Look no further than the gas pumps to see the extraordinary, often nonsensical, choices made by shoppers reacting to comparisons. Prominent signs proclaim each brand’s current price per gallon, making it easy to compare among alternatives. And drivers whose time is worth hundreds of dollars an hour will drive miles out of their way or wait in line for what amounts to a dollar or two off their total bill.
You may be tempted to dismiss such behavior as irrelevant and only applicable to low-impact decisions like choosing a brand of gasoline, a new computer or a spouse.1 However, the truth is the vast majority of choices are strongly influenced by comparisons.
If you harness the power of comparison, you can increase your margins, the number of projects you win overall and your revenue per project. Below are five, proven pricing strategies that make the most of our prospects’ propensity to rely on comparisons when making decisions.
Assumptions – These strategies assume:
- You separate fees from effort. If you charge your clients based on the time you put into the project, these strategies won’t apply. (Seen this article in Consulting Magazine.)
- You offer more than one alternative to your prospect; i.e., 3-4 prices for different bundles of benefits. (To learn more about crafting alternatives, see chapter 7 of this book.)
- Your higher-priced alternatives deliver commensurately higher value.
- Your prospect has at least a vague, “expected fee” in mind.
Five (and a half) Pricing Strategies
for Consulting Proposals
When you’re confident you’ll win the immediate project at hand, and you have your eye on more projects with this client.
When your prospect is signaling a lot of hesitancy and/or you are sensing credibility/outcome concerns, and it’s possible to conduct a small piece of the project independent of the rest.
When you’re sure your fees are going to be well above the client’s expectations, and those expectations are not based on the cost of internal resources.
Call & Raise
When you are up against competitive consultants who will be offering standard, run-of-the-mill solutions.
Tenements vs. Townhouse
When you’re sure your fees are going to be well above the client’s expectations, and those expectations are based primarily on the cost of internal resources.
When your intention is to get out of consulting entirely and, instead, become a contestant on one reality TV show after another.
What pricing strategies have you found effective?
Text and images are © 2020 David A. Fields, all rights reserved.