Over the past three years, your consulting firm charged your client Fru Gal Corp. (FGC) roughly half a bajillion dollars for each of the two “big progress” projects they hired you to lead. Next year you’d like to charge FGC higher fees for the same type of projects.
How (and why) do you ask FGC for the increase in fees?
Every couple of years—if not every year—your consulting firm’s fee levels deserve the Farah Fawcett hair treatment: scrub and lift. Clean out clients and projects that deliver low fees and fluff up your pricing.
When your consulting firm has legacy clients, such as FGC, who have played a large role in recent years’ revenue picture, you may feel awkward or even unjustified in raising your fees.
Let’s address that.
You deserve higher fees for your consulting firm’s work, and asking for the increase doesn’t have to be difficult.
Why Your Consulting Firm Deserves Higher Fees Next Year
You probably already know a few justifications for attaching a higher bill to the same consulting project going forward. A few potential additions to consider are below:
- Your consulting firm is more experienced now than you were in the past, and your advice is commensurately more valuable.
- Your consulting firm is more in demand than you used to be—possibly much more in demand.
- Your consulting firm underpriced your services early on with FGC (or in general) in order to gain a foothold. Now that you have that foothold, it’s time your fees are raised to fair levels.
- Inflation is for real. Your consulting firm’s expenses are on the rise, and unless you keep pace with inflation, you’re effectively taking a price decrease.
How to Ask for a Fee Increase
Raising your consulting firm’s fees isn’t a big deal when you’re proposing work for a new client.
However, when you’re asked by a past client to complete similar work to a past project or when you’re continuing in a long-term advisory relationship, higher fees are obvious and could be a point of contention.
Generally speaking, you’re best off with a short, sweet notification to your consulting client, devoid of justifications and defenses. You don’t need excuses or rationale to support your consulting firm’s escalated pricing.
A few examples of how this could be handled in the cover note on a proposal:
Just a quick update on fees: our fees are increasing this coming year. We enjoy our work with Fru Gal and we’re excited about the goals we’ve mapped out together for the next “big progress” project. As you’ll see in the attached proposal, the fee for our “big progress” work will be $1.2 bajillion, rather than $1 bajillion. If you have any questions about this, let me know.
One quick note on the fee in the attached proposal. Since Fru Gal has been a long time client, you’ve been grandfathered through a number of fee increases. To be fair to my team and also have some equity across clients, we need to bring you more in line with what our standard fees are now. Therefore, you’ll see the next “big progress” project includes a modest fee increase to a kazillion bajillion dollars.
There’s good news and bad news related to the “big progress” project we talked about last week. The good news is that our work this year with Fru Gal has been extremely productive, the results are accelerating and our work together next year should produce even more powerful results. The bad new is that, alas, we are increasing fees on “big progress” projects starting in January. Details are in the attached proposal.
None of those examples offer a rationale, other than a possible reference to the length of time FGC has paid the current fees.
Statements like, “We’ve brought on higher-level talent to support your team” sets you up for a fight over whether that higher-level talent is necessary. Don’t go there!
How have you let your current clients know that your fees are increasing for the same work?
Text and images are © 2023 David A. Fields, all rights reserved.