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How to become an independent IT consultant

Matthew Heusser | Oct. 23, 2015
The risk may be high, but the rewards can be even higher. Here are some practical tips for making the leap from employee to independent IT consultant.

Speaking of support, let's talk about three kinds of work. Contracting tends to pay by the hour, and charge for post-implementation support. If you charge an hourly rate, you'll be compared to others who charge by the hour, which can lead to competition against teams from developing nations that can charge very low rates. Consulting and piece-rate work comes in to solve a problem, and can often charge a fee based on the value of the solution. Years ago I got a frantic phone call, asking for some software to do an EDI conversion in a very short timeframe. I could have asked for an hourly rate, at which point we are nickel-and-diming – but I knew the firm and the end customer and about what they would charge; I quoted a rate about one-fifth what they would charge. This limited their risk, yet allowed me to get an hourly rate roughly 3x what I could if forced to put in a competitive bid based on hours worked. One bonus to the client for fixed-rate pricing is the implied satisfaction guarantee; if you call with a question, you won't get a bill for 15 minutes of time. This provides an incentive for a consultant to solve the problem done-done, instead of trying to optimize for billed hours. 

Consulting usually means giving advice; helping an organization understand a specific problem, designing processes, helping to craft the plan, or delivering training. The point of consulting is to increase the capability of the client, so they don't need you anymore. Some people like to implement the solution, to build the product, do the testing and administer the machines. There's nothing wrong with this; we typically call it freelancing when it is part-time or at night, and contracting when the work is on-site, 30 or more hours per week. 

Contracting and freelancing can be easier to sell because people know what they are getting. Consulting is ... squiffy. A typical engagement for consultants is an in-person meeting, interviews, a report with recommendations and a follow-up meeting. We tend to call that process assess and report. The typical assignment is two or three days, plus a day to write the report; if the client can't afford that, we are unlikely to work together well. The report has some ideas to implement, which the team could do internally, or the company might outsource, say, building test tool infrastructure. Some might be training that we offer. In some cases, my company, Excelon, proposes to bid on the follow-up work. Sometimes we don't. 

One thing to consider is the market. It is very challenging to sell products that companies do not understand. Many consultants make the bulk of their income through training, because HR departments and managers understand three-day courses. That allows Monday and Friday for travel or to add two days of consulting onto the assignment as "bookends." 


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