How Do Consultants Get Paid?


Consulting engagements are often unique and may include a wide array of projects and results. Given the unique nature of each member, how do you as a business owner determine the optimal compensation package for consultants who urges them to deliver their best?

here are four of the most common compensation packages typically used today.

1. Compensation per hour worked.

hour charges are typical of many professional partners. Accountants and lawyers typically bill per hour of services rendered and consulting engagement can follow a similar pattern. I would recommend paying a consultant at the hour of services rendered by employing limited in scope and amount of time required to complete the project is tight and fairly easy to determine.

Pay per hour is often one of the most reasonable compensation package available in the short term or specific projects when a project has a clear start and end point. On the other hand, if the participation is not clearly defined and objectives are not easily measured, costs can quickly escalate and you may end up paying a significant amount for consultancy hours not yield any real results.

2. Compensation based on a specific initiative implemented successfully.

This model is similar to pay-per-hour participation and initiative are clearly defined. Examples of this engagement initiative are tailored to complete a management initiatives such as writing a business plan, systematize a process, or given a defined business objectives fall within these parameters.

In determining whether paid on-engagement model is appropriate for a specific result considering the following questions 😕

Is participation easily defined end goal and easily measured

will restrict participation defined scope lead to results desired?

Will successful initiative to achieve in the short term with clearly defined goals?

If you answer yes to any of these questions, pay for participation relationship may be the most beneficial for all parties concerned.

3. Compensation based on predetermined targets.

Typically, this consulting engagement is used when there are specific areas within the company that will benefit from a rigorous and structured game plan. Examples of pay per results of participation are the following;

increase in sales of a predetermined outcome

Reducing certain costs of the expected amount of

.. Get specific and clearly defined objectives.

4. Compensation based on specific performance in a predetermined area.

This type of participation is often used when a company is strapped for cash and the owner is willing to give up a percentage of ownership or profits based on improvements company-wide. Start-ups and existing businesses looking to benefit from new product releases or untapped markets will get from this type of involvement. Consultants will often work for little or no upfront fees in exchange for a percentage of stock or ownership in the company, or based strictly on profits realized from employment.

As a business owner you must clearly understand your current financial situation and the anticipated results deposits take effective business consultant. Consider your unique situation and determine whether participation is transient and project based or long-term and results-driven. There really is no hard-and-fast rule to determine the most cost-effective and efficient participation. Speaking openly and honestly with business consultant upfront before employment will ensure that you get the service and leading business requires while your adviser is compensated for services rendered.


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