As promised, here’s a bit of the fresh Q&A from my talk at Chief yesterday on the fractional executive consulting model:

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“How do you price fractional work aside from just converting an annual salary into an hourly rate? When do you use a retainer?”

The most advantageous pricing approach for a fractional executive (and for the client as well) is a monthly retainer.

This gets you out of the chore of time tracking, the pain of haggling over an hourly rate, and the perverse incentive of lower productivity.

So how do you arrive at a monthly retainer? You could use a few ways:

1. [If you must] Use a ‘shadow’ hourly rate sourced from your peers/community multiplied by the capped number of hours you plan to provide - don’t mention this hourly rate in client discussions, remain focused on the monthly rate.
   • Note: this method is popular, but can unravel in negotiations quickly
2. [Better] Prorate the market rate for a full-time executive in your domain, and add back a ~50% premium to cover your own costs + the value-add of being able to retain you part-time
   • Note: again, you don’t need to justify your calculations proactively; your price is your price
3. [Recommended] Triangulate your retainer via my PTMM method - understand your revenue goals, the prevailing market rate, and most importantly, the value you’re unlocking for your client.

Across all, stay away from hourly.

If you’re asked for an hourly rate, simply say you don’t have one.

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“How should I think about adding ‘fractional’ to my LinkedIn page, even if I haven’t decided on that path or sold any fractional work?”

Remember that fractional engagements are only one way of packaging your expertise into a client service.

Declaring yourself ‘fractional’ on LinkedIn doesn’t permanently classify you one way or another. It simply signals that you’re available for fractional hire.

I’d push back the question and ask: would you only want to be hired fractionally?

E.g. if a client had a clear start/end project and wanted you for it, or wanted to retain you as an advisor, would you say no?

You may find it less limiting to simply say in your About details: “Available for project-based, advising, and fractional engagements.”

Focus your effort primarily on demonstrating the value of your expertise. How you package yourself into a service to meet a client’s problem can work itself out collaboratively.

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“How do you know when a role listed as fractional is actually just a full-time role without benefits?”

After clarification, this question seemed to suggest that companies may be titling roles as “fractional” to attract interest, but underneath might be some other restrictive or undesirable setup.

First, remember that a fractional executive role is at its core a part-time role without benefits. You can and should build your personal overhead into your retainer fees.

Aside from benefits, what you want to be wary of is something that looks too much like a full-time role:

• Required presence 5 days / week
• More than 20 hrs / week expected
• On-demand travel or after-hours commitments

Of course, come to a mutual agreement with your client about expectations, but remember that you hold the keys to your expertise, and you have the power to preserve the flexibility you want.

If you’re content to contort yourself into a rigid box and remain in an ‘employer-employee’ mindset rather than a ‘client-expert’ partnership, you may genuinely be better off in a full-time role.

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💡

-Wes