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Sunday, September 24, 2006

What is an Affordable Consulting Salary for Your Business?

The consulting salary will be a critical element when you are considering what types of employees you can hire as your business expands. In the beginning, you will do most of the consulting work yourself, but as you gain clientele you will need support. Establishing a consulting salary and payment plan that appeals to the best talent will be very important.

From the start of your business, think about whether or not you will be able to afford a highly technically-skilled person that will work best with sweet spot customers. If you are only getting enough revenue to afford to pay someone a consulting salary of $27,000 per year you probably aren’t going to get much interest from the best and most talented consultants.


When envisioning a consulting salary, use the triple billing rule. This means that 1/3 of the revenue will go towards paying for sales and marketing and the second third will go to taxes, insurance and other administrative expenses. The final third will go towards the consulting salaries and other business-related costs. You can set up the following Excel spreadsheet to do a scenario analysis:

1. Put different hourly billing rates through the aforementioned analysis.

2. Set up the overall revenue of the business into the thirds.

3. Analyze the leftovers and try to organize it into a reasonable consulting salary.

The ideal consulting salary should be equivalent to $75 - $125 per hour and support a consulting salary of $40,000 per year or higher.

Blogged By: Computer Consulting Kit