Sometime your business may be facing a challenge that requires you to work with an expert rather than relying on your in-house employees. It could be a financial consultant, marketing or IT consultant among others. Hiring a consultant means that you are incurring an extra cost in your company and you may be figuring out on be the best price to pay a consultant without harming your financial budget unfairly. Here are some of the things to consider so as to tell whether you are paying your consultant too much or too little.
- Pricing Models For Consultants
A consultant can charge for the services they offer through two models. These are the hourly rate and the project rate or fixed bid whereby they charge based on the project in question. When using the fixed bid model, you will be required to estimate the number of hours you will require to complete the project and then multiply it with the hourly rate. The rate per hour depends on the market charges in the market and other economic factors such as current demand of consultants, status of the economy and the level of expertise of your particular consultant.
As a business owner, you will have to consider some things before deciding on the consultant salary to part with at the end of the day. For instance, if it is hard to estimate the number of hours your project will take, you will be forced to stick to the hourly rate until the project is complete. Also, evaluate the credibility of your consultancy especially when working with an hourly rate because some consultants can decide to work slower so that you can pay them for a longer period. You may be paying too much if you are blindly using the hourly rate and you could be more if you misestimated your project period, because it is hard to revoke a fixed rate contract. Bottom line, apply due diligence when choosing a payment model to ensure you get a value for every penny you paid to the consultancy.
- Consultant As A Full-Time Employee
If you were to compare your in-house marketer salary and consultant salary, you would realize that the difference is quite high. The hourly rate of a consultant may be double or triple the hourly rate of other employees. However, the in-house employee requires an office, vacation time, lunch hours, equipment and benefits such as insurance. A consultant doesn’t require most of these except an office space which he uses for very few hours only. Also, employees waste some time at work in unnecessary breaks, and this also adds to their cost per hour. However, the hourly cost of paying the employee is still lower than of a consultant. This analysis shows that if you would consider hiring a consultant as a full-time employee, the hourly rate will reduce a little bit. However, at the end of the year, the cost of that consultant will be much higher than it would have been if you hired them for a specific project. It is quit uncreative and rarely necessary to have a strategic individual in your company for a full-time basis.
- Value For Your Money
There are reasons why you would consider hiring a professional consultant rather than consulting your own employing with a certain challenge. These include the fact that they have better experience and understanding of whatever problem you are having. Again, it is also good sometimes to get a different perspective when you are dealing with something because in-house employees may be biased in their decisions or opinions as they try to involve emotions and save relationships at work. While you might consider hiring a low paid employees, it all narrows down to the quality of service you get. Why would you want to pay peanuts for gold and then expect that gold to have any more value than that of the peanuts? Whatever you are paying your consultant is a matter of what you are getting from them at the end of the day.
Author Bio: Douglas Pitassi is a freelance writer and small business blogger.
