Setting fees for consulting services is a subject near and dear to the heart of every marketing consultant. Michael Goodman believes there are three philosophical approaches:

Hourly or per-diem means the consultant sets an hourly or daily rate. Goodman believes this serves neither the client nor the consultant very well. Why? The client is motivated to minimize contact with the consultant to keep costs down, while the consultant is rewarded for being inefficient. Further, the consultant is required to maintain detailed time records, an extra task.

Retainer arrangements involve the client and consultant agreeing to a set amount paid over a set period. In such situations, savvy consultants strive to over-deliver on a regular basis so that clients feel they "are receiving very high value for their commitment," claims Goodman. Such arrangements are only feasible after the consultant has proven his or her value to the client.

Project billing involves the client and consultant agreeing in advance to the monetary value to be paid for a specific piece of work. "It is the fairest approach for both the client and the consultant," in Goodman's considered opinion. Why? The consultant is motivated to work efficiently, and the client pays for value received rather than hours worked.

The Po!nt: There are several approaches to setting consulting fees. Consider the implications of each before coming to an agreement.

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