per month and that hardly brings any company forward.

The tragic thing about it: Many companies don't have much more budget or just don't want to spend more. Here we can only advise: Do it yourself. Gradually build up the necessary know-how and get specific support from time to time for individual questions and problems.

What is often forgotten ...

A qualified manager in a medium-sized company receives remuneration of around € 250,000, as _haufe.de_ writes. There are also company cars, vacations, pension commitments and much more. Converted to the day, this results in around € 1,600 per actual working day. Therefore, it is only in the nature of things that a consultant has a daily rate of € 1,600. And that's just the turnover: Just like yours, there are costs such as space costs, IT and marketing.

CONCLUSION: WHAT IS THE RIGHT PRICE NOW?

After more than 1000 words, here's the revelation: There is no right or wrong price. In our opinion, an hourly rate between 100 and 250 euros seems appropriate for medium-sized companies - depending on seniority and area of ​​responsibility. Everything below an hourly rate of 100 euros seems a bit strange at first glance - you cannot do serious business consultancy at a daily rate of less than 800 euros - and anything over 250 euros per hour is hardly manageable and rather daunting, at least for small and medium-sized companies.

If these criteria are met, the only question (for us) is transparency. How is billing done, how is time recorded and how are successes measured? You should clarify these questions in advance before each consultation and, ideally, record them.