Imagine you are terribly ill. You have a huge pain. You would do anything to take the pain away. It’s preventing you from enjoying your life. You can’t work. You can’t sleep. It’s making you miserable.
Now imagine two doctors appear. One can start right away. They’ve got a solution, they have experience in the field, and you really click with them. They charge $500 an hour for their consulting fee.
The second doctor also has a solution, has some experience in the field and you really feel like you’ve got a strong rapport with them. They tell you that their practice is new and they’ll take you on for $200 an hour in consulting fees.
What does your gut say?
When you’re in pain, you want someone you can trust. You want