If your in-house marketing strategies aren’t generating the sales and revenue you want, it might be time to hire a professional marketing consultant. These highly-skilled professionals can pinpoint your marketing strategies’ shortcomings and develop long-term, revenue-driven solutions. However, these solutions come at a cost.
Hiring a marketing consultant will likely be worth your investment—but how much of it can you afford? If you’re wondering how much to charge for marketing consulting, this guide will answer all your questions.
What Does a Marketing Consultant Do?
Marketing consultants assist in developing and implementing strategies for branding and advertising. Some tasks might include:
- Strategy mapping
- Consumer research
- Brand development
- Monitoring campaigns
Compared to native strategists, marketing consultants only work on an as-needed basis, though they can occasionally commit to long-term contracts.
Payment Structures for Marketing Consultants
Marketing consultants typically charge for their services using these payment structures:
As its title suggests, this payment structure requires clients to pay a single, up-front fee with an explicit predetermined deadline. While clients won’t have to pay hidden or additional fees, lump-sum structures prevent project flexibility.
Should clients encounter potential project disruptions, any fee increases can cause disagreements. In addition, flat fees don’t determine costs according to the effort, which can result in potential under-deliveries.
Hourly or Daily Rate
Hourly and daily rates are the most popular payment structures among marketing consultants. These fees are easy to calculate depending on how much work you need to be done and how long it will take. Hourly contracts typically enumerate additional fees and services but are prone to inflating should a contractor take longer to complete a project than expected.
Daily rates are more common within consulting firms. They can range between $1,500 and $3,000, depending on the complexity of the project and the reputation of the consulting firm.
The primary setback with daily rates is the ability to earn more—consultancy firms can only increase profits by working more days.
Results-based payment structures are increasingly popular because of their inherent “fairness.” In most cases, consultancy fees are only partially output-based—the rest are fixed costs. Consultants will only receive the additional results-based fee if their work achieves a specific target.
Companies with an insufficient cash flow are more likely to charge an output-based rate if there is higher earning potential. However, non-time-based rates can put consultants at risk of working slower and charging higher. Should there be any delays in business objectives, clients may have to bear the brunt of the cost.
Similar to output-based rates, risk-reward models consider results instead of the number of hours worked. Clients agree to pay a base fee, which may change according to the risks and rewards involved.
While risk-reward payment schemes are an excellent performance driver, they are less straightforward than other models and require robust monitoring. Not to mention, clients and consultants may disagree regarding the quality of the output.
Consulting retainers are ideal for freelancers who want to earn predictable income. However, consultants who offer this payment structure run the risk of complicating their role within an organization—clients might begin to treat them like employees or demand more than what the agreed-upon fee can accommodate.
Consultants considering a retainer may benefit most from this payment structure in an advisory role. Instead of exhausting resources to deliver output, retainer-based consultants can instead offer their knowledge and expertise.
This type of payment structure isn’t typically recommended for first-time projects, as clients can’t accurately forecast how well the consultant can deliver. In addition, jumping into a consulting retainer from the get-go can encourage consultants to become complacent and allow wiggle room for prioritizing other clients.
Factors That Influence Consultancy Fees
Determining how much consultancy services are worth will ultimately depend on the following factors.
Scope of the Project
Perhaps the biggest determining factor when it comes to calculating consultancy fees is the scope of the project and the required level of involvement.
For instance, strategy-forward consulting will involve high-level business objectives and significant growth efforts. On the other hand, management-level consultants will instead focus on improving existing business strategies, which may potentially require less regular involvement.
Some industries require more hands-on work than others. Advertising-based industries may demand developmental materials or involvement in promotions and PR. Some might only require knowledge, expertise, and insight, leaving execution up to existing in-house teams.
Rates will also vary depending on whether a consultant is self-employed or works as part of a consulting firm.
Education and Experience
On average, marketing consultants make $125,991 a year, with a base pay of $62,258. Naturally, consultants with more experience can charge higher, especially if they have the portfolios to prove their success.
