Why your billing rate is low

We probably all know someone who does the same thing as we do but makes a lot more money doing it. We can sit there in jealousy, wondering how he or she does it. But they are obviously doing something we are not. It’s probably more than one of the items below.

You’re not up to date on technology

There is still demand for mainframe COBOL programmers. But everyone knows it’s not the hottest skill in demand. While organizations still need people to maintain their old back-end systems, they’re paying top dollar for cyber security skills and mobile app developers.

Technology changes at a more rapid rate than ever. Last year’s hot technologies may be obsolete by next year. If you don’t invest the time and money to keep up to date on the latest technologies, you will find fewer companies willing to shell out high billing rates for you.

You’re not up to date on business trends

Similar to technology, business trends also evolve. If you’re recommending direct mail strategies to your clients in a world that that is developing email lists, clients will see you as out of touch.

Consultants need to follow business trends in trade journals, blogs, Ted Talks, and anything else they can get their hands on. Additionally, consultants should belong to industry groups that meet regularly to share ideas and keep each other up on the latest trends.

You’re locked in on a contract

A long-term contract with a client can provide the security you may be looking for. Depending on the terms, it can also keep you locked in at a rate while other consultants are passing you by.

When signing long-term contracts, it is wise to include increases that will at least keep you in line with the cost of living. Otherwise, keep in mind that risk and reward have a direct correlation. If you’re not willing to risk being unbillable, you may not have the luxury of demanding high rates.

You can’t be found

Whether you work as an independent consultant or as part of a large firm, people need to be aware of your skills. As an independent, do you have a website that people can find? You may need to invest in some search engine optimization (SEO) tools to make sure that potential clients can find you for the right skill searches.

Independents should also make sure that they’re always expanding their network. Networking is the greatest way to develop a pipeline of clients.

If you are a consultant working for an established firm, you still need to make sure the decision makers at the firm know your abilities and strengths. If the people who staff projects don’t know you or your skills, your chances of being staffed on the high-billing projects goes down significantly.

You pigeon-holed yourself

Maybe you’ve always had a niche skill. That’s great, until it’s not. Skills that are in high demand can demand high rates. But that demand can fall to the wayside quickly. If your skill is transferrable to another in-demand skill, you can sometimes expand your market with limited retooling.

For instance, let’s say you have several years of web development experience creating user interfaces. With limited training and a little experience, you can expand your marketability to be a mobile app developer. Always consider similar skills that your existing knowledge and experience may cover.

You aren’t selling value

It is the age-old sales debate of features vs. benefits. Features sound great but they don’t necessarily solve problems. Benefits on the other hand, are what really add value for the customer.

When IT consultants sell themselves, they often talk about the skills, knowledge, and experience they have. A technical client may be able to translate that into value. But it shouldn’t be the client’s responsibility. Consultants that want to increase their billing rates should be savvy at explaining to the client why their skill is of value to the client and why they should pay more for it.

You are inefficient

If you waste a lot of time repeating questions or missing important meetings, clients will have problems increasing your rates. Clients see value in productivity. If you can prove to the client that you can produce more than your competition in the same hour that they are working, the client will pay a premium for your hours.

One of the best ways to do this is to be organized. This includes knowing where to access documents and emails from the past. An efficient filing system – for physical and virtual files – will definitely increase your productivity.

Additionally, having a well thought out process for identifying priority tasks and getting them done is imperative. Having a to-do list for each day helps to make sure you’re working on the right things at the right time.

Conclusion

Like any business person, consultants want to maximize their income to the best of their abilities. It’s easy to develop practices that limit your ability to do that. Being aware of those practices can help you avoid those ruts and greatly increase your income.

Are you billing as much as you should be?

As always, I welcome your comments and criticisms.

If you would like to learn more about working in consulting, get Lew’s book Consulting 101: 101 Tips for Success in Consulting at Amazon.com

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