Using a Consultant

4. Fees and Costs

Consultancy work is usually charged on the basis of a daily fee, sometimes on a fixed fee, and occasionally on a success fee. Some agreed expenses and extra charges may be added.

4.1 A daily fee typically ranges between £200 and £1,000 per day. The fee will be quoted, accompanied by an estimate of how many days' work is required.

• Bear in mind that once a project has begun on a daily rate, the meter is running. Any problems that slow down completion will cost you money.
• Do not pay for work that has no benefit. For example, a grants consultant may suggest reviewing what grants are available, but he or she should know this.

4.2 A fixed fee means that it is the consultant who bears the extra cost if the work takes longer than expected.

To counteract this, the consultant will tend to quote high - so that you pay for it, whether or not there are problems.

• Difficulties arise if the project goes over budget. The consultant may claim you have caused this by changing the brief.
• Fixed fees can tempt consultants to take short cuts, eg re-hashing old work.

4.3 A success fee allows the consultant to earn more if the objective is achieved.

The basic fee may be small, or even zero.

• One danger is that in achieving the stated objective, you sacrifice another objective which is more important.
• Some consultants will take a success fee in the form of an equity stake. For example, if helping to buy or rescue a company.

4.4 Consultants may charge separately for their expenses. Agree what can be charged for.

• Try to limit it to just travel (but usually not first class), and any other specific out-of-pocket costs, all backed by receipts.

4.5 If the consultant is making purchases on your behalf, you should sign them off first.

• For example, a marketing consultant may buy advertising space for you, or a security consultant may purchase equipment.
• Specify that you must receive the benefit of any discounts received.

4.6 The more fees are broken down into fixed segments, the easier it is to get good value.

• Isolate each stage, such as preparation, analysis, proposals and implementation.