IT consulting rates are an essential factor to consider when seeking professional advice and support for your business's technology needs, and this guide will help you understand the various pricing structures, factors that influence the cost, and tips for finding the best IT consulting company for your budget.
The global IT consulting market is projected to pass 100 billion by 2028 — a truly impressive growth!
But this has not always been the case.
In the not so distant past, many organizations especially in the small and medium spectrum tended to view IT consulting as more of an indulgence than an essential investment. This perception appears to be shifting now, though: businesses are coming to understand the utility of IT consulting, especially with the current influence of technology where it’s really hard to compete without using tech tools. Without specialized expertise to guide you through it all, you might as well be writing a blank cheque for your rivals.
Nevertheless, one concern that keeps organizations from tapping into IT consulting services is the rates; there's this assumption that IT consulting is overly expensive. This simply isn't true.
This article takes an in-depth look at the costs of IT consulting for 2023 and provides expert advice on how to get the most out of your expenditure. Our comprehensive research on consulting rates is meticulously curated, reflecting our unwavering commitment to equipping clients with insightful and reliable information for their technology needs.
What does IT Consulting Entail?
IT Consulting is a professional advisory service that helps businesses get the most out of technology. As an organization, IT Consulting can help evaluate your current technology strategies and make sure they are aligned with your business goals and processes.
According to Gartner, IT consulting can be broken down to a couple of core categories of planning:
- Strategic: Helps clients to evaluate their IT requirements and devise system deployment plans.
- Architectural: Combines strategic plans and the knowledge of new technology to come up with a logical system design plus the supporting infrastructure that will meet customer requirements.
- Operational: These services assess the operational efficiency and capacity of the organization’s IT environment.
- Implementation: These services advise clients on roll out and testing of solutions.
Think of it as a service that helps you to assess your current technology needs, identify opportunities for improvement, and provides guidance for developing and implementing solutions that increase efficiency and reduce costs.
Current IT Consulting Rates
What are the current IT consulting rates? How much do IT consultants charge per hour? These are some of the top questions that decision makers in companies are constantly asking when looking to hire IT consultants.
The current average IT consulting rate starts at around $100 per hour among IT consulting companies, and around $50/hour among individual IT consulting professionals working solo. From here, the rates can go as high as $800 per hour and beyond.
The location, experience and size (for companies) are the key factors that determine the rates. For example, a new IT consulting company is likely to charge lower rates compared to an established company with many years of experience.
Most IT companies begin with a base rate, to which they can add more costs depending on what the client needs. For example, consulting company XYZ can tell you that their services start from $100 per hour or $5000 per month. This means that whatever service you want, you’ll not pay below $100 per hour. In other words their most basic service costs $100/hour or $5000 per month. This is the general concept.
Here is a breakdown of the IT consulting rates in USA based on size, which is the top factor that influences the rates:
Average US IT Consulting Rates Per Hour
| Size | Definition | Average Rate ($) |
|---|---|---|
Individual consultant | A professional working solo. Can handle projects for small businesses and solo entrepreneurs, project budget ranging $5k to $50k | 50-150 |
Small | -10-50 employees -$100k-$3M total assets -$100k-$3M annual turnover Can handle projects for small to medium business, with project budget range of $50k-$1M | 100-200 |
Mid-sized | -50-300 employees -$3M-$15M total assets -$3M-$15M annual turnover Can handle projects for any size of company, with a project budget range of $50k to $5 million. | 150-350 |
Large | -Over 300 employees -Over $15M total assets -Over $15M annual turnover They handle extremely large projects e.g. for fortune 500 companies and governments, budget range $5M and above | 400-800 |
Average US IT Consulting Rates Per Month
Depending on the project, you may decide to work with IT consultants on a contractual basis. This is normally the case for projects that will go for long, say six months to one year or more. It would be too expensive to go the hourly way for this kind of project.
In this case you will sign a contract with the consultant. The contract will specify the obligations of the consultant as well as you, the client. If you are looking for help with cloud tools, for example, you might want to go for a Managed cloud services provider.
The contract should be very specific. This is important because any work outside what is specified in the contract will always attract new costs, as the consultant will have to dedicate more resources to that extra task. For example if you hire an IT consultant to oversee your cloud environment, and somewhere down the road you discover that you need to add new tools, you will need to pay for this extra requirement if this service was not captured in the contract. The good thing though is that a consultant who you are already working with will normally give a fairly good discount because you are already a loyal client.
