I just got done reading an email from a blogger on another site for which I write. She has her own business and consults with a non-profit organization for about 20 hours a month. The organization wants to "bring her in house." What does that mean? She works more and gets paid less.
The organization wants her for 40 hours a month, but wants to pay her the exact same amount they're paying her as a consultant. Does that sound like a good deal? Not to me!
Companies and organizations are famous for making moves like this all the time. I call it the "buy it in bulk" mentality. They think that if they offer you more work, you should be willing to lower your rates. Kind of like when you go to the grocery store and buy a 20-pound can of baked beans. It's often going to cost you less per serving. But there's always a downside to consider. Sure, the beans are cheaper per serving, but do you really want or need 20 pounds of baked beans?
There's a downside for the business professional as well. Consultants, especially struggling ones, are often tempted to enter into these types of arrangements, even against their better judgment. Many times there are implied promises of future projects or rewards for taking this type of pay cut. The concept of guaranteed income is often attractive as well. Don't fall for it!
Most consultants work for themselves for a reason: They don't want a traditional corporate job. So why lock yourself into a ton of hours with one client, especially if you're not really going to be paid what you're worth? And there's the issue of fees. However you determine your rates, you obviously think they're a fair price for your services. Why would you give your services away to a client who is only willing to pay a fraction of what you are worth?
Too many consultants enter into arrangements like these hoping that their efforts will be appreciated and they will be rewarded in the long run. That doesn't often pan out. When a client wants you to cut your rate (especially in half!) you are being sent a message that they don't value your services as much as they should. Offer to provide the additional work they need for an appropriate price, and if they don't agree, let some other sucker take on their project for what little they're willing to pay. I'd be willing to bet that you'll thank me in the long run.
Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
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