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#611: The Complexity of Your Services May Not Add Value

Posted By Mark Haas CMC FIMC, Monday, July 18, 2011
Updated: Monday, July 18, 2011
My question is about fees for value delivered. My consulting firm has built technical capabilities over nearly 30 years and offers some of the most sophisticated expertise and tools around. However, we get price resistance even from customers who stand to increase profits significantly from our services. Why shouldn't we be paid proportionally?

Fees are always an emotional issue, especially when they are compensation for something created with one's own time and effort. We tend to place a high value on intellectual property we created and all the more so when it is unique or highly complex. Yet, uniqueness and complexity may or may not be worth much in the marketplace.

Buyers may equate uniqueness with lack of peer credibility, thorough testing or market acceptance. Complexity may signify excess risk or over engineering. Consider how comfortable most people are with "tried and true." Only in a market where there are a lot of undifferentiated substitutes and the commonly available product fails to provide value will "unique and complex" demand a fee premium.

You may be selling complexity but the client is buying something else. Define what that is and you will be able to raise your fees. Is complexity tied to application flexibility, fault tolerance, or failure resistance? These are the kind of features you may be able to translate directly into value added for a client.

Tip: Also consider whether what you consider as "complexity" is really all that complex. One person's "complex" is another's "simple." How would you determine fees based just on a subjective assessment of complexity? For example, consider the instrument cluster complexity of an aircraft cockpit. To many, the dozen or so instruments of a typical small plane are "complex," but not so when compared to the instruments of the Space Shuttle.

© 2011 Institute of Management Consultants USA

Tags:  brand  fees  intellectual property  your consulting practice 

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