One of the greatest things about being a consultant is the fees — if you can get them. Highly paid consultants aren't highly paid for no reason. As with all business arrangements, there's an equitable exchange of money for value. The more valuable you are to your client, the more money you can command. But what makes you valuable as a consultant? Why should the client pay you two or three (or more) times the amount they pay their employees? These are critical questions that you should ask yourself.
What's so special about you?
The value that separates you from an employee is the degree to which you stand out favorably while remaining part of the consistency of the organization. There's a certain paradox here. When executives and managers are looking for a consultant, they're looking for someone to fit within their organization or team; however, they're also looking for someone special — it's the only way they can justify your fee. The way in which you stand out depends on how you invest in yourself and your business.
One of the basic rules of consulting (whether you choose to adopt it or not) is the rule of thirds, which speaks to your expense model. It says, in general, a third of your revenues should go to your salary, a third to expenses, and the final third to contingencies (aka the "stuff happens" bucket). Actually, I feel the rule of thirds is a bit arbitrary, but it serves the purpose of framing your business properly.
Your salary should support your lifestyle not your business, and contingency reserves are tapped retroactively, so your expense bucket (which I like to view as my investment bucket) is your only resource for making sure you stand out. You need to make sure this bucket is large enough, and is used properly as part of a directed strategy. I'll share three of the most powerful investment strategies that have set me apart from the crowd.
Three key ways to invest in yourself1: Invest in powerful tools
Even as a young consultant in the early 1990s, it was not unusual for me to spend thousands of dollars on expensive computers and software — for me, it was just a cost of doing business. I still follow this practice; right now, I have several powerful workstations in my office, and tens of thousands of dollars in privately licensed software. It would be unreasonable for an employee to bear this kind of expense, but for me it creates a distinct advantage. For example, when I was working with Sun Microsystems, I had a private commercial license of TOAD that could spot sessions running in their data warehouse that not even their own database administrators could track down.2: Invest in training and education
I've spent hundreds of thousands of dollars out of my own investment bucket on training, and it has paid off. It's not unusual for me to spend ten or twenty thousand dollars or more on just one high-quality training session. To obtain my Six Sigma black belt, I spent $15,000, and I drove across the country to Illinois so I could learn at Motorola with the best master black belts in the world. I've already made several hundred thousand dollars back in fees on that one investment.
Highly paid consultants look highly paid. I'm always clean cut; I wear a nice watch; and I carry an attractive pen. I carry around an expensive leather organizer (Filofax) and an iPad, which has a custom leather case with my company logo tactfully embossed on the cover. I don't have a resume — I have a press kit in a high-gloss custom presentation folder. When I hand out my business card, it's classy without being gaudy. I have several expensive suits that I routinely wear when I see clients onsite.
You don't want to go too far — which is easy to do in a place like California, where it's not unusual to find people dressed in t-shirts, shorts, and flip-flops — but you do want to make a positive statement with your image.
If you make $300,000 per year, according to the rule of thirds, you should invest about $100,000 of that money on standing out. This is enough money to buy a private license for some high-powered software, a heavy-duty workstation to install it on, an advanced training course on your core skill, and a nice suit.
This may seem like quite an expense to go this far to be a consultant, but if you make wise investments in yourself, your clients will notice, and it will pay off in the long run.
Related IT consultant resources
- Why should clients hire you?
- Help prospective clients justify hiring you
- How to determine your consulting fees
- Self-training for IT consultants: Management and marketing resources
- IT consultant resources about proposals, PM techniques, skill development, ethics
- How you look matters when you're visiting clients
John Weathington is President and CEO of Excellent Management Systems, Inc., a management consultancy that helps executives turn chaotic information into profitable wisdom.