Are you starting a consulting business in the IT field and wondering what to charge for an initial consultation, or a more in-depth technology assessment/IT audit?

In this article, we’ll look at starting a consulting business with your best foot forward, essentially your right foot-in-the-door, so you don’t inadvertently sabotage yourself with your foot-in-your-mouth.

Now pricing is a very individualized decision. Some sales experts say you should scout around to find out what the competition is charging and then set your price somewhere in the middle. But the most important thing to remember is that you have to think about pricing very carefully before setting your final rates. Changing your prices is going to be very difficult later on, so you have to make sure you set them right in the beginning.

And it certainly is worth pointing out… When you’re starting a consulting business, it’s common to think that prospects make their decisions largely based on price.  The reality however is quite different.  The best qualified prospects are often a lot more tuned into being value-conscious, rather than price-driven, and often pursue a vendor who has the lowest perceived risk, because of their underlying fear of failure.

So consider these following 5 factors that should go into your pricing strategies as you are starting a consulting business, regardless of how and what you decide to charge for your solutions.

1. Geography. Generally, consultants within large cities can command higher billing rates than those in the suburbs. Many of these geographic issues can be traced to monthly overhead or a more general cost of doing business.
2. Scarcity of Skills. You might have a specialty … or be a generalist. You need to think about how in-demand you are to your potential clients as you are starting a consulting business and setting rates. In much the same way that a cardio-thoracic surgeon can charge more for an office visit than a general practice physician, a consulting firm specializing in firewalls, Virtual Private Networking (VPN) and penetration testing will be able to command higher billing rates than a firm that just installs PCs and LANs.
3. Local Demand. How booked up are your competitors? Just like the hotel industry, when consultants start approaching 80% – 85% utilization rates (about 32-34 billable hours per week), prices will get firm. As you are starting a consulting business, make sure you know how busy those in your industry and specialty tend to be. When consultants are sitting at their desks on a Monday morning twiddling their thumbs and hoping their phones will ring, they really need to think about being more aggressive about marketing and awareness-building, or tweaking their specialty to make them more marketable.
4. Overhead. You need to consider how much it costs for you to get trained each year, the cost of lab/test equipment, how much time and money you need to invest in marketing to keep your calendar relatively full, insurance, taxes, professional services (accountants, attorneys, etc.), cell phones, electricity and everything else as you are starting a consulting business. All these overhead items can factor into the prices you will charge your clients, so you can’t ignore them.
5. Client Size. A home-based micro small business will generally have a much smaller IT budget than a 10-person downtown law office. And the 10-person downtown law office will have nowhere near the IT budget as the 100-employee (50 PC) manufacturer. Think about the size of the clients you will be serving and what they can reasonably afford to pay you for your services before setting your prices. And if the size of business you are targeting can’t afford to pay you sustainable rates, it’s probably time to seek out a new target for your services.
   

In this article, we talked about 5 factors that should go into the pricing strategy for your new consulting business. Learn about starting a consulting business and getting great steady, high-paying clients now at http://www.StartingAConsultingBusinessNow.com

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