What do you think about raising your consulting firm’s fees 30% or 50% or 100% or more? Does a little voice in your head protest, “No way! No one’s going to pay <insert number> an hour for a consultant”? We’re going to name that little voice and give you an alternative.
The dissenting voice in your head is your internal Quarryman. The voice we’re going to amplify is your internal Sculptor.
A Quarryman is a person who carves mammoth slabs of rock from the earth. (Not to be confused with a member of the Quarrymen, who were an awful cover band…that became the Beatles.)
From the Quarryman’s point of view, rock is rock. For instance, marble typically runs about $150-200 per ton, though high-end marble could set you back as much as $700 per ton. So, what’s the upper limit on a six-ton piece of marble? Five thousand bucks? Maybe ten thousand?
The Quarryman pushes back, “No way. No one’s paying $1,500 per ton of marble.”
Your internal Quarryman still sees your consulting firm’s work as blocks of stone. He views your product as generic and he believes your customers harbor similar perceptions.
Hence, he believes there’s a firm upper limit capping your consulting firm’s prices, with competition and market rates clamping down the lid.
He denies that marble can actually be priceless or that high fees could apply to your consulting firm.
The Quarryman’s modus operandi is denial.
But there’s another voice: the Sculptor. The Sculptor points to Michelangelo’s David, which weighs six tons and would fetch a fair bit more than ten grand at auction.
The Sculptor views your consulting firm’s engagements as having the potential to be magnificent works of art.
His modus operandi is experimentation.
Two Steps to Raising Your Consulting Firm’s Fees
The Sculptor takes two steps while the Quarryman is pouting stubbornly in the corner:
- Search for Evidence. He looks for any indication that the block of marble could be more than just a rock.
- Experiment. He bangs away at the rock and sees what emerges.
A quick case study: the Quarryman held sway at a mid-size, Boston-based consulting firm I started working with a number of years ago. At the time, their average project was around $250,000 and seven-figure projects were very rare.
Over the years, their work has remained fundamentally the same; however, we fired the Quarryman and put the Sculptor in charge. They started asking clients for bigger projects and higher fees. Now, their average project is around $1 million and it’s not unusual to win $3+ million engagements.
If they can do it, why can’t your consulting firm?
Heck, you already took step 1 of the two-step process by reading about the Boston firm. They’re evidence a firm can dramatically raise fees. (I have plenty more examples.)
Now it’s time to take step 2: Try asking for higher consulting fees.
If your consulting firm charges based on an hourly or daily fee, then quote a 30% higher rate on your next four projects. If you win at least twice, try raising the rates another 30% on the subsequent four projects, then raise them again so that you’ve doubled your current rate.
Your consulting firm might not win as many projects (though I think you’ll be pleasantly surprised), but you don’t have to. Imagine winning half the projects, working half as much and raking in the same revenue. Not a bad picture, right?
If you charge based on value, follow a similar process: determine fees however you normally would, then raise them 30%. Are you still offering at least a seven-to-one return on risk-adjusted value? If so, then propose the higher fee.
Step 2: Just try it.
You can settle for the Quarryman’s view that your consulting firm is churning out blocks of stone, and accept the limits on your revenue.
Or, you can climb out of the quarry and act like a Sculptor. Look for evidence that higher rates are possible, and give it a try.
You don’t need to be Michelangelo—even a simple headstone commands ten times the price of raw rock.
Have you been able to raise your rates recently? Do you believe you can? Let me know in the comments.
Text and images are © 2020 David A. Fields, all rights reserved.