What are you worth? That’s a very difficult question isn’t it, but it’s one a new HR consultant has to get their head around pretty quickly.
Whilst our consultants do all have an hourly rate, and do some work on that basis, we encourage a different mindset wherever possible when it comes to pricing, and that is all around charging on the basis of value added to the client.
This approach works particularly well when it comes to retained HR advice (many of our clients being on regular retainers), but also for project work.
With the retainer, many of the benefits of it aren’t really quantifiable in terms of time spent. But the value they bring to the client can be enormous. Peace of mind is valuable. A consultant who knows the business really well and can be relied upon to give great, commercial, tailored advice every time is a valuable asset to have in your pocket even when you don’t use them. Not having to clock watch (because your consultant is charging by the hour or limiting the hours you get) is valuable. The reduction in stress knowing all your documents and policies are kept up to date and suitable for your business is valuable. The improved performance, attendance and engagement of your workforce is valuable. Issues not even arising or being dealt with really early because your consultant is proactive, knows the business and has a regular review with you to spot upcoming potential flashpoints is valuable.
These benefits continue even in a month where perhaps a client doesn’t need to pick up the phone at all and absolutely nothing happens. In fact, these benefits might be the reason nothing happens, and for a stressed business owner, nothing happening in HR terms is hugely valuable!
And with projects, yes of course the time you anticipate spending on the project must be a factor in your fee, you can and should also consider the impact of the project. What difference will you make to the client? When the project is done, and completed smoothly and successfully, what position will the client be in that they would otherwise not be? What stresses will they have avoided? How much time or money will you have saved them? What improvements will have been made? What legal vulnerabilities will have been avoided? These things all have value. Clients know this, and so should you.
Changing your pricing mindset to move away from purely time spent also has the added benefit of not limiting your earning potential nearly as much. There are only so many hours a week, and if you purely charge on time spent, there is an automatic cap on your business’s turnover. Change at least some of that to involve an element of pricing by value added, and you don’t have nearly as firm a cap on your income.