Streamline Your Billing Process with Our Consulting Invoice Example for Facilities

Consulting invoice example for Facilities

so if you're starting out management consulting on your own you're starting around management consulting business a question you'll often be faced with I'll be asking yourself is how much to my charge we're going to talk about that tell me right up okay so how much do you charge for your services as a management consultant now on a previous video I talked about the difference of contracting versus consulting and we'll put a link to that up here a contractor is basically getting paid you know 9:00 to 5:00 Monday to Friday for turning up and doing a job within a company generally the management consultant is getting paid to deliver certain results and to a degree very often the clients really not bothered you know how many hours you're putting into it they're paying for a result having said that and I'll talk about this in a subsequent video there are probably two if not three key ways that management consultants charge for their services one is probably a day rate a little bit like contractors and that can be quite handy if the sort of amount of effort there's a bit unknown so you know maybe they they they need some services they think support for sort of three or four weeks but we're really not sure the outcome or the process or something is still a little bit unclear sometimes we'll do that on implementation projects with existing clients we very rarely do it with new clients so sometimes that day rate can work in very often though in management consulting what a client wants is a fixed fee so you're going to deliver a certain outcome whatever that is and they're going to pay you know $25,000 $400,000 whatever there's an agreed price for an agreed outcome and so your challenge then is having to cost that job and a subsequent video I'll talk about how you cost those and then there's perhaps a little bit of a variation and this can be gain sharing or fees for results where either it's totally based on what you deliver or partially so you might have a smaller fixed fee and then deliver it depending on the results so typically this might be for a cost-saving project if we save you a million dollars you know we'll get 10% if we save you twenty million dollars we'll get 5% whatever it is we generally don't do that a lot of consultants do there's a challenge for me with that because I don't think it drives the right behaviour for the consulting firm so if I'm totally focused on the maximum amount of money that I say for the client I'm going to get paid more perhaps it's going to encourage consultants to cut corners maybe - I know I've seen it happen in the logistics industry where they're putting in you know suppliers and things which are not quite up to speed but they're cheaper so sometimes it's not a great outcome for the client so certainly in our business we generally do mainly fixed fee and then some sort of time and materials as we call it or day rates but what do you charge well you get charged right upfront what's your day rate you know how do you calculate your fixed fee that's what I want to talk about so let's just behind me here I'll put up a little table and then I'll tell you where you can get this table so very simply you're going to work back from it's basically cost recovery how much do you need to recover to get a reasonable income and this is one that I did many years ago so we're going to step through how many total working days are there in a year that's 260 we actually use this type of formula when we're working out you know salaries and things for consultants as well so that's quite handy we're then going to take off a couple of weeks holiday here in Australia it's actually 20 days we're going to take out some time for marketing and selling on this particular table I've got 45 that's only a day a week I think you probably want more than that I'd only be aiming for about 60% billing time I think we've then got some time out to get a networking events and on previous videos I talked about networking maybe some time doing administration we've got 20 days this holiday week and then we've got available days to build to clients is 175 so you're going to make all of your annual income in 175 billable days then the likely percentage of days that I'm actually billing I've put 65% and that's a fairly sort of standard figure and management consulting that's sort of the numbers that we use why isn't it a hundred percent well this is not contracting you're not with a client Monday to Friday getting paid for every hour that you're available with management consulting you're working in blocks maybe with multiple clients at the same time and there's going to be downtime between projects particularly when you start and you're on your own and look this is one of the biggest challenges for people who start out on their own they get so focused on delivering the work that they forget to sell the next project so you've got to leave yourself a little bit of free time for sales and marketing okay otherwise it's you know this this sort of high-low thing and you making lots of money and then you finish one project and you've got no client you've got no income for a month so plan on you know something like sixty five percent of your time being billable so on this table the likely days that you're going to build two clients is 114 so that's two hundred and sixty potential working days you're only going to be billing one hundred and fourteen days and then I put a daily rate to clients here it's a little bit more these days of $1,600 and so the potential sales on my own is one hundred eighty two thousand so that helps me with my overall business budget but it also helps me understand what I should be charging for clients so even though I'm doing let's say if I'm doing a timer materials project I might be charging sixteen hundred a day if I'm doing a fixed fee projects then basically what we do in our business is we do a bottom up costing we do it bottom-up top-down all sorts of ways but basically we'll build up a project plan and work out the amount of days of effort that I've got to put in to deliver this outcome and I'm going to base it on sixteen hundred dollars per day how many days that's the fixed fee for that project and I mean it's a lot more complicated than that we'll see I've got to get you know be doing data preparation and planning and meetings and you know it's quite a complex dance chart that we put together for projects could be a hundred different activities on it but the principle is you're going to plan that out work out how many days going to take 1600 a day bang you know mister I miss its client there is the price for this outcome that's how basically your cost projects so if you find that and that useful and I was just kind of reading off this little table here this is actually a free guide seven essential steps to starting your own consulting business I'll stick a link below where you can download that but basically that is how you work out what to charge now you can go down lots of other avenues and then you'll hear about value pricing you know and that's got its place as well so what that means and maybe we'll talk about in another video is maybe it takes ten days to deliver this outcome and then almost 1600 a day that's a sixteen thousand dollar project but maybe the value of that to the client is huge you know and this is where a lot of the the big consulting companies jump in and they'll say this is not sixteen thousand it's fifty thousand for example or a hundred thousand because of the dilute the value it's going to deliver that can happen you know in some cases but you know for a savvy client they'll say oh I'm this is I'm going to take you a week to do so it's a bit of a fine balance depending of course what you're consulting on okay so if you have any questions on that do comment below I will answer all of the questions myself tell me how you do bring your pricing I'd love to hear I mean there's a lot of different ways to do this I'm not just my way and if you're not subscribed to please make sure you hit that subscribe button hit the bell that way you will get notified every time we have a new video coming out and they come out every week on Wednesday I'll see you there [Music] [Music]