5 Things to Remember When Pricing Your Consulting
Dec 23, 2020
If you struggle with determining how to set a price for your consulting services, don’t worry you are not alone. It’s a real challenge for those of us who get paid for our knowledge and insight to come up with the EXACT RIGHT AMOUNT TO CHARGE that both honors our expertise and is fair and reasonable to our clients.
To help you master the art and science of pricing consulting services, let me share with you 5 Guiding Principles:
- Pricing is not a separate activity you to do earn money for your consulting. It is an integral part of your consulting offer. You establish your brand with potential clients through your marketing messages, how you interact with them, what work you pitch for them and how you frame that work as well as what you charge AND how you charge. Therefore, your pricing strategy is an essential aspect and extension of your consulting brand.
- Fee ranges are project driven NOT market driven. It doesn’t matter what others out there are charging by the hour or the day. Consulting fees should relate more to the incremental value that the consultant’s differentiated expertise creates for a specific client with a specific business performance need.
- Always shoot for a positive price/value as perceived by your client. Many consultants feel energized to ask for exceptionally high fees but that can create a barrier for many clients if they are not convinced in the value is equitable to the fee. By the same token, undercharging creates the same challenge because that old adage is true, “we value what we pay for.” If you are not asking for equitable compensation, you are not setting your consulting up for success.
- Tier your price points for your different products and services in a way that makes it easy to attract your ideal clientele and fosters a relationship. Can you offer a low cost coaching package, eBook or assessment to warm up your prospects and leads?
- Choose the right pricing model to match the type of service that you are offering. There are many different ways that consultants can price their services including time based (daily or hourly), flat/project fee, value-based and retainers. All are effective pricing options WHEN they are used for the right situations. If you are engaging a client for a one-off retreat facilitation, perhaps a daily rate or flat project rate makes sense. But if you are engaging a client in a longer-term project, time based fees actually work against the relationship that you are trying to create with your client because every time they reach out for your help you it is a financial decision.
There is so much more at stake for you, when you are setting prices for your consulting services because let’s be real. You are not selling a widget; you are selling yourself and your insight, knowledge and advice. There is more on the line emotionally if your client says no to YOU because of the impact on self-esteem and money fears.
Mastering pricing begins with mastering your ability to quantify the value of your consulting which includes:
- Translating your expertise in terms of tangible business results and dollars.
- Calculating the return on investment for the project that is on the table AND the value-added contribution that you as a consultant creates.
- Communicating the business case for the change project at hand and working with you that connects with both your client’s mind AND heart.
When you are able to quantify your value, you essentially cultivate your ability to stand in your worth and worthiness to receive equitable compensation. Equity in compensation is all about the win-win with you and your client. It is not about overcharging them and at the same time, it is not about undercharging them either because truth be told – your client needs you to ask for your worth.
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