Q. How do you establish a fee schedule for your services? By the hour (and if so, how much?) or by the job (and if so, how can you estimate in advance?)
-Peg Albert

A. This question takes me back to my teen years as a baby sitter when I asked myself, "Should I charge by the hour or by the kid?" Many experienced entrepreneurs/consultants have not taken time to create a process for pricing. When I coach entrepreneurs, I often find they charge too much or too little. However, before consultants fret about how much they should charge and how to quote rates, there are a few important questions they should ask.

Can the consultant deliver client expectations? How much experience does he or she have? Has the consultant developed a portfolio of client success stories? The quality of service is more important to the client than how much you charge. Many clients don't mind paying more for excellent performance.

There are several ways to approach developing fees. Check with other consultants in the field to find out what their price menu is like. Many check what experience the competitor brings to the table and what that success rate is. Check the Internet competition. In the "old economy," I would have suggested that a consultant check the immediate market. Someone working from Pittsburgh would have lower rates than someone working from New York, but our new global economy has found its place on the Internet, and we're now living in a buyer's market.

The Internet has made for big competition for many consultants. Smart decision-makers are making a stop on the Internet to be more efficient. I have had tremendous success searching for services on the Internet. Staggering prices from local Webmasters sent me surfing. I found a web designer on the Internet who lives and works in Rhode Island. I also located an editor in Omaha to work with me on an audio script. Her prices were reasonable, and the work was grade A and her on-time performance was terrific. A potential client wants three things: to save time, to get great results and to have little to no hassle along the way. When a consultant can deliver this, he is on his way to wealth whether he charges by the hour or by the job.

How a consultant handles client expectations is important. For example, a publist whose client was expecting to get on the Oprah show and ended up on a local cable show that airs at 2 a.m. would be a little upset. A proposal writer whose client expected to receive a million-dollar grant but instead got a "better luck next time" reply is more than disappointed. The Feng Shui consultant's client who thought that rearranging things in the feng shui manner would increase his popularity, but instead saw his friendly neighbors stop speaking, would be unhappy.

There is a lot more to starting a consulting company than how much the fees should be and how to quote them. I suggest starting with the quality of service you can provide to the client and charge reasonable rates. Build your experience and successes, become proficient in client-expectation management and slowly increase your prices commensurate with success.