How should physicians price themselves accurately for industry consulting?

The Challenge

Two of the most common questions we hear from physicians are

“What should I charge for consulting?”

“Where are the opportunities?”

Many are still new to this area, and even those with experience often aren’t sure if they're getting the best possible remuneration package.

No matter their level of experience, many physicians find themselves frustrated and out of control in these situations. This makes them vulnerable in negotiations, doubting their value, and wondering whether what they’ve been offered is really right for them.

They may understand their clinical worth, but consulting is a different playing field, and the two are not directly comparable.

It is possible to estimate a general number for what a physician is worth, but without knowing how that figure is calculated, it becomes challenging for them to negotiate effectively.

Most physicians admit that they often end up accepting the rates offered by companies, even when they feel it is less than they could potentially demand, simply because they aren't sure of what is fair. As a result, they leave money on the table because they couldn't communicate their true value effectively during negotiations.

To help physicians level the playing field, we created a way for them to determine their own consulting rate, one that is unique to their circumstances and as accurate as possible.

Armed with this information, physicians will only need to determine how much an opportunity is worth to them and adjust their rate accordingly when stepping into a negotiation.

If you want to calculate your consulting rate right away, you can use our Physician Consulting Rate Calculator. It's completely free, no signup is required, and we don't store your data.

Calculate your rate now

What Does Value Mean?

A physician's value in industry consulting is made up of multiple factors including:

• Academic achievements
• Clinical expertise
• Business acumen
• Perceived value

The latter being based on their influence, reputation, reach, and the strength of their network.

Different markets derive varying levels of value from your expertise, based on their sector and stage of growth. This can greatly affect your negotiating leverage.

For instance, consulting for a large, established company like Stryker as part of a team of physicians is very different from working closely with an early-stage startup to help shape a new product.

Your value and leverage will be markedly different in each of these scenarios.

Let’s break down these different value types to see how they contribute to negotiating power.

Actual Market Value

This is the simplest factor to determine. It’s based on your location, specialization, and seniority. If you are in private practice, your benchmark would be the average physician in your specialization with similar experience. This number involves dividing your annual salary by the hours you work, giving you a baseline hourly rate.

However, it is important to note that the exact method for calculating this rate may vary depending on industry standards, local norms, and available data. Benchmarks must be current and come from reliable sources to avoid inaccuracies.

Added Market Value

Your added market value includes factors such as having qualifications from top tier institutions, advanced degrees like masters and PhD, working at notable organisations and demonstrating a track record of successful projects.

Each of these accomplishments adds value, setting you apart from peers who don’t have these credentials. Thus creating a gap between you and your competitors.

Specifically, having recognised expertise in high value areas such as artificial intelligence, robotics and digital health mean your value is at an additional premium in the industry.

Perceived Value

Perceived value is where things become more nuanced and interesting. Essentially, this is your brand, how others perceive your value to them. This involves your network's reach, your influence within that network, and the authority you hold.

A strong brand can have a profound effect on your consulting rate. For example, a startup may want you to validate their product, your actual market value is $400/hr, without any brand recognition, your offer from this client may be capped at this rate.

However, if you have a significant and well-connected network in the relevant market, your value could increase significantly. You can now open doors for that startup, ones that might otherwise remain closed. Depending on the power of your network, this kind of access can be worth hundreds of thousands, if not millions of dollars to the company.

This gives you leverage to negotiate a much higher rate or even creative compensation arrangements like equity. In a competitive industry, having influence or power makes you highly sought after, and the greater your reach, the more valuable you become.

However, it’s important to remember that a large following does not necessarily equate to greater success or significantly higher remuneration. You must be aware that the power of your network, its level of engagement, your authority, and relevance to the consulting sector all matter greatly.

It’s completely possible to have a huge audience, but only yield a minimal boost if they’re there to see your regular clickbait and you hold no influence in your specialist area. This is why it’s critical to carefully build an audience that is aligned with your sector, build trust and remain heavily engaged with them.

Having previous examples of where your network influence helped previous clients will be helpful to leverage this value in future negotiations.

Opportunity Value

Once you have determined your hourly rate, it’s important to consider opportunity value.

Imagine an opportunity meter that measures how beneficial an opportunity is to you, ranging from something with little personal value to an opportunity you’re very eager to secure. This helps determine how your rate can adjust based on the perceived opportunity.

