Pricing your consulting firm’s projects is tricky. You’re not alone if your heartbeat elevates or your stomach clenches when it comes to talking about your consulting firm’s fees with a prospective client, or when you’re developing the “investment level” for a specific consulting engagement.
A few rules and a handful of cookies will soothe your pricing anxieties.
Ten are below. (Pricing rules, not cookies.)
By the way, the thorniest challenge in writing this particular article was paring down the list to only 10 rules.* A lot of good pricing guidance was cut out. You can add it back in, though, by contributing your ideas for pricing in the comments section.
10 Pricing Rules for Consulting Firms
If you don’t have explicit agreement from the decision-maker on the Context, you’re much too early to quote specific fees. (Though you can give a range.)
Discuss, then Offer
If you haven’t discussed fees with your prospect, don’t submit a proposal with fees.
Price the Whole Package
There’s more to pricing than the monetary figure. Price includes the fee, scope and terms.
Price on Value, not Cost
Use bottom-up costs as a minimum-margin check, not as the basis for setting fees. (Unless you’re absolutely caught in a VTM project.*)
Always propose alternatives, including at least one high-fee, large scope engagement.
You can negotiate down, if you need to; however, it’s hard to overcome low fees if you set the precedent.
Don’t discount fees with the expectation that you’ll be able to raise them later. You won’t.
Stay Within Reason
In RFP situations, you can win with pricing up to 30% more than competitors. In non-RFP, competitive situations, you can win with pricing up to 3x other consulting firms.
Keep Moving Up
If you’ve closed all 10 of your last 10 proposals, raise your fees at least 10%.
Understand the Real Issue
If consulting prospects consistently turn you down and point to your consulting firm’s high fees, you don’t have a fee problem; you have a Trust problem.
What additional pricing guidance do you have for other readers? What other guidelines do you follow?
Text and images are © 2022 David A. Fields, all rights reserved.