While $75 - $85 per hour might seem like enough to sustain you in the IT consulting business, you need to think ahead when setting your rates during startup. If you keep charging those low rates beyond your grand opening special, your business will not become successful enough to last long term.
Think about Overhead Expenses
While when you first do the math, $75 an hour seems to be $150,000 per year in IT consulting it does not really work that way. You can’t bill 2,000 per year. IT consulting professionals just starting out often forget about overhead expenses that develop as their businesses grow. You just can’t handle 40 hours per week every week of billable work if you want to run a computer consulting business.
You need to bill higher rates from the beginning, because starting an IT consulting business is not as easy as it might seem on the surface. While your overhead might be low, especially if you are working from home there will still be expenses, and you will have an inconsistent work schedule.
Your Utilization Rate
You need to always keep your utilization rate in mind. This is basically the reality of only being able to bill out about 75% of the 40 given hours each week. If can take you six months to a year to even get to this level.
The Main Idea about IT Consulting Startup
What happens when your IT consulting business grows and you want to scale up? Keep this in mind when setting your rates appropriately in the beginning.
Added By: Joshua Feinberg