When pursuing new engagements, consultants often face competition from others who are willing to accept below-market rates. Competing on price alone can feel frustrating and demoralizing. Fortunately, there are proven strategies that can help you protect your value and get paid what your consulting expertise is worth.
Why The Lowest Bid Does Not Necessarily Win
Do not assume that every prospective client is going to choose the lowest bidder. After all, your prospective clients do not drive the cheapest cars that they could have bought. They do not wear the cheapest shoes and do not buy the least expensive houses. Most people associate price with quality and want the best services they can get. However, they do not want to pay any more than necessary and do not want to pay more than someone else paid for a similar service or product.
Do Not Confuse the Value of Services with Expertise
Your expertise as a consultant is often far more valuable than the tasks you perform. As a knowledge professional, you bring:
- Years of experience
- Specialized training
- Industry insights
- Proven judgment
Prospects only know what you tell them. Clearly explain your credentials. Show the client how they can directly benefit their organization by hiring you. Share case studies and real-world examples that showcase your expertise and results. Client testimonials about your expertise and what it is worth are especially powerful proof points.
Differentiate Your Expertise from the Crowd
Your expertise and work product are not commodities. No two consultants have the same education, certifications, experience, or approach. When consultants prepare analyses with the same facts, they do not necessarily come to similar conclusions. In fact, their conclusions and recommendations often vary dramatically.
Practice Your Consulting Fee Conversation
Practice makes perfect. That certainly is worth considering when preparing to discuss your value and price with a potential client. Practice that discussion just as you would prepare to give a speech. Think carefully about what you are going to say and how you are going to say it:
- Anticipate questions and objections
- Practice confident responses
- Rehearse your value story
When discussing your price, you will likely have the prospects’ full attention. They will watch to see how confident you are in your own fee structure. They will interpret a lack of confidence on your part as an invitation to negotiate. In other words, prospects will never have more confidence in your fee schedule than they think that you have.
Be Prepared to Negotiate What You Are Worth
Many executives and business owners are skilled negotiators. If you are not a good negotiator, you may be at a disadvantage.
Remember the saying:
We get what we negotiate, not get what we deserve.
Invest in formal training in negotiation skills. Do not think of it as a one-and-done proposition. Instead, include training in negotiation skills in your ongoing education every second or third year.
Do not be intimidated if a prospect asks for a discount. Most negotiators are trained to always ask. Declining to grant a discount does not mean that you will lose the engagement. In fact, standing firm about your fees can increase your credibility.
Tie Your Fee to Expertise and Results
Be sure to tie your fee to the end of the engagement, not the beginning. Telling the client you can start today may not relieve the client’s stress. However, promising to deliver to one of their milestones, such as a report draft well before a board meeting, is more apt to solve their pain. Too often, consultants discuss the start of an engagement while the potential client is highly focused on the completion. Focus on how you can provide results, and you’ll get paid what your expertise is worth.
Distinguish Yourself with These Best Practices
Listen Carefully
Listen very carefully to your prospect and resist the temptation to interrupt. Commit to staying involved in the project even though much of the work may be done by less experienced staff. Promptly acknowledge receipt of all correspondence from the client. Promise to provide regular updates so the client knows what has been done and what you anticipate doing next.
Build Long-Term Relationships
Consider that executives and business owners like long-term relationships. They prefer long-term employees and long-term customers. In many circumstances, they also want on-going relationships with their advisors.
Be Selective
Be selective about the clients and engagements you accept. Do not be bashful about letting people know that you are selective. We may think that we are the right advisor for everyone, but that simply is not the case.
Ask Smart Questions Up Front
Ask plenty of questions when talking to a prospective client. This will help you find out whether you are qualified for the project, whether you want this client, whether their expectations are realistic, and what their hot buttons are. You may also pique their interest by asking questions. For example, you may ask about a certain type of value that other consultants have never mentioned. When you ask about traffic to the company’s website, their name recognition, and the value of their workforce in place, the prospect may realize that you see value where others do not.
Understand Client Urgency
Be sensitive to the fact that most clients see their projects as being urgent. From their viewpoint, the sooner you provide your services, the more valuable your services are.
Industry Experience Matters
Remember that clients often put a premium on industry experience. Yet broad industry experience may not be enough. For example, it is unlikely that anyone is looking for a specialist like you who has experience in the healthcare industry. They drill down further than that. If the prospect is a cardiology practice, they are looking for someone who has experience with cardiology practices. A hospice will look for someone who has hospice experience. For this reason, it would be advantageous to keep a record of your past engagements. One day you may be talking to a dental practice and will find it very helpful to be able to say that you provided services to ten dental practices over the last twenty years.
Include Results on Your Invoices
On invoices, consider whether you should provide a listing of your input or a listing of your output. Your input may include activity such as meetings, discussions and phone calls. Your output may involve answering the client’s questions and resolving their issues. Communicate your output in terms of results for the client. Based on results, the client will have no problem paying you what your expertise is worth.
Position Yourself as The Expert
Perhaps one of the most important points is to look at yourself, your website, and your correspondence from the viewpoint of the potential client. If prospects perceive you as a salesperson, they will probably want to end the discussion quickly. On the other hand, if they perceive you as an expert, they will value what you say and will want to hear more from you.
About The Author, Stephen Kirkland, CPA, CMC, CFF
The author of this post, Stephen Kirkland, currently serves as Treasurer on the IMC USA Board of Directors. He is a Certified Management Consultant and Expert Witness, providing compensation consulting and expert witness services to closely held businesses, professional service firms, and non-profits across the United States since 1995. For more information visit his website and connect with him on LinkedIn.
More Articles about Getting Paid What You’re Worth…
Consulting Fees that Win Business without Selling Yourself Short
I wrote Value Based Fees, which is in its third edition, among 50+ other books on consulting, and Wiley will release The Seven-Figure Consultant in February. I don’t want to be harsh, but the advice here, well intended and presented, is simply insufficient to establish high fees, which are based on value recognized by the buyer, and never negotiated. Never include anything but the fees you are due in an invoice. Industry experience is a tiny factor, more of us are really process consultants. I’m not trying to sell you a thing, my site (alanweiss.com) is full of free resources, and my podcasts, videos, and newsletters are free. At least read another opinion from someone who’s dealt with Fortune 500 firms and closely held businesses.
All well intended, I presume, Alan — but your comment still comes across as a bit of a sales pitch, of which you are undoubtedly one of the masters in our industry.
Speaking of value-based, have you ever proposed sending a client/customer a zero $ project invoice, asking them to pay what they believed the services were worth ??