Perception of Your Value Is Subjective and, Seriously Flawed (in most cases)
I was reminded of a client who shared that she had secured an appointment with a BIG prospect — an international conglomerate that is doing billions in annual revenues.
My colleague and I gave her some basic ‘tips’ for a first meeting and . . . off she went.
“I Got a New Client!”
She called us after her meeting with the prospect. “They want me as their consultant!”. I wanted to know all the details. We met later at my office for the ‘debriefing’.
“So tell me, what exactly landed this nice new corporate client for you?” “Well” she began, “I asked them, “Do you take physical possession of the software used in all your offices worldwide OR, do you download the software and license for each workstation?”
She learned the client took physical possession of software for each workstation and ships it off to Iron Mountain for storage. That meant they paid a ‘use tax’ that was 7% vs. 1% . . . AND, on top of that, they had to pay storage charges for the software, as well.
“So what got you hired?” “Oh” she said, “I asked them how big a number 6% of their annual software expenses, worldwide, would be (7% –– 1%) and asked if they’re OK paying that when they wouldn’t have to if they downloaded the software and filed the licenses.”
My client was beaming at this obvious and significant ‘win’. That’s when my colleague asked her a question, “Mary (not her real name) . . . please God . . . don’t tell us you’re charging an hourly fee for advice that’s saving this company millions of dollars annually!”
She thought about it. Then said, “Oh my goodness, not anymore I won’t!”
The Creative and Fair Pricing Structure She Used After This
Mary realized her value doesn’t reflect how long she works, but how how much value her client enjoys from her specialized expertise. So, she created a contingency fee structure.
If she could recover taxes a client assumed were gone for good, she took a 25% Finders Fee. If she couldn’t recover any taxes, there was no fee to pay. And, no risk to a client!
UPDATE: ‘Mary’ retired early and lives in a nice home on the ocean!
ACTIONS YOU CAN TAKE . . . To Cultivate Relationships with This Insight:
Learn . . . the financial impact your problem-solving expertise creates for a client . . . as your client defines or understands it
Charge . . . an all-inclusive ‘project fee’ — no more hourly fees — as a consultant you are compensated for what you can do for a client, not how long it takes you to do it
Set . . . your fees to reflect the value you can reliably deliver for your client.
Include . . . a factor to account for normal cost variations and make sure your final fee is a small fraction of the total value your client will gain from your services