A consultant asked me the following question:
What is your experience with clients that ask you to do an introductory project before jumping into a big engagement? For instance, I’ve been asked to do $15,000 in work for $7,000, knowing that there’s a $50-100,000 project on the back end. What should I do?
What follows is my answer to the consultant who asked the question:
Even though this is a simple question, I’m going to give you multiple answers! That’s because there are actually three different strategies to discuss here.
- Discounting – Minor concessions are fine; major concessions like your example are a bad idea. You may never recoup your losses and you’ve set a bad precedent. I’ve never given a major discount to win a project. BUT, one consultant I mentor slashed his fees by 80% on an initial project and has won $2 million in follow-on work. Is it worth discounting slightly to win a project even if there’s no reduction in scope? Absolutely! Don’t let dogma blind you to opportunity.
- Pilot projects – Pilots are great “getting to know you” engagements. As opposed to most consultants, I typically charge a premium. My rule is 15% of the “big” project’s fees to do 10% of the work. Instead of doing an initial $15k project for $7k, do the first, tiny phase of a $75k project for $10k.
- Entry points – Where I DO discount is on pre-made offerings that I use as entry points into a new client. For instance, my Firm Growth Lab is offered to boutique firms at a steep discount versus my “rack rate.” In that case, the product is high value, highly repeatable, efficient and usually leads to follow-on business.
What experience do you have that would help this consultant? There is plenty of bloviating from gurus who say you should never lower your prices. Has standing fast worked for you in practice? Has lowering your fees worked for you?
You can see more discussion of this question by joining the Solo Consultant’s Network on LinkedIn.
Text and images are © 2018 David A. Fields, all rights reserved.