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How to Structure a Consulting Proposal

dollar signI made a huge mistake, and it probably cost me $5,000 or more. When I first started my website, www.PracticeofthePractice.com, I would occasionally get listeners to my podcast or readers of the blog that wanted consulting.

I’d get an e-mail that would say something like:

“Hey Joe, It’s Jamie from Awesome Counseling in Atlanta. I’ve been listening to your show and want to know how much consulting is? Keep up the great work! -Jamie”

Then I would reply:

“Hey Jamie, thanks so much for listening, glad you like the show. I charge $250 per hour and have some different packages.”

Then I would never hear from Jamie again.

 What Was Happening?

Think about Jamie’s needs. Jamie just wants a price and then determines the value on that price. However, Jamie does not know the actual value of consulting to grow her private practice. I failed to educate her and show my value.

So what did I do?

I started offering 30 minute consults. Then, I learned that I could get most information in 15 minutes. Doing 15-minute free consults forced the potential consulting client to be highly focused. During that time, consultants have a few options:

  • Help the client identify the problem, but not the solution
  • Take one problem and solve it
  • Get a broad overview of all the goals
  • Give the client some action items

I personally hate when people identify a problem and then say, “Pay me and I’ll help you solve it.” It seems kind of slimy. So I try to identify one problem and then give a lot of value. I figure that if I do that for Jamie, she will think, “Wow, Joe just solved that in 15 minutes! What could he do in 45 every other week?!”

Now Jamie sees my consulting value, I can give a ROI she trusts, and my value is not just based on her perceived notion of my worth.

 Constructing a Consulting Proposal

After the call, I then send Jamie a number of “Growth Options.” We all like to feel like we are in control. By giving options it helps the person feel that they can truly decide what they need.

The days of one-size-fits-all are over! If consulting clients are paying you good money, they want an individualized approach.

Next, I determine the cost of the project. One of the biggest errors in structuring consulting proposals is to think about what you are worth to yourself. Instead, professional consultants think about what they are worth to their consulting client.

Imagine that I have a client that wants to start using a WordPress-based website. They want to install all of the latest plug-ins so that they can start ranking higher in Google. Imagine that the consulting client has never designed a website. How would I come up with a starting point for a consulting proposal?

 What is My Consulting Time Worth?

My very first number would be my counseling rate in my private practice. Let’s say that it is $150 per 45 minute session or $200 per hour. If I am turning away potential clients, I need to make at least $200 per hour. Also, I would want to take into account my overhead, preparation time, and other costs. This gives us a basic starting point of $200 per 60 minutes.

 What is My Consulting Time Worth to the Client?

The next question is to evaluate what the time is worth to the client. Imagine that my client charges $100 per session. Maybe WordPress would take them 10 hours to learn, but I can do it in one hour. That means that one hour is worth $1,000.

I would then have a range of $200 to $1,000 per hour. But then we need to also look at what it is worth in results to the client. That is the return-on-investment (ROI). If they invest $1,000 in consulting, when will they make that money back?

 Determining the Return-on-Investment (ROI)

If Jamie starts ranking higher in Google she might be able to charge more, maybe $125 per session. So if she sees just one more client per week that would add up to $500 per month. As a result of my consulting, she gets one more client per week at the higher rate: that would be ($125 x 4), plus the $25 additional per current client. So if she has 10 clients and charges $25 more per week, that would $250/week or $1,000/month.

Already my ROI Worth is $1,500, and that is just from raising prices and ranking higher in Google.

Next in the “Growth Options” I outline the expected ROI. I am very clear that it is not guaranteed. However, after seeing consulting client after client achieve their ambitious results, I have found that I have fairly strong predictive measures.

Consider this example. Someone is charging $65 per session and seeing 20 clients per week. I examine their area rate for private pay, and decide maybe they could be charging $120 per session—although that could lead them to lose 20% of their clients. That would mean 16 clients are retained.

  •  They were earning $1,300/week (20 x $65)
  • They could be earning $1,920/week (16 x $120)
  • That would be $620 additional income per week

Depending on their goals, I may also say that it is reasonable to add one new client per week at $120 per session. So the additional income becomes $740 per week.

Now, say they are looking at a $2,995 consulting package. The expected ROI would be $2,995/$740 = or 4.04 weeks after implementation.

Next, I would think about whether four weeks is a realistic timeline. If not, I would examine what numbers seem realistic. It’s not an exact science, but I always try to under promise and over deliver.

 Why Process Matters

The process of building trust, articulating worth, and teaching the client about the return-on-investment is the goal of a consulting proposal. When potential consulting clients understand how a consultant speeds up the process of learning and leads them to ambitious results, the consultant’s time is worth more!

 

Read: How to Become a Consultant

Read: How to Grow a Consulting Specialty

Read: How to Grow a Consulting Audience

Read: How to Grow an Income as a Consultant

 Image courtesy of www.tradingacademy.com on Flickr.

 

 

How to Structure a Consulting Proposal

Joseph R. Sanok, MA, LLP, LPC, NCC

Joseph Sanok

Joseph R. Sanok, MA, LLP, LPC, NCC teaches consultants how to become better consultants through his website www.BecomeaConsultantToday.com. Joe also helps counselors with growing private practices through his website www.PracticeofthePractice.com. He also loves sailing and playing with his two daughters.

 

APA Reference
Sanok, J. (2015). How to Structure a Consulting Proposal. Psych Central. Retrieved on December 12, 2018, from https://pro.psychcentral.com/how-to-structure-a-consulting-proposal/

 

Scientifically Reviewed
Last updated: 9 Jan 2015
Last reviewed: By John M. Grohol, Psy.D. on 9 Jan 2015
Published on PsychCentral.com. All rights reserved.