How Much You Should Charge As A Consultant: A Guide to Hong Kong Consulting Fees
If you have the experience and the expertise, you must have asked yourself: why don’t I set up consulting services of my own?
The Hong Kong consulting business is full of potential. There are large and small consulting firms as well as niche advisors.
This is not surprising, given Hong Kong’s business-oriented climate. According to Hong Kong Companies Registry statistics, 104,120 local companies were newly registered in 2022. Further, the number of business operations with parent companies located outside Hong Kong was 8,978 in 2022. These companies need the guidance that consulting services can provide.
An important aspect of starting your own consulting business is the consulting rate you would charge. Here is a guide to calculating consulting fees before starting out as a business consultant.
Top Five Consulting Business Verticals in Hong Kong
With a total value of around USD 250 billion, the global consulting business sector is booming. In Hong Kong, the industry is vibrant, with a range of services for businesses of all sizes.
Large firms such as McKinsey, Bain, and BCG have a strong presence. But, there is also a growing number of smaller firms in various sectors.
It is important to find the niche that best suits your skills as a business consultant. Let us look at the five leading types of consulting services you can offer:
Marketing
Marketing consultants deal with identifying and influencing target audiences, and formulating marketing strategies, and customer service policies. These consultants mainly work with customer goods and services companies.
Average Base Pay: HK$31,900 per month
Information Technology
IT consultants are involved in integrating information technology into businesses. They show clients how to use IT more efficiently.
Average Base Pay: HK$ 73,000 per month
Finance
Finance consultants advise clients on budgeting, how to save for big purchases, retirement planning, and investing. Companies also need financial consultants to advise them on investments and tax planning, among other things.
Average Base Pay: HK$ 1,15,000 per month.
Human Resources
HR consultants help companies with HR policies and procedures. They advise on issues a company might have with its workforce.
Average Base Pay: HK$ 1,50,000 per month.
Management and Strategy
Management consultants and strategy consultants analyse business practices. They suggest strategies for cutting costs, increasing revenue, and making critical decisions
Average Base Pay: HK$ 1,13,600 per month.
Consulting Fees Calculator: Arriving at a Pricing Structure
Consultants use different pricing models to charge clients. There are different consulting rates by industry. Here are the most common formulas for consulting fees.
Hourly Rates
In this model, consulting clients are billed by the hour. To estimate the consultant fees,
Find the average annual salary for full-time employees in your position.
Divide this by the number of working weeks in a year.
Now, divide the result by the number of hours worked per week.
The answer is your hourly fee. Some consultants multiply this hourly consulting rate by two, to factor in extra consultancy costs.
Example:
- Average annual salary: HKD 100,000.
- Divide by number of working weeks. In this case, 50. You get 100,000 divided by 50 = 2,000.
- Now divide by hours worked per week. Let’s say 35 hours. 2,000 divided by 35 = 57.14.
- Your flat hourly rate is HKD 57.14.
- To account for extra costs, you can multiply this by two.
- The final consulting fee: 57.14 x 2 = HKD 114.3.
Project-Based Fees
If your work follows a similar pattern, you can look at project fees. Examples of these are designing a mobile-phone app or creating a map of customer touchpoints.
To begin with, you should estimate the number of hours you will need for the project. Apply an hourly consulting rate for the project and add extra consulting fees for contingencies such as rework.
Example:
- Estimate work hours on a project: 50
- Hourly rate: HKD 35
- Contingency estimate: 15%
- Your project cost should be (50 x 35) + 15% of (50×35)
- The result: 1750 + 262.50 = HKD 2012.50
Retainer
If you are on the lookout for a steady income per month, you can look at a retainer fee structure.
The elements are:
- Your hourly consultancy fees and the number of billable hours projected per month.
- Scope of the consulting work.
- An assessment of the client’s budgetary expectations.
- The value you provide.
- The competitive landscape.
Example:
Your hourly rate: HKD 50.
Scope of work: Marketing strategy, campaign planning, and execution.
Client’s budget: HKD 2,500 per month.
The value you provide: Help the client generate HKD 5,000 in new leads.
Competition: Others charge an average of HKD 100 per hour for consulting.
Based on the above, you can estimate monthly consulting fees of HKD 3,500, for 40 hours of work every month, plus additional costs based on value added.
To get the best advice on how to handle taxation and record-keeping for your retainer structure, check with the experts at Sleek.
How to Charge Clients: Best Practices
- Consider competitive charges
- Understand client needs and expectations
- Negotiate and overcome client hurdles
- Communicate the value of your consulting services
How to Find Clients
As an aspiring independent consultant, how do you find clients? Here are some tried-and-tested methods.
- Build a personal brand on social media: Share your expertise and insights on relevant topics online. Create a following of potential clients interested in what you have to say.
- Online advertising: Target ads to potential clients on relevant sites they visit.
- Business events: Attend industry events and meet-ups to network with potential clients and learn about their needs.
- Referrals and contacts: Ask friends, family, and former colleagues for referrals.
- Cold calling: E-mail potential clients to introduce yourself and your services.
How to Incorporate A Consultancy in Hong Kong
Once you have decided on your niche and consultancy fees, you need to incorporate your consulting business in Hong Kong.
Choose an appropriate business name and open a company bank account. Next, prepare the Articles of Association and other necessary documents for registration.
Decide on a registered office and choose a company secretary. File for registration at the Hong Kong Company Registry.
The above are simply the basic steps. For the exact means of registration, approach the professionals. Sleek will take care of it without the fuss.
Essentials to Stay Compliant After Registration
To stay compliant with Hong Kong rules and regulations, it is not enough to simply register your consulting business. Going ahead, you should be aware of the types of tax filings and deadlines.
For example, there are employer returns and profit tax returns. Over and above this are audit requirements. Each one of these has separate forms to be filled and deadlines to be met.
Once you have started work as an independent consultant, it is important to maintain records. Proper bookkeeping will help you to be compliant with Hong Kong regulations laid down by the Companies Registry.
To make sure that this is accomplished on time and without hassle, do talk to our efficient, professional team at Sleek.
FAQs
The common methods are:
- Hourly rates
- Project-based fee
- Monthly retainer
You need to register your business with a local business address. Some consultancies such as accountancy need specific licences. You also need a local bank account. You need to register for filing Profits Tax, among other taxes.
Hong Kong has a thriving business climate. The policies are business-friendly, with reasonable taxes. There is a skilled workforce, with the latest technology and infrastructure. Some of the world’s best companies, investors, and professionals are in Hong Kong.
