David A. Fields Consulting Group Five (and a half) Pricing Strategies that Will Win You More Projects at Higher Fees
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.
- You offer more than one alternative to your prospect; i.e., 3-4 prices for different bundles of benefits.
- 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
Teaser/Trailer
When you’re confident you’ll win the immediate project at hand, and you have your eye on more projects with this client.
Pilot
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.
Sky Anchor
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.
Roulette Wheel
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?
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I have thrown little comments in jovially during early meetings about ‘quality doesn’t come cheap’ and ‘we are very expensive, as we only work with client committed to solving XYZ etc’. These are never the main point of the conversation and are just little teasers to help subconsciously anchor that I am a premium ‘product’. I always make a point in early meetings of asking them what they think this problem is costing them. Often they will answer that they don’t know, or will offer behavioural difficulties. I spend some time working with them through different questions and offering scenarios so that we reach a ballpark figure of what their problem is costing the company. This is usually a multimillion dollar figure. Then, when crafting a proposal or scoping solutions with them, I always refer to this figure that we arrived at together. This way they don’t question that figure as they have had input into it and so already reached agreement that yes, this is what it is costing. I always use language such as ‘investment’ rather than price, and I also include caveats such as their internal resources etc that I will need in helping craft the solution. I feel that this puts the price for my consulting expertise in proper comparison with their costly problem, as well as help anchor me as part of their team by emphasising the internal resources etc rather than just talking about money.
That’s a great approach, Yvette. Setting a high anchor early then focusing on value is definitely part of the path to increasing fees. Thanks for your input.