Marketing consultants who work within a consulting firm may be able to charge better rates with higher educational attainment.
How to Calculate Pay Rates
There are multiple ways to approach structuring consultancy fees depending on the chosen payment structure. Below are a few methods of calculation.
Suppose you charge a $15,000 flat rate for a 3-month project. First, divide the total cost by the number of months. In this instance: 15,000/3 months*4 weeks*5 days*8 hours to get an hourly rate of $31.25.
When calculating hourly pay rates, consider that the following factors may influence your final fee.
- Time estimates: When determining how long it’ll take to complete a project, over or underestimation can considerably derail fees. As a rule of thumb, provide some allowance when estimating the number of hours you’ll need to work to achieve a specific goal.
- Team productivity: How many people you employ will depend on the scope of the project. Ensure team productivity and prevent overcharging by explicitly determining project roles and requirements.
Retainer-based engagements demand front-loaded work cycles, especially within startups. Developing a comprehensive inbound marketing campaign for a small to medium-sized business can take nearly 200 billable hours, for which you will have to determine an appropriate baseline rate.
When developing a payment contract, structure yours into two sections: the initial setup and ongoing consultancy. However, determining how long and frequently a client will require your services can be tricky. As such, there are three retainer-based models to choose from that can enhance costing accuracy.
- Hourly-based retainer: Clients pay in advance for a set number of hours.
- Deliverables-based retainer: Clients pay in advance for a set number of deliverables per month. This payment structure does not consider the number of hours worked.
- Performance-based retainer: Clients pay according to set anticipated project milestones. These payment structures work favorably for consultants with a proven success record.
Alternatively, consultants might consider a hybrid approach that combines any of the above payment structures.
How to Reduce Costs
Higher rates promise quality but aren’t typically sustainable for small to medium-sized businesses. Fortunately, there are methods of cutting costs that don’t impact project quality. Below are a few tips for developing accurate and maximized consultancy rates.
- Outline specific goals and objectives. Include subtasks whenever necessary.
- Specify your target audience and goals for conversions.
- Outline your measures of success.
- Cite any legal parameters, assets, and guidelines.
- Include a breakdown of your budget and consider what payment scheme best suits your business.
- Factor in potential additional consultancy costs. Consider business disruptions, logistics, and other hidden costs.
How to Take Client Payments
Despite the rise of the gig economy, many independent marketing consultants have trouble getting paid—at least on time. On top of developing contracts and invoices, below are a few payment methods that ensure on-time payments.
PayPal is among the most popular payment methods for freelancers. It’s free to use, easy to set up, and transfers funds almost immediately. Note that PayPal charges a transaction fee of 2.9% + $0.30.
Now that cashless payments are becoming more commonplace, you won’t be hard-pressed to find a marketing consultant that accepts credit cards. Most consultants accept credit card payments through gateways like PayPal or Stripe.
Many consultants use mobile phone applications to accept credit card payments instead of purchasing costly card terminals.
Electronic Fund Transfer
Electronic fund transfers (EFTs) are quick and easy to facilitate and don’t require the existence of credit card processing companies as middlemen. However, payments can take between two and four days to process (plus transfer approval from both banks).
Consultants with a lengthy list of clients might use accounting software to track income and expenses. In most cases, these software also come equipped with billing and accounting features that enable users to create invoices and get paid faster.
Programs like QuickBooks can even take direct payments, send due date notifications, and provide invoice templates.
The Bottom Line
Knowing how much to compensate a marketing consultant can be tricky, especially considering the number of factors to look out for. However, clearly defined goals and an appropriate payment structure can make the process much simpler for both clients and consultants.
If you’re looking for a Dubai-based digital marketing company that can help improve your marketing strategy, Igloo has over 15 years of experience. Through ample research and relationship-building, we can determine your pain points and address them effectively and appropriately.