Charging What You’re Worth for Professional Consulting Services
Two of the perennial problems that many consultants face are how to set their prices, and how to convey to potential clients the value in working with them, buying your service product.
Lack of clarity as to what you are worth to clients will undermine your confidence and often lead to trying to compensate by over delivering and over promoting.
Here are some simple ideas to help you get clear on the value you deliver, and to charge fees that are in line with that.
1. Not all clients (customers) are the same. Your value to them will be different. That is why it is important to think like an effective marketer and segment/target. And segmentation needs to more than Demographics/Firmagraphics.
Value is specific (and perceptual) to each market/segment and situation. You need to create a market segment profile for each target market. The more detail, the better your understanding. If it is only a few words, you do not understand your market well enough.
If you are struggling to make a useful segment profile (it takes a bit of knowledge and time) – seek help. Also check out http://smartamarketing.wordpress.com for ideas about effective segmentation. You will find other useful and free ideas in the many ideas there as well
2. What value do you offer? An effective exercise is to list 30 results that your clients get in working with you. Your Product is both goods (tangibles) and services (intangibles). Be sure to list the tangible as well as the non-tangible. Dig deep. If you’re new to your business, then look at the results that are typical of your particular profession or industry, and ask yourself how you can help people create that.
If you are struggling to make a 30 list (it takes time) – seek help
3 Once you have made your basic list, look at it from a client’s perspective. What benefits are there for them? Clients/customers buy benefits (intangible services – supported by tangibles). Put yourself in their shoes and ask “What’s in it for me” (WIIFM).
4. Determine a Price. Determine not what you think you are worth – but what your prospective clients are prepared to pay. What clients think may be wrong, but that is what you need to work with. If you think they should see you as being worth more, then you need to work out how to persuade them of that fact. While your costs are important in determining an asking Price, Clients don’t care about your costs except where it offers them some advantage. Adopt a good marketing approach when looking at your cost decisions. Ask “How can this benefit my clients in such a way as I can add it to my value offer”?
Create Price Lines – that is different asking prices for different segments and offerings.
Price different offerings (Products) differently
4. Don’t stop researching, thinking and planning about your offering. Be sure to ask your clients (frequently) what they value most about working with you or your competitors. Don’t just assume that what you think is goog is good for your clients – find out.
5. Think strategically as well as tactically. Tactics – short term plans and action to suit the particular situation are needed, but to get ahead consistently, you need to also think strategically about your business. Look for (and create) value offerings that will differentiate you from your competitors. If your offering is undifferentiated, it is a commodity. Commodities only compete on price – or luck.
Thinking strategically means looking at the whole Marketing Mix (eg. 4 P’s) not just Price. It is also about establishing an effective Brand in your market place.
6. Do your prospective clients know about you and what you can offer them? Now that you know what you should offer to clients, it’s important that they become aware of it too. How you can let them know is another (important) topic. This is also where knowing a lot about your target segment will pay dividends. You will know what media they use; what key ideas they want to know about – and how you can effectively communicate with them (not just to them)
Check out the other articles on the SmartaMarketing blog (http://smartamarketing.wordpress.com and https://smartamarketing2.wordpress.com); visit MAANZ International (www.marketing.org.au) and look at the short courses on offer. Or contact me for specific advice and projects you are looking at
It is how you can build your business/consultancy
Dr. Brian Monger