Advice for consultants: Setting your rate

Knowing what rate to charge can be one of the biggest challenges for independent consultants, especially those just starting out. According to Susanne Barsoum, founder and CEO of KeyLime International, there are four ingredients — market rate determination, salary history, confidence, and flexibility — which can help when it comes to calculating your rate. Speaking during a Devex webinar earlier this year, Barsoum shared her tips for independent consultants and suggested that market rate determination is the starting point in setting and negotiating your rate. Salary policies can vary between different donors or clients, who may choose to work with ceiling rates, daily rates, or hourly rates. Therefore it’s important to understand your client and what the market for your skills is, said Barsoum. “While you may command a certain rate in one market, you may be limited in another,” she explained, “so you do need to understand how your market, or the submarket that you’re looking into, works.” Networking events can be a good time to gather this kind of information. It’s often easier to have these conversations in a more informal setting and in advance of negotiations, said Barsoum. “Just ask the questions, like ‘how does your organization work with compensation? Do you have categories? Do you have ceiling rates? What do you use to establish a rate?’” she suggested. Some organizations stick firmly to salary history when it comes to determining rates. Yet while these decisions may be driven by the client, Barsoum advised against using salary history as a primary basis for rate negotiations.