We just saw a post saying how costing is done for the services of an IFA. That of course, is from the IFA point of view, now let us see how much the advise is worth to the client. Fairly put, each client will value your service at a different level and therefore at a different price.
If YOU are not sure how much you should charge – obviously more wealthy clients will value your time more – you will not even know which client to target.
Actually when you are deciding how much your time is worth to your client, the question to ask is NOT how much your time costs you, but how much the time is worth to your clients?
That figure will be different for different for different clients – depends on how the client values his time. So a client with a higher income and higher wealth will value your time more than a client who is earning lesser and has lesser wealth to be managed. Also the client will have to pay for the back end part of the work too – the kind of work which she cannot see when you are delivering value sitting in front of the client.
Look at the ‘training’ end of my profession. I need to quote a ‘training’ day / training hour when the client wants to consider me as a trainer. I am asked how much will I charge for a one day training or for a 2 hour training. Now comes the tricky part. I am assuming that the preparation for a lecture is about 1 day for the training delivery for a client. The client is a pharma company and he wants a 2 hour training in Puri. (For those who are not sure, Puri is the beach on the east coast of India). Reaching Puri is kinda complicated! One has to take a flight from Mumbai to Bhubaneshwar and the flight is normally one via Kolkatta – the plane reaches at about 1pm or later, and via Kolkatta. So if I have a lecture on Tuesday at 11am, I need to leave on Monday at about 11am and reach Puri by about 5pm. And my transaction is repeated on the reverse side on Wednesday.
So assuming I wish to charge Rs. 10,000 per hour, should I be charging my client Rs. 20,000 or should I be charging for the time spent on this lecture – say 8 hours a day for 3 hours a day? i.e. 24 hours @ 10,000 an hour – which is Rs. 2,40,000 for a 2 hour lecture?
Well here the clients willingness and ability to pay comes into play, and the clients may have to worry about costs. Remember the client is also paying some Rs. 36,000 for the travel, about Rs. 12,000 per day of stay (2 nights minimum), local transport, etc. Thus for the client the cost is not just Rs. 100,000 (assuming I decide to charge this amount) – but another Rs. 65,000 + taxes as applicable. Now arrive at the per hour rate – it comes to about Rs. 100,000 per HOUR! So is this rate justified?
Now tell me what is the formula to use while billing / quoting for a 2 hour talk? and what is fair? client may think Rs. 20,000 is fair, but I will have to provide for the time spent in travelling too. I cannot do any work on Monday, Tue, and Wed.
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