It is time – Consulting Rates to be indexed after years of deadlock!

17/12/2015 | Eclectic |

 

After seven years of crisis we finally dare to say that economy is starting to recover. We are looking at rising demand for consulting services as well as cutting-edge IT projects all over the place. The backlog developed from years of frozen IT budgets is currently worked on diligently.

“Companies feel the need for innovative solutions again and need to keep up with the times.”

At the same time we are still struggling when it comes to appropriate consulting rates. Inflationary compensation has barely been conducted during the past years. Most independent consultants found long-term assignments and a bit of certainty more important than a mark-up of a few euro per hour. Understandable! But in the meanwhile this way of thinking is becoming counterproductive. Customers are totally used to the fact that even very senior consultants have been working for quite moderate prices in the past and complain as soon as they are confronted with rates that are a bit higher than expected.

The consulting industry feels that something needs to happen. Getting back to the level of rates we had
10 years back is not realistic yet, but mark-up on rates needs to be realized step by step in order to catch up. The start of a new year seems to be a good moment to tackle this topic. Price indexing is typically done by many companies. We are used to receiving letters containing information about new prices for the same products and services in January of every year. So why shouldn’t we do the same? A reasonable index needs to be applied, which typically is the average percentage increase in cost of living.

All this sounds quite natural, but we still experience a lot of objection! Why is that? Companies that work with annual price indexing towards their customers seem to have difficulties to accept the same from their suppliers. These companies grant their own workforce salary increases of about 1,5 to 3 percent every year as inflationary compensation. However, the compensation of a freelance consultant is looked at in a different way. But in fact it is nothing else than a salary for a self-employed staff member. Daily life needs to be financed – this applies to an employee as well as an independent consultant!

So the message is clear! We need to work on improving consulting rates for our consultants. And to be perfectly clear on this – I am not talking about only enlarging the margin for us as the facilitating company.

“It’s all about full transparency
and fair pricing.”

 

EclectiC has full transparency agreements with her largest clients. Wholesale prices as well as sales prices for a consultant are made transparent in all order confirmations. Maximum margins for EclectiC are agreed on with the client. Working with EclectiC means working with a true partner!