A consulting job is never easy, especially when you consider the time and dedication you put into making sure your clients are satisfied with your work. Whether it’s analyzing an organization’s marketing strategy or developing a plan to help an organization sustain profitable growth, there are no limits to what consultants can do for a client.
However, with all this time dedicated to perfecting your efforts, you might not be putting as much thought into a key ingredient for success: effective pricing.
In a recent webinar with Mimeo, Gus Prestera (President of Prestera FX, Inc.) discusses how consultants need to focus on pricing to help their businesses flourish. With over 20 years of experience in the field, Prestera reveals 5 mistakes that are most common when pricing your consulting services:
Finding out what other competitors are charging for similar services is a good starting point when determining your pricing. However, if you decide to stop here, then you’ve turned your services into a commodity that fails to separate itself from others like it.
Once you’ve become a commodity, it becomes difficult to evolve in the eyes of potential customers. To avoid this, consider the value you are providing to customers and sell your services as something more than just a commodity.
Taking the time to describe your services to potential clients will help explain why your business should be recognized as a top-tier solution.
Falling Short of Awesome
When you’re first starting out, there is a pressure to get your projects done on time with great quality attached to it. Even when you do, clients are not that impressed, especially since it was their expectation that the project would be done on time.
Just doing the bare minimum isn’t enough and gives you a reputation as an “order taker.” Don’t let this happen by standing out and differentiating your services by choosing projects you know that you can do well. Take initiative by providing additional analysis that wasn’t asked for by the client. This will lead to a better experience for them and a better reputation for your services.
If pricing has a relationship to value and value is dependent on client needs, then why offer one blanket price for your time (ex: $100/hour). This type of pricing can do potential harm, whether it’s too low or too high for the requested services.
If your pricing is low, then you are potentially losing out on additional income. If your pricing is high, then you are pricing yourself out of other jobs that could be better suited for your services.
There are better options available than just giving someone a single rate. Instead, use a rate structure that employs a combination of your time and costs to determine what specific services are most valuable to you and your clients. This will prevent blanket pricing and help you stay competitive in your consulting.
Blindfolded on a Bridge
If you’re walking blindfolded on a bridge, then you’re most likely going to fall off. The same applies to pricing if you’re not paying attention to the marketplace.
Actively scan your market on a regular basis so you can properly change and negotiate your rates with potential clients. This will give you a better idea of what your competition is up to and how valuable your time is to those you service.
Failing to prepare for future price variations can lead to you falling behind other consulting firms. Stay ahead of the curve by staying focused on your current market.
Defending Your Price
A phrase that is commonly brought up during Prestera’s negotiations with consulting firms is, “This is our price, sorry.” Based on his experience, he feels there is no need to be apologetic about how a company has chosen to price it’s services, especially since it signals to the buyer that you can negotiate.
Sometimes you have to be flexible during the negotiating period, but it becomes detrimental to your business when you negotiate a rate lower than you were willing to actually go.
When you have a potential client, be sure to do your homework and understand the value you bring to a project. Not only will this keep you in range of your predetermined rates, but it will give you a chance to prove that you are worth the price you charge.
Keeping these keys in mind will help you develop the type of pricing structure that will keep your business value afloat. Having a working knowledge of what you bring to the table, how much your time costs and the current state of the market will earn the respect of your clients and keep them coming back for more.