3. Get what you pay for
A major factor in choosing a consultant is, of course, price. Plenty of executives grumble that consultants cost too much and don't do enough. "Most people don't realize that the typical employee costs a company three to four times their base salary," says Carl Kline, CEO of National Consultant Referrals in San Diego. "Consultants are really quite a bargain."
The money saved in employee costs like paperwork, benefits, Social Security, Medicare, office equipment and repair, and support staff-as well as the potential for lawsuits, disability, and severance packages-makes a consultant's pay worthwhile. Not to mention future profits gained from expansion and increased revenue as a result of their work.
With no learning curve, a consultant can swoop in and get the job done. But a good one will cost you, depending on factors like reputation and location. Fees for individuals and smaller firms range from $150 to $500 per hour.
Senior partners at top firms typically charge between $4,000 and $7,000 a day. If your need is well defined or you have a fixed budget, a flat rate works best. For a broader project, like assessing global expansion or designing a corporate strategy, an hourly or daily rate is typical.
Some consultants offer discounts for long-term projects,
such as a drop in fees after a certain number of months, and others offer an equity plan. That gives them an ownership
stake in a new venture or the existing company.
But be wary of placing cost too high on the priority list. "If you go for a specialist, you have to pay,"
says Mike Bartoschek, executive director of the Davenport, Florida–based International Guild of Professional Consultants.
"Big companies use big consulting companies for prestige," says Bartoschek. "But the best bargains are often the small consulting firms. They value their clients more, they are not as quite as expensive, and they respond more rapidly to clients' needs." Companies with small budgets should also look locally so they don't have to incur extra expenses like transportation costs.
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