Please fill in all fields. Use 0’s when no value is applicable. Please do not use commas (,) or decimal points (.).
When researching the possibilities for consulting in the field of HRD, the following questions should be explored:
- Is there a demand for HRD consultants?
- What types of organizations are hiring HRD consultants?
- Do HRD consultants typically take on an expert, pair of hands, or collaborative role?
- What are some of the strategies for successful internal consulting? What are some of the strategies for successful external consulting?
- What are the major roles that HRD professionals perform to accomplish the purpose of HRD?
- How much should I charge per hour as an external?
Valuing Your Time as a Consultant
This last question, “How much should I charge per hour as an external consultant?”, is one that is asked quite frequently. After all, if you are considering launching your own consulting firm, it’s beneficial to know how to value your time.
First, you will need to decide on a realistic desired annual salary. You don’t want this figure to be so high that you price yourself right out of business. Consider a salary that would allow you to live comfortably.
Next, think about how many hours you will be available during a one year period. You’ll need to exclude the time you will take for vacation, personal days, holidays, and you should even include some hours for those times that you may not be feeling well. The time that you spend initially trying to secure a client is usually considered a free consultation. You’ll want to build in some time for free consultations as well.
Finally, you’ll want to add a percentage for overhead. Your overhead will include things like office rent, office utilities, office equipment and furniture, office help, etc.
Now let’s put this all together and take a look at a formula you can use to value your time as an independent consultant.
Suppose you have decided upon $80,000.00 as your desired annual salary. You’ll need to divide that figure by the number of available hours in the year. There are 52 weeks in a year, multiplied by a 40 hour work week will give you 2,080 hours.
From the 2,080 hours, you will need to deduct vacation, personal days, holidays, and sick time. Let’s suppose that you want 2 weeks for vacation, or 80 hours, 10 personal days, or 80 hours, 3 weeks for initial consultations with clients, or 120 hours, and 2 sick days, or 16 hours. The amount you will deduct from the 2,080 hours is 296 hours, leaving you with 1,784 hours available per year.
A commonly used percentage for overhead is 35 percent. We’ll use this as a multiplier. With all your data compiled, you are now ready to calculate your hourly rate:
1. Desired annual salary, $80,000.00
2. Divided by number of available work hours ÷ 1,784 = 44.84
3. Multiply by overhead percentage x 1.35
4. This gives you your hourly rate, $60.53 per hour
The assumptions of the formula can be changed based on the situation.
By Shirley J. Caruso, M.A., Human Resource Development