There are lots of questions that you face as a consultant or freelancer, but few are as important as this one: What is my income potential?
There are, of course, other related questions to this one, including:
· How do I improve my income potential?
· How much should I charge?
· How should I structure my fees?
· Can I earn enough to make a career from consulting?
As with most important questions, there is not one clear and easy answer. But, there is an answer out there, and it is your job to find it!
While you will need to discover what your income potential is, we are here to help you start the discovery process.
Determining Your Income Potential
Consultants and freelancers determine their rate using the same four factors. In its simplest terms, your income potential will be determined by:
1. Your Rates
There is a market rate (or range) for the services you offer. Some consultants charge $450 per hour, others only $45. Clearly your income potential is much greater with the higher rates. The good news with consulting is that you can continue to increase your skills which increases your value which increases what you can charge.
2. Your Capacity
How much you can and are willing to work also determines your income potential. Some consultants strive to bill as many hours as possible. Others choose this career to be able to better integrate work and other obligations or interests. But even for those who are willing to work mega hours, your income potential is still capped by the number of hours in your work week.
3. Your Marketing
The efficiency and effectiveness of your marketing systems will determine how much time and money you will spend to secure paying work. With an efficient marketing system, you will be able to spend more time generating income than finding clients. With an effective marketing system, your cost of customer acquisition will be lower – and will yield the right clients for you.
4. Your Scalability
Your business model will determine if you are able to scale beyond just working more hours. Do you have any passive revenue sources, like books or courses? Have you built a business where you can sub-contract work, enabling you to engage in larger projects? You may or may not want to scale your business, but the ability to do so can positively impact your bottom line.
LEAP Resources for Determining Your Income Potential as a Consultant or Freelancer
To help you determine your income potential, we’ve put together a free recording of our LEAP webinar Your Income Potential as an Independent Consultant. Access it and you’ll be able to better understand how to answer the question: What is my income potential as a consultant?
Thinking seriously about a career as an independent consultant? The Launch Series will guide you on your path to a successful consulting business. In this course, you’ll learn from Kris and Katie how to launch or grow your consulting business and how to define your unique niche.
