There are a lot of things that are unique about working in the consulting space. But one of the most tricky might be knowing when to ‘collaborate’ or ‘contract’ and how to set your consulting fees in each situation. 

I was recently working with Lauren, who had been approached by an organisation and asked to deliver some training to their clients. Lauren is fairly early in her practice, and because she hasn’t developed a huge amount of IP at this point, she delivers some training herself, and some she contracts out.

In this case the training the client wanted was built around IP that Lauren hadn’t developed yet, and neither had the client. So they asked her to not just deliver the training but to do the design as well. They wanted to ‘collaborate’ with her to develop this IP so that she could then deliver it to their clients 

This is not an unusual situation in the consulting space. However, it does muddy the water a bit. Lauren wasn’t sure what consulting fees she should charge to do this work. There is definitely a different rate for delivering her own IP versus the client’s IP. 

And if she did collaborate on the project, who then owns the IP? Once the design is done, can Lauren take that IP and deliver it to another client, or does it belong to this single client since they developed it in collaboration?

Consulting Fees: Should I ‘Collaborate’ or ‘Contract’

Collaboration Model

Collaboration is generally two or more people or organisations working together in pursuit of common goals. On the other hand, with consulting you are coming in as a subject matter expert or an expert in a particular field. And a contractor is simply hired to perform a task or tasks as directed by the organisation doing the hiring.

Because of these differences in approach, there’s a bit of a sliding scale between collaborating, consulting and contracting. And as the model above shows, the rate that you should charge will slide along that continuum as well. 

• Your IP + Your Clients = $$$$. Where you are delivering your IP to your own clients, then you should definitely charge your full fee. This is all you, all your work and all your design.

• Your IP + Their Clients = $$$. Here it’s your IP, but you are delivering to their clients, so it becomes a collaboration. In this case you might give them a percentage of your fee because they’ve brought you the client. 

• Your Clients + Their IP = $$. When you’re delivering a program and you bring in another expert to deliver their IP to your clients, then you pay them a delivery fee. You will still have your fee for managing and delivering the program, of course.

• Their Clients + Their IP = $. Here there is really no collaboration. You’re simply a ‘talking head’ hired to deliver the client’s own program, so the fee is less again in this case, you’re a contractor. 

As a consultant, you’ll often be asked to partner at a training. The scenarios are usually one of those set in the model above. The key point is to understand your value and where the value sits, so that you can be sure to charge correctly (and to your value!) when these opportunities arise. 

As Oprah Winfrey says, ‘When you undervalue what you do, the world will undervalue who you are.’ 

Making sure that you’re charging the right consulting fees that represent your real value will show your clients (and the world!) that you know your own worth – and they should too!

Who owns the IP when you collaborate?

As Lauren’s situation shows us, the other sticky question that arises when you collaborate is who owns the IP? You can think of this like being a fisherperson. If you’re taking someone else’s trawler out into the ocean, when you get back to shore, who gets to keep the fish? You might be doing the fishing, but if it’s all their equipment, it’s just not clear.

My advice on collaboration versus consulting

This question comes up a lot when people are early in their careers (like Lauren). Collaboration can be an excellent tool for growing any business, including a consulting practice. Research shows that SMEs that collaborate on research and development projects are more successful than those that don’t. But the research also showed that businesses needed to be prepared to collaborate.

I often see consultants stepping into collaboration far too early. They meet someone that is like-minded and decide it would be a great idea to get together to create some IP or develop and deliver some training. The problem here is that generally one person is doing far more work than the other. And once the design or the IP is complete it simply depletes everyone’s value. 

In the end the advice I gave to Lauren was to design the IP herself so that she could then deliver it and use it at her full fee. Importantly she would be able to use it in the future as well without any confusion, which would mean that it’s always her trawler and she could always keep the fish!

Questions to ask yourself!

Interestingly I was asked this question in a recent Content Creation Bootcamp. But after I’d spent some time answering the question and demonstrating the model the chat was flooded with comments saying how helpful this explanation was. While we don’t often talk about consulting fees, understanding how to value yourself and your work is hugely important. If you don’t value you, no one else will!

So before you collaborate, ask yourself:

1. Have I created my own body of work?

2. How do I value my own IP?

3. Am I in a position where collaboration will add to my value rather than deplete it?

4. If I am entering into a collaboration or contract, is the agreement on who owns the IP clear?

Once you have these questions answered you’ll know whether collaboration is right for you, and the consulting fees that will demonstrate your value for each type of project you take on.

I’d love to hear your thoughts….