For early stage companies, Consultants are often a luxury they cannot easily afford. At the same time, a consultant is possibly just what they need. Figuring out the balance is a difficult task. Start-ups want to pay using equity or a percentage of the deliverable. Consultants want some cash up front because too often start-up equity never achieves liquidity.
If you are interested in the appropriate salary range, you may want to do some online research first. PayScale.com is a great resource to start with. If you are considering an SEO or SEM consultant, you may want to look at fellow Know More Media Blogger Marshall Sponder's July 28th post on Search Engine Optimization Pricing. One of the great things about the amount of information available on the web is the ease of finding competitive information such as this. One used to have to as for a stack of proposals and to get a feel for the average price. Now, a simple search and you have the information you need.
Finding the balance between fair and reasonable should not be difficult but it is. It's difficult because each side has a different view of what is fair and reasonable. Is it reasonable to ask someone to write a business plan, present it to potential investors, and then not pay them for the work they did? Is it reasonable to expect payment for a business plan that does not raise money?
Finding the right middle ground...
Seasoned consultants know that they have to cultivate a number of potential customers to find the ones that fit. In some cases, consultants get in over their heads; they take on projects that they are not sufficiently skilled to handle. At other times, consultants are too much for the company to handle; they make demands and push an agenda that the company cannot afford. Finding this balance is also a part of the learning process.
One factor that cannot be ignored is the financial condition of the contracting company. If the company is stable, revenue generating, or has obtained investment money, then they should be willing to pay the appropriate costs. If the task is not well defined, or the result is less dependent on the efforts of the consultant, then the company should be willing to pay. If the result is completely dependent on the quality, effort, and work of the consultant then payment based on the delivered result is very appropriate.
I would like to hear from consultants and start-ups on this issue. Please identify which side of this argument you feel you are on. I think that it has a number of facets that are worth exploring. Certainly many conditions alter the equation one way and another.
Which method of payment seems most appropriate to you?
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