Hi, I am new to consulting. I have a potential client and I have no idea what fee I should charge, nor how I should collect it monthly? Hourly? I am developing training on new software in which I will have to learn in order to develop it. It will be an interactive training using screenshots and video. No longer than an hour in length.
Do you feel confident in your ability to estimate how many hours it will take to learn the software and develop the course? If so, you can do fixed price. Clients often like this because they know exactly what to budget. If you go this route, you'll get paid by milestones. You might do 50% upfront, 50% on completion or break it down more (40% upfront, 30% when storyboards are approved, 30% on final approval). Try to front load the payments so you get more money at the beginning. That way, if they flake on you at the end, you won't be out as much money.
If you do fixed price, make sure you clearly define the scope, including how you'll handle revisions. Endless revisions are the curse of fixed price projects.
If you think the scope might change or you're not sure how to estimate the hours, charge an hourly rate. I usually bill monthly, but some people bill weekly or biweekly. It partly depends on what your client wants.
I collected several resources for figuring out your hourly rate in this post. This will give you a couple of points to compare to determine what your rate should be.
There's also a whole concept of value-based pricing, but if this is your first consulting project that's probably more complicated than you want to deal with.
Hi, Veverly: Congratulations on your gig. Freelancing is a wild ride. As far as fees, most elearning freelancers (who know their stuff) charge between $40--$100 an hour. Yes, a large spread, yes skills vary widely.
Most likely, it's going to take you longer to build the project than you think. You might start researching industry standards as to how many develpment hours it takes to create 60 minutes of training (depending on level of complexity, you might be looking at 150-300+ hours.) If you can create a contract around a smaller chunk of the project--say needs analysis or storyboard--that might be best all parties involved.
Here are some articles on the Articulate blog that might help:
To tag on to what has been said (good feedback so far), I can't stress the impact over estimating hours can have. I always over estimate and when I come in under the number of hours, it comes in under the client's budget. They like that and they use me again. They also understand that revisions cost time/money so they will get all their feedback at once.
Just thought I'd add an "amen!" To Daniel's advice. I would only advise working by the hour - never by project - and you want to overestimate rather than underestimate hours. Always be the hero who comes in under budget! I also agree with his general range of rates.
Just to add....if you have a potential job, don't be shy!
Ask the prospect what their budget is, and what they expect to get for that. Always assume there is another 10% hidden away, then work backwards, and see if your numbers work that way too.
Great advice from Daniel, broadly correct numbers, but it depends on the client. I once had a situation where a client showed a course I'd built to a contact. The contact wanted the same course, with a few design and voiceover tweaks. I did the changes, (less than a day of work), and my client sold the result to the contact. We charged $1000 less than the budget, (so contact was happy...), but $5000 for a days work was a good result :)
Moral of story - never be scared to ask, because before I did I had suggested an hourly rate.
I have to respectfully disagree with Jackie, many clients IMHO do not like an hourly rate, as it sounds "open ended". I do a lot of work by project.
Think about a 5% discount for the first piece of work, but make sure you are contractually covered for increases thereafter.
Another way is to set your fee based on a % of the amount they think they will save, gain, or reduce loss by, but that does require a deep understanding of the purpose/ROI of the training on your, and their part.
Good points, Bruce! I agree about asking what their budget is. I tell them I charge on an hourly basis, but if they tell me their budget I can tell them what I can give them for that amount - and that my highest priority is to not exceed their budget. That seems to quell the fears of every one of them I work with.
Project rates simply don't work for me. I have yet to see a project that doesn't get delayed on the client end, and I'm not willing to cool my heels for - in some cases - months at a time while they do whatever the heck they're doing - and in the meantime I'm not getting paid for whatever (paying) milestone we nearly reached. So I've invested a ton of time and I'm left hanging. No bueno.
It also comes down to personal motivation. I'm simply far more motivated to make it fantastic if I'm on the clock. Less so if I'm enduring huge delays in getting paid or similar issues. So part of it is personal preference.
That's also why I don't worry about "losing" a potential project by stating I'm compensated by the hour. If they're not on the same page, it won't be a good fit and I'm very (very very!) happy to let them go forth to find their ideal match.
There's more than enough work out there - why take a client or a deal I don't like?
Project rates simply don't work for me. I have yet to see a project that doesn't get delayed on the client end, and I'm not willing to cool my heels for - in some cases - months at a time while they do whatever the heck they're doing - and in the meantime I'm not getting paid for whatever (paying) milestone we nearly reached. So I've invested a ton of time and I'm left hanging. No bueno.
Using Project Rate with "milestone" payments is the standard way to deal with this. I always try and arrange it so that I submit invoices just prior to the "QA" stage, so I have been paid for everything I've done. If they take time, it then just screws up their financial scheduling, so the onus is on them to get it done quickly!
