What’s the smallest project your consulting firm should accept? Should there even be a minimum? Absolutely! Sort of.
Brrrrng, brrrrng. It’s Phyllis Phinsternoodle calling to inquire whether you can take on a quick, two-week project at her petunia plant.
No, she’s called back: it turns out she only needs you for one day.
Oh wait, actually she’d like to just pick your brain for half an hour.
What should you do? When a diminutive consulting opportunity pokes its tiny head into view—regardless of whether a current client or a new prospect presents it—accepting the project for a low fee is a bad idea.
Small fees for small peas may work for farmers, but not for consultants.
Instead, your three good choices are:
- Walk away. You could politely brush off Phyllis, while congratulating yourself on remembering that small projects crowd out large projects.
- Fold it into a larger project. Educating Ms. Phinsternoodle on the benefits of a broader scope could pave the way to a more attractive, valuable engagement.
- Perform the project gratis. In the right circumstances, a few hours, days, weeks or even months of work “on the house” could pay out handsomely.
At the boutique firm where my consulting career started, we never accepted a project under $25,000 and rarely below $50,000. At Ascendant (my firm), pretty much the same standards hold for corporate clients; on the other hand, I do perform work gratis on occasion.
To make sense of these choices and respond to opportunities correctly, you need to establish two standards for your consulting firm:
- Your Free Line – You complete projects with an insignificant scope–smaller than your Free Line–at no charge to the client.
- Your Fee Line – You absolutely charge an equitable fee for substantial projects; i.e., those above your Fee Line.
Your Free Line and Fee Line are not adjacent. Between them is a No-Go Zone. When you face an opportunity in the No-Go Zone, either walk away or fold it into a larger, paid project.
Why do any projects for free? Because accepting tiny, for-fee projects diminishes your stature as a consultant and creates a precedent for the client to nickel-and-dime you.
A small effort for free shows you’re generous. A small effort for a small fee shows you’re minor league.
Set different Free/Fee lines for low-potential prospects, high-potential prospects and current clients.
A few days of work or even a couple of weeks may be a reasonable gesture if Phyllis generates $500k or $1 million or more in annual revenue for your consulting firm.
One caution with current clients: your Free Line applies to requests unrelated to your current initiatives. Requests for additional work on your existing projects is verboten (it’s scope creep).
Where should you set your Free Line and Fee Line? Take the smallest engagement you’ve accepted over the past 18 months and double that number. That’s your new Fee Line for prospective consulting clients. In another 18 months you can double your Fee Line again.
Your Free Line for prospects can be as low as you’d like– perhaps limited to only ten minutes of guidance. Where you set the line is less important than you have a line, you know it, and you stand by it.
Have you accepted a tiny project? What was your experience?
Text and images are © 2018 David A. Fields, all rights reserved.