How Much am I Worth? Navigating Setting Fees for Self-Employed Work

A funny thing happened in the third week of retirement, which was last week. I worked. Not a lot, but enough to realize that for me as for many people I know, retirement is a process more than a radical change.

However, this process now required me to set a fee for my services. Having been on salary most of my working life, I never needed to establish a fee for self-employed consulting work.

The work in question is with two former-job clients who want to continue working on their business plans with me. Their request was flattering and reassuring. These clients are young, bright, competent, successful, and they want to continue working with me.

That they are willing to pay me I also find really....touching.

But they needed to know "my fee." I told them I'd have to get back to them.

I knew I would find a rationale upon which to base my fee, but it proved more challenging than I expected. For one thing, there is a wide range of definitions and tiers for business plan consulting. Determining where you fall depends, of course, on your experience, how specialized you are, the complexity of the plan, and the size of the business you're working with. Also, demand and supply, and competition. In any case, the initial Google search for business plan consulting fees yielded that the range is between $50 and $500+ per hour. For someone who claims experience in one of the big-four accounting firms (Deloitte, EY, KPMG, and PwC) it can go as high as $1,000.

My fee-setting process became more complicated, after I shared the situation at a family reunion. This triggered a heated, if well-intentioned, discussion about underselling myself.

Their arguments centered around the fact that women in general and I in particular tend to undervalue our market worth, no matter how qualified we are, or how much the employer or client is willing to pay. When I shared the rates I had in mind, the uproar was as loud as if I had said 50 cents an hour. It was time to overcome impostor syndrome, they insisted. (Here's a link about impostor syndrome, if you don't know what that is: https://lhdbenefits.com/resources/addressing-imposter-syndrome-in-the-workplace/)

I offered the reasons some rates might be much higher than mine.

"Oh my God, Alina, stop trying to convince me why you don't deserve to get paid more!" one of my nieces insisted.

I love her!

But my relatives' arguments and examples just weren't persuading me. I wouldn't be worth my salt as a business consultant if I couldn't arrive at a rationale for my own pricing, and defend it. "My relatives say this is what it should be" is not a very strong rationale.

(A side note here: Though I might suffer from some degree of impostor syndrome, I suffer none when it comes to math or writing, which is at least 50% of what I bring to the table. The impostor syndrome that creeps up for me is that I have never been an entrepreneur, which is what my clients are or aspire to be. As such, I am guiding them in an activity I have never undertaken myself. However, I disclose this to every new client, and it has never stopped them from wanting to work with me. Math and writing--that's what they want help with.)

My search for a formula to price my invaluable time began with this approach: If I took my yearly salary, divided by 52 weeks, then by 37.5 hours, what hourly rate would result from that? However, the resulting figure was simply too low to contemplate. This is bound to happen with most non-executive, non-supervisory salaries.

(Another side note here: It doesn't mean I was underpaid, at least not grossly underpaid. My employer bought100% of my hours. I didn't have any overhead costs. I worked from home, had flexible hours, and worked independently. The employer provided excellent health insurance for a pittance, matched retirement savings, and had adequate sick and vacation time. All told, it was a livable wage.)

Back to my search, a variation of the salary method is to take that hourly amount resulting from dividing salary into weeks and hours, and multiplying it by 2 or 3. The rationale here is that your salary already incorporated some measure of market pricing. The multiplier accounts for the benefits and overhead that are not included in the salary, plus a profit.

I tried this, using a factor of 2.5, and I liked the resulting figure. It seemed affordable even for a small business, and would make it worth some of my time. I decided to add a premium to the first hour of work on their new business, to account for the effort of absorbing new information about a business not previously discussed.

I didn't bother to check the competition, because these clients know they can continue consulting with the Florida SBDC at FIU, which offers free services. It wouldn't get more competitive than that. https://business.fiu.edu/faculty-and-research/centers-institutes/sbdc/

I came across another guideline recently, and was gratified to see that my fees fall within those of Thumbtack, a platform for freelancers: "In the U.S., small business consulting fees range rom $50 to $238 an hour, with an average cost of $85."

Last week my clients and I turned on the clock and began to work. I have felt comfortable and confident invoicing and getting paid. They have scheduled a follow-up. I have enjoyed the work and the extra cash.

I remain touched at their trust and willingness to take my guidance. There's something personal about that validation. As you retire and relinquish whatever workplace influence, power or weight you had garnered throughout the years, such validation preserves an essential benefit of paid work: relevance. That might be the biggest compensation of all.

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