Having worked full time as a Colorado private investigator for nearly 15 years, and for over 10 years as a business owner, I’ve been able to experience the ebbs and flows – the ups and downs of the profession. Over those 15 years, I’ve had the opportunity to network with hundreds of practicing private investigators, both full-timers as well as part-timers, and I’ve also guided aspiring private investigators who were looking at gaining entry into the profession. Those hundreds of PI’s that I’ve met have come from many walks of life. Some had prior law enforcement or military experience. Others came into private investigations with criminal justice, investigative journalism, or even law degrees under their belts. Still others started out by taking an online private investigations course, or perhaps attended one in person. Others were introduced into private investigations having had no previous exposure to any type of investigations.
With such varying levels of experience, credentials, certifications, licenses, etc. how do private investigator business owners begin to set a fee structure when they start their own companies? This is a critical question that each new business owner should consider carefully at the time that the business is started. Most private investigators have an hourly rate with expenses charged separately, others might charge a flat fee hourly rate to include expenses incurred such as mileage and travel time, and still others charge a flat fee daily rate. Some private investigators even charge on a contingency or percentage basis. However, many states have restrictions or complete bans on this type of fee structure for private investigators. To complicate the matter even further, some investigators have a lower fee for cases worked as a contract investigator versus their regular fee for cases where they are the originating investigator.
Many new investigator businesses will simply attempt to research what the going rate is for the state or region of operation and then set their rates accordingly. However, consider this: over the years I have heard of Colorado private investigators charging rates as low as $40 per hour as the originating investigator, to rates as high as $300 per hour. Wow. $40-$300 per hour! That seems like quite a disparity to me. Think about it: all other expenses and factors being equal, the $40 per hour investigator has to work 7.5 hours just to match the 1 hour worked by the $300 per hour investigator! The obvious explanation to this is the $40 per hour investigator must be an inexperienced generalist while the $300 per hour investigator must be an experienced specialist with every credential imaginable. However, there are other variables which could factor into those rates. The $40 per hour investigator could be a part time investigator, perhaps a retired individual who receives a pension or other forms of secondary income. Those individuals perhaps view private investigations as more of a hobby or pastime. The $300 per hour investigator perhaps has a brick and mortar office in a prime location complete with a receptionist, office manager, administrative assistant, field employees, etc. The $300 per hour investigator could also be a smaller agency that contracts out work to $100 per hour investigators and as a result still generating a good profit while having subcontractors do the investigations.
I once experienced a scenario which I had not previously been aware of or even considered. I received a phone call from a large corporation which had recently started hiring in-house investigators. The potential client wanted to know what my company’s rates were for initiating surveillance on a subject in Glenwood Springs, CO. The caller explained to me that the surveillance would span from a specific pickup point until the subject returned to their residence, so in the potential client’s words, the surveillance would only be one day. I informed the caller of my hourly rates as well as mileage and travel rates, and explained that my office was located in Castle Rock, Colorado – approximately 3.5 hours away from Glenwood Springs. To help explain the minimum travel and mileage expenses, I informed the caller that the only investigator available to cover the surveillance case would have to be dispatched from Castle Rock. The potential client stated that their in-house investigator is paid a $125 per day flat rate. After a couple of seconds of silence on the phone line, I realized the potential client wanted me to make an attempt to match that rate. I politely explained to the caller that I could not lower my rates, and perhaps the corporation should continue using their in-house investigator. Her reply was something to the effect of, “But I don’t want to use my in-house investigator.” She went on to explain that they were not pleased with the quality of investigations they were getting from the in-house investigator. I spent another few minutes on the phone with the caller, but I quickly realized she had been accustomed into believing this flat fee rate was the average going rate for investigations.
I ended the phone call unclear if the in-house investigator was an employee or if the investigator was a vendor who did all their work for this corporation. Perhaps I could have clarified the caller’s definition of ‘in-house’ investigator, and then maybe I could have explained the various expenses, taxes, operating costs, insurance, etc. that I as a business owner must incur versus an employee investigator. Perhaps I could have explained how our company specializes in surveillance, that each surveillance investigator has years of experience, and how each investigator is individually licensed in Colorado. However, in my mind I was convinced we would not come to an agreement on a rate.
So once again, what should an investigator charge? Based on all the variables, this is a difficult question to answer. Instead, I ask private investigators to take a look at other businesses and professions. For example, attorneys, like private investigators, range in size as small as sole proprietors to as large as national or even international corporations with employees numbering in the hundreds or even thousands. Some attorneys have a home office, while some have dedicated office buildings. Practically all have some form of website or other forms of internet presence. Many have memberships in professional organizations and associations.
Private investigators, like attorneys, might have to purchase similar attire as attorneys for marketing, face-to-face client relations, and testifying / providing attorney support at hearings and trials. Unlike attorneys, private investigators aren’t required to have a 4 year or higher college degree, and in many states aren’t required to pass an exam or even be licensed. So perhaps the average rate for private investigators shouldn’t be the same as the average rate for attorneys in a given state or region.
To the private investigators at the low end of the spectrum, such as in the $40 per hour range, taking a look at other businesses and their hourly charges may prove to be an indicator of how the investigator is perceived to clients as well as colleagues, inadvertently or otherwise. Plumbers who are licensed charge $45 – $150/hr. Car mechanics charge $80 – $100/hr. Are licensed and professional minded private investigators not, at the bear minimum, as valuable in terms of the services provided as car mechanics or plumbers? Those are the questions that each investigator business owner must answer when establishing their rates.