Oh wow, you’re a contestant on the new game show, Set Your Fees! Let’s listen in on the cheesy announcer. He seems to be giving you a choice of three doors.…
“Door #1 is sponsored by Recession. Faced with uncertain revenues and reluctant prospects? Lower your consulting firm’s fees, to help you lock in projects!
“Or choose Door #2, sponsored by Inflation. Personnel are 40-60% of your consulting firm’s expenses, and your folks are demanding higher wages. Plus, the cost of everything else is going up, up up. If you want to stay in business and make a profit, you’ll need to raise your fees!
“Perhaps Door #3, whose sponsor is… uhm… it’s scratched out and hard to read… ah yes, it’s Confusion. Not sure what to do? Close your eyes, don’t change anything and pray for the best!”
The countdown music is playing, the audience is shouting… the pressure is on! Which door should you choose?
While you’re deliberating, think about this:
There are two schools of consulting buyers: Price Buyers and Quality Buyers.
Both schools will choose the consulting firm that offers highest value, but their definition of value differs.
Price Buyers: Best Value = good enough quality at the lowest possible price.
Quality Buyers: Best Value = highest possible quality at a reasonable price.
The two schools also have different tendencies when faced with financial hardship:
Price Buyers save money by spending less on everything. They accept lower quality.
Quality Buyers save money by reducing the number of investments. They invest more in the few things that will have the greatest impact, and accept higher prices.
Of course, there’s a large contingent of consulting buyers who wander between those schools. During good times, they’re willing to swing toward high quality, as long as the fee isn’t crazy. During lean times, their desire to conserve cash shifts their preference to low fee offerings.
When recession winds blow in your consulting firm’s face or other downturns rattle your confidence, remember that there are always Quality Buyers. The number of adherents to that school may dwindle, but the school doesn’t close.
Also, financial downturns don’t affect everyone uniformly. There will always be segments and individual prospects in your market that are growing, thriving, and looking for help from a kick-butt consulting firm like yours.
Remember, there are always Quality Buyers.
The game show music has stopped and it’s time to make a decision.
You know that turning to Door #1 is a losing game. There’s no guarantee you’ll be the lowest price. If you do win, you’ll struggle to deliver work your consulting firm is proud of at an acceptable profit.
Plus, it’s difficult to recover from a price-cutting precedent.
You choose Door #2. You raise your fees.
The audience cheers! They’re ecstatic.
But are you thrilled?
More likely you’re nervous. Anxious. Perhaps, deeply concerned about revenue. And rightly so.
Winning consulting projects at higher fees during economic busts requires more dedication, effort, discipline and precision than during boom times.
Yes, raise your fees in the months ahead, and also commit to a four-part mantra:
Four-Part Inflation/Recession Reaction Mantra
“I will make my consulting firm more visible to Quality Buyers.”
“I will identify and pursue high-performing segments and prospects.”
“I will ensure my consulting firm’s offerings are meaningful and address high-priority problems.”
“I will upgrade and pamper my Business Development engine, so that I engage in more productive conversations and my opportunities yield more, closed projects.“
Each element of that mantra deserves more exploration, and we’ll talk about them in future articles.
In the meantime, steel yourself to choose Door #2 and raise your fees.
The fanfare will blare, the confetti will flutter down and the audience will love you. So will your consulting firm’s bottom line and, most importantly (and perhaps surprisingly), so will your clients.
Are you planning to raise your fees as much of the world potentially enters a recession?
Text and images are © 2023 David A. Fields, all rights reserved.