Also read: MSP Contracts Explained
IT Consulting Rates Outside Normal Working Hours
Some IT consultants apply different rates for work that falls outside normal business hours. Good examples include weekends, public holidays, and at night. This is something you should always discuss upfront with your chosen IT consultant to avoid surprises. It’s also possible to find consultants who charge the same rate whatever the timing.
How Much in Total Will IT Consulting Cost You?
It starts with budgeting.
Estimation will help you get a rough idea of how much money you need to put aside for a certain project. This is normally useful at the planning phase when you are preparing to roll out a project but you are still a bit far from the actualization or execution. You need not bother IT consulting companies or professionals at this point. The price they give you today might have changed by the time you are ready to execute.
To estimate, simply define what you want an IT consultant to help you achieve, then check out and compare the prices of the various IT consulting companies that offer that service. As a resource for IT companies, we have many companies in the IT consulting services section. So this is a good place to start.
Confirmation
By the time you want to confirm the rate from your shortlist of IT consulting companies, it means you now have a clear idea of your project and now you just want to execute.
Well, you will call or email the companies and ask for their rates based on your needs. The companies are going to quote their rates either by the hour for small projects, per month or per project for large projects. Remember you had done your own estimations and budgeting earlier so the IT consulting rates they give you should not be very far from your estimation.
If the IT consulting rates they quote for you are below your estimation, good job! If they are more than your estimation, then you'll have to try negotiating. We have some tips for negotiation.
How to Negotiate Lower IT Consulting Rates
The rule of thumb in negotiations is to approach it from the interest of the other party. For IT consultants, their main interests are to secure profitable work. If you can make it long term, then you’re going to be good friends and they are likely to get you a very good IT consulting rate.
These tips can help you to negotiate a lower IT consulting rate while also building a strong working relationship with IT consultants.
- Research the market rates for similar services: This will give you a good idea of what is considered a fair and reasonable rate, and will give you solid data to use as a starting point for your negotiations.
- Ask for a volume discount: If you plan on using the consultant's services frequently or for an extended period of time, ask for a volume discount. This can be a percentage off the hourly rate or a flat discount on a fixed-price contract. Many IT consultants and agencies will be willing to offer a discount to secure a long-term client.
- Be open to alternative solutions: Be open to discussing alternative services or solutions that may be less expensive but still meet your needs. For example, if you're looking for a complex software solution, there may be a more cost-effective option that still fits your needs.
- Negotiate with multiple vendors: Contact multiple vendors and compare the quotes, negotiating with all of them to get the best deal while paying attention to the quality of each vendor’s services.
- Discuss long-term agreements: Long-term agreements may result in lower IT consulting rates than short-term agreements.
- Provide references: Showing the IT consultant that you have a good track record with consultants like them can also help you negotiate a lower rate.
- Be flexible on payment terms: Consider paying in advance, this can help vendors to offer you a better deal.
How to Get the Most Out of Your Investment in IT Consulting
There are several ways your organization can maximize the return on investment in IT consulting services:
- Clearly define your goals and objectives: This is like the most obvious of all! Before engaging an IT consulting firm, it's important to clearly define your goals and objectives so that the consulting firm can provide services tailored to your specific needs.
- Communicate effectively: Open communication with the IT consulting firm is key to ensuring that they understand your needs and can provide services that align with your goals and objectives.
- Consider long-term engagement: Long-term engagement with an IT consulting firm can help ensure that your organization is continuously improving and staying up-to-date with the latest technology and best practices.
- Use the consultant as an interim CTO or CIO: Hire an IT consultant as an interim CTO or CIO to provide expertise and guidance on strategic IT decisions, such as technology roadmaps and digital transformation initiatives. You might also want to consider CTO as a Service for more specialized support.
- Use the consultant to build an MVP: Use the consultant to build a minimum viable product (MVP) to test a new business idea or product before investing significant resources into development.
- Use the consultant for a «Hackathon»: Hire an IT consultant to lead a «hackathon» where a team of developers and business stakeholders come together to brainstorm and prototype new ideas or solutions.
Conclusion
Instead of viewing IT consulting services as a one-time expense, consider it as an ongoing partnership that can help your organization stay competitive in the long-term.
This means not only choosing a reputable consulting firm with the right skills and expertise, but also regularly reviewing and adjusting your technology strategy to align with your business goals.
