JUNE CHALLENGES – HOW TO GET WHAT YOU ARE WORTH (based on Alan Weiss, Value-Based Fees)
The last few weeks, we have been focusing on how to price your services based on the value you bring to the table. We’ve gone through two challenges so far to help you identify where you may be missing the mark. If you missed either of those, take a minute to review them here:
Week 1 – Why people give you their money
Week 2 – What you say affects your worth
Now you are ready to put it into action. Your challenge this week is to change the way you charge your clients from time and labor to value based fees. There are two parts to this challenge. To make it extra useful, take something you are working on now and go through this process.
Part I – Define the following – the 3 key building blocks of a value-based project:
- The business objectives to be met
- The metrics or measures that will be used to assess progress and determine success
- The value meeting those objectives brings to the client
With these three criteria defined, you can determine the appropriate price that will make good business sense for everyone involved. I would define good business sense the following way: What fee range will prompt the client to say, “That was a terrific return on my investment, and I’d like to work with that company again,” and you to say, “We were paid very well for our contribution, and the margin was excellent”.
Value-based fees are more an art than a science. You have to not only deliver significant value (what you identified above) but you also have to believe enough in yourself to charge a significant fee, which is usually the toughest part of the sell which leads to Part II of the challenge.
Part II – Establish your own value based on you or your company’s uniqueness. Here are the 3 key questions you should answer for every single engagement, prior to establishing fees: (apply this to the project you used in Part I)
- Why you? What value do you bring that others can’t? Do you possess some unique expertise? Have you been referred by a trusted source? Are you in the right place at the right time?
- Why now? Is there some urgency that needs to be considered? What would happen if the client did nothing? Would the situation be stable or would it deteriorate further? Is there a limited opportunity to get the project done or the opportunity will be lost? Is there funding that will disappear if not used?
- Why in this manner? Why aren’t they doing this internally? Have they tried this in the past and failed? Have they used other outside resources before and if so, what was the result? Who else is involved inthe project and why?
By answering these questions, you will quickly see and appreciate your own value. Look in the mirror, and practice on the toughest buyer of all. That, coupled with the value you bring to the client based on meeting agreed upon objectives in Part 1 will help you begin establishing value-based fees for every project that you or your company take on.
“It’s easy to assess your own unique value, but most companies and consultants don’t bother. If you don’t do it, no one else if going to do it for you.” – Alan Weiss, Value Based Fees
The Rector Group