11 Replies
Do you feel confident in your ability to estimate how many hours it will take to learn the software and develop the course? If so, you can do fixed price. Clients often like this because they know exactly what to budget. If you go this route, you'll get paid by milestones. You might do 50% upfront, 50% on completion or break it down more (40% upfront, 30% when storyboards are approved, 30% on final approval). Try to front load the payments so you get more money at the beginning. That way, if they flake on you at the end, you won't be out as much money.
If you do fixed price, make sure you clearly define the scope, including how you'll handle revisions. Endless revisions are the curse of fixed price projects.
If you think the scope might change or you're not sure how to estimate the hours, charge an hourly rate. I usually bill monthly, but some people bill weekly or biweekly. It partly depends on what your client wants.
I collected several resources for figuring out your hourly rate in this post. This will give you a couple of points to compare to determine what your rate should be.
https://christytucker.wordpress.com/2013/09/09/instructional-design-hourly-rates-and-salary/
There's also a whole concept of value-based pricing, but if this is your first consulting project that's probably more complicated than you want to deal with.
Hi, Veverly: Congratulations on your gig. Freelancing is a wild ride. As far as fees, most elearning freelancers (who know their stuff) charge between $40--$100 an hour. Yes, a large spread, yes skills vary widely.
Most likely, it's going to take you longer to build the project than you think. You might start researching industry standards as to how many develpment hours it takes to create 60 minutes of training (depending on level of complexity, you might be looking at 150-300+ hours.) If you can create a contract around a smaller chunk of the project--say needs analysis or storyboard--that might be best all parties involved.
Here are some articles on the Articulate blog that might help:
Launching your career as an elearning freelancer
3 ways to protect yourself with a contract
Last bit of advice: protect yourself with a clear contract, Overestimate the hours it'll take so you have a bit breathing room.
Great question. This is exactly what I was looking for.
To tag on to what has been said (good feedback so far), I can't stress the impact over estimating hours can have. I always over estimate and when I come in under the number of hours, it comes in under the client's budget. They like that and they use me again. They also understand that revisions cost time/money so they will get all their feedback at once.
Thanks you this helped a lot. I appreciate your help.
Thanks so much! You all have made this much easier. I was getting a little
anxious about all of this.
Yes, good point, Jason. Under promise, over deliver. (UPOD). It's all about
setting expectations.
Just thought I'd add an "amen!" To Daniel's advice. I would only advise working by the hour - never by project - and you want to overestimate rather than underestimate hours. Always be the hero who comes in under budget! I also agree with his general range of rates.
Good luck, Veverly!
Just to add....if you have a potential job, don't be shy!
Ask the prospect what their budget is, and what they expect to get for that. Always assume there is another 10% hidden away, then work backwards, and see if your numbers work that way too.
Great advice from Daniel, broadly correct numbers, but it depends on the client. I once had a situation where a client showed a course I'd built to a contact. The contact wanted the same course, with a few design and voiceover tweaks. I did the changes, (less than a day of work), and my client sold the result to the contact. We charged $1000 less than the budget, (so contact was happy...), but $5000 for a days work was a good result :)
Moral of story - never be scared to ask, because before I did I had suggested an hourly rate.
I have to respectfully disagree with Jackie, many clients IMHO do not like an hourly rate, as it sounds "open ended". I do a lot of work by project.
Think about a 5% discount for the first piece of work, but make sure you are contractually covered for increases thereafter.
Another way is to set your fee based on a % of the amount they think they will save, gain, or reduce loss by, but that does require a deep understanding of the purpose/ROI of the training on your, and their part.
Hope that all helps rather than confuses.
Good points, Bruce! I agree about asking what their budget is. I tell them I charge on an hourly basis, but if they tell me their budget I can tell them what I can give them for that amount - and that my highest priority is to not exceed their budget. That seems to quell the fears of every one of them I work with.
Project rates simply don't work for me. I have yet to see a project that doesn't get delayed on the client end, and I'm not willing to cool my heels for - in some cases - months at a time while they do whatever the heck they're doing - and in the meantime I'm not getting paid for whatever (paying) milestone we nearly reached. So I've invested a ton of time and I'm left hanging. No bueno.
It also comes down to personal motivation. I'm simply far more motivated to make it fantastic if I'm on the clock. Less so if I'm enduring huge delays in getting paid or similar issues. So part of it is personal preference.
That's also why I don't worry about "losing" a potential project by stating I'm compensated by the hour. If they're not on the same page, it won't be a good fit and I'm very (very very!) happy to let them go forth to find their ideal match.
There's more than enough work out there - why take a client or a deal I don't like?
Using Project Rate with "milestone" payments is the standard way to deal with this. I always try and arrange it so that I submit invoices just prior to the "QA" stage, so I have been paid for everything I've done. If they take time, it then just screws up their financial scheduling, so the onus is on them to get it done quickly!
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