Steven Babitsky, Esq.
In consulting, as in many areas of business, setting your fees(pricing) is one of the more complex issues physician consultants will have to deal with. In my experience teaching physician consultants, almost every new physician consultant charges too little for their services. The reasons for this include the incorrect assumption that charging less will get you more assignments, not considering what they bring to the table and how much is at stake, and concerns about what other physician consultants are charging.
The two main ways physician consultants charge is: by the hour and by the job.
CHARGING BY THE HOUR
Charging by the hour has the advantages of being paid for all your time, and theoretically not having to estimate how long the assignment will take. In reality, one of the first things the client will ask is “So how long is this going to take? Can you give us a ballpark figure on the total cost?” If you make the mistake of giving a ballpark figure you will be hard-pressed to exceed this estimate. Consultants can start out with an estimate for initial work not to exceed a certain price. We at SEAK often say that we will not exceed this amount without your prior written approval.
The disadvantages of working by the hour include: the more efficient you are the less you are paid, getting underpaid for those assignments in which your hours are minimal but you bring great value due to your expertise and experience, and continually have to deal with client complaints about your bills.
Having said all this, almost all new physician consultants start out by billing by the hour. Physician consultants will want to make sure that they are not undercharging and selling themselves short. A rule of thumb to start with might be $500 per hour which would increase depending on your level of expertise, and the amounts at stake in the consulting assignment.
CHARGING BY THE JOB (ASSIGNMENT)
Most experienced physician consultants prefer to charge by the job. Charging by the job has the following advantages: the fee is certain and there is no need for ongoing billing, you set the price for the assignment, and you can set a higher price for difficult assignments or where you bring a high level of expertise, and it is more lucrative as your efficiency becomes an advantage instead of a disadvantage.
The downsides of charging by the job include: having to come up with a fair price for an assignment, undercharging when the job turns out to be more complex and time-consuming than you anticipated, and scope creep (e.g. the client expanding the scope of the work after you have given a price).
Physician consultants will want to consider all of their experience, training, and expertise when setting their fees. There is an old saying in consulting which is illuminating: When you have a serious problem, you can’t afford to hire the least expensive consultant.
Steven Babitsky Esq. is one of the trainers on the SEAK streaming video course How to Start, Build, and Run a Successful Consulting Practice. For more information on the video course, see here: https://seak-streaming-content.teachable.com/p/how-to-start-build-and-run-a-successful-physician-consulting-practice.