Opportunity carries its own value, and this must be factored into your calculations. As a rough rule of thumb, consider a 40-50% variance in your rate to reflect the opportunity’s value. This ensures you remain within a fair market price while allowing for flexibility.

Keep in mind, however, that this percentage range is variable and depends on your personal goals, risk tolerance, and the specific industry context.

The key here is not to burn bridges by being unreasonable or greedy.

This is why understanding your value, and what you can contribute to a consulting project is crucial. It maintains balance, respect, and opens doors for future opportunities.

Treat the evaluation of an opportunity like an investor assessing an investment.

Think of your time as your capital, and consider potential risks, expected returns, and other market factors. If you’re taking a lower cash rate in exchange for equity, assess the startup's stage, funding, probability of success, and the quality of leadership.

You must be confident in the company’s likelihood of success for this type of arrangement to yield value.

Sector, Stage, and Location

Before discussing negotiation tactics, it’s important to consider how different sectors, stages of development, and geographical locations impact your rates. Consulting in New York City, for instance, commands a different rate than consulting in a rural area of Norway. Similarly, your value to a MedTech startup might differ greatly from a role involving a large hospital project with multiple stakeholders.

Not all sectors are balanced the same way. Some may be higher risk, require more funding, or demand specific expertise that you uniquely provide.

To determine your exact rate based on these factors, use our Physician Rate Calculator to get a tailored result.

Negotiating

Now that you know your rate and what the opportunity means to you, it’s time to negotiate.

Start by considering whether the project is a short-term consulting role or a long-term retainer. Long term stable engagements usually get a reduction in your hourly consulting rate, we usually recommend approximately 20-30%.

Then you must evaluate whether it involves high or low clinical risk for you. High risk engagements involving critical patient decisions, strict regulatory issues, etc usually incur a premium on your hourly rate.

For larger organizations, standardized processes and fee structures often leave less room for negotiation, but the opportunities themselves can valuable enough to compensate for this. In these situations, think about how you can leverage this engagement to secure future work from this organisation or others down the line.

When it comes to negotiating with startups, cash is king.

Startups may prefer to offer stock or stock options to conserve liquidity, and this is where you need to show why an investment in you will ultimately yield greater returns. The ability to speak the language of investment and growth is crucial to negotiating the best remuneration package.

One of your biggest assets is flexibility. If you have a long term plan and a taste for risk, taking a combination of cash and stock (or just stock) can be an effective approach. However, this approach requires a certain degree of business understanding and an appreciation for the risk-to-reward ratio.

Negotiating stock compensation is complex. You need to consider your contributions, the company’s prospects, the probability of success, and understand what type of equity or options you’re being offered.

You should always consider the effect of potential dilution of your share, if the business raises funds from investment in the future.

Always seek advice from financial or legal experts before making decisions involving equity-based compensation.

Increasing Your Value

Growing your value and maximizing opportunities comes down to building your brand and authority in the market. Your influence and reach hold a kind of market value that no qualification can match.

As you widen the gap between yourself and competitors, more opportunities come your way, creating a cycle of success.

Establishing and strategically growing your brand ensures alignment with your long-term goals, while building the authority that leads to market demand. Creating valuable content, engaging meaningfully, and growing a targeted audience are what ultimately increase your perceived value.

It’s not about churning out content endlessly or building the largest possible audience. It’s about positioning yourself as a high-value individual.

When industry decision makers view you as an authority, your market value rises significantly.

Conclusion

By understanding how to determine your value through all the factors outlined above, you will be better equipped to handle consulting opportunities and negotiations, leading to optimal outcomes for both you and your clients. Understanding your true worth empowers you to take control of negotiations and value discussions.

To simplify this process, use our Physician Rate Calculator before accepting any offer to ensure you’re not underselling yourself.

If you’re interested in growing your value and enhancing your brand, reach out, and let’s discuss how I can help you achieve your goals.

Notes:

• If your rate is already very high based on your market value, and you're considering a low-opportunity startup, it may be wise to decline instead of overpricing yourself and damaging your reputation. At the other end, your rate could be reduced to zero for cash in exchange for stock or stock options, depending on the startup's capacity.
• Equity and stock options are different forms of compensation. Equity provides you with direct ownership in the company, such as shares that may appreciate in value. Stock options, on the other hand, give you the right to buy company stock at a fixed price (the exercise price) at a future date. Both stock and options typically vest over several years, and exercising stock options can create tax liabilities that you should consider.

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