How Should I Charge for Lab Consultancy When Sample Quantities Are Uncertain?

Consultancy Fee Structure for Laboratory Services

I am planning to work as a consultant for a company. I have no prior experience in consultancy. The company is a lab that conducts analysis of various solids, fluids, and gases, including chemicals. I shall be speaking to clients or meeting them personally to convince them to send their samples for analysis to the lab. The number of samples could vary depending on the customer's needs, and it could be a one-time process or an ongoing one lasting for years, with the quantity of samples varying based on the tests required and the associated charges. There is also a possibility of establishing an agreement between the lab and the customer for a certain number of samples over a year's duration.

I would like to request your professional guidance on how to charge the client since I will be connecting potential customers with the lab, and sometimes may not know the exact quantity of samples as the customers could also directly engage with the lab. This will be a long-term partnership with the lab, so I seek advice on the appropriate methodology for charging them—whether it should be a one-time fee for each new client or based on the samples received over time.

I am looking forward to receiving your professional insights.

Thank you.

What you would be doing is selling the competency of the lab to your prospective customers. This may not be a regular salesperson's job as you would be using your technical expertise to convince the customer. Nevertheless, I see it more as salesmanship than consulting. By hiring your services, your client is in a better position because it is not a salaried job. Therefore, there are no liabilities attached for failure to bring in orders.

Under the circumstances you have provided, I recommend that you first determine your costs. I suggest focusing on the following points:

- What would be the cost of each visit to the customer?
- How many visits are required to convince the customer?
- How many hours of back-end work would you be required to do per conversion?
- Will you be hiring supporting staff like an office secretary, etc.?
- What would be the cost of overhead, such as computer services, internet services, printing services, office rental, etc.?
- Will your spouse or any other family member help with office tasks?
- What is the expected sales cycle time?
- How many orders do you expect to bring in the next financial year?

Since you are concerned that once the customer is given the first order, your client may deal with the customer directly, I recommend that when a deal with the customer is closed, you ask the customer to provide a purchase order. For each purchase order, you may raise an invoice to your client for a certain amount that covers all the expenses mentioned in the above paragraph.

Let me revisit the topic of selling skills. What have you done to hone your selling skills? If you believe that the services of your client can be sold solely because of your technical expertise or contacts in the market, then it is a myth. While your contacts may help you gain entry to the customer's premises, that alone is not a sufficient condition for a sale. For a successful sales conversion, a salesperson cannot rely solely on technical know-how or selling skills. Both are complementary to each other, and the absence of either will impact the sales conversion.

All the best!

Regards, Dinesh Divekar