What Should New Interim Managers And Consultants Charge?

A key question that interim management service providers are often asked is: "What should I charge?"

The Bottom Up Method

A guideline that many executive interim managers and consultants use when developing their pricing model is to assume a utilisation level of 67% per annum. At this level of utilisation, it is necessary to increase income by 50% to maintain a given standard of living. For an individual previously earning a permanent package including bonus, car, pension, private health insurance etc of say £ 80,000 per annum, then a 50% premium gives: £120,000 which when divided by say 240 working days = £ 500 per day.

The Top Down Method

The interim management service provider Russam-GMS often conduct and publish surveys of daily rates, which can be helpful in establishing what the market norm is at any particular time.

However, as a new interim manager irrespective of how you determine what you will charge, it is often advisable to start at a lower daily rate, to get the first interim management jobs on your CV, and once you have these and are more certain of the demand for and value of your skills and expertise, increase your fees thereafter.

Operating Through a Limited Company

Your accountant is better placed to advise you about this, but having established a limited company, won your first interim management jobs and completed a profitable year end, as the shareholder in your business (subject to IR35 legislation) you may wish to draw a significant proportion of your earnings from it as dividends. You'll still pay income tax on dividends, but you won't pay expensive national insurance contributions.

VAT Registration

Virtually all executive interim managers and consultants will need to be VAT registered. This means that VAT is reclaimed on most purchased items; a considerable saving.

Business Link

Your local Business Link may offer some free or inexpensive training courses if you are setting up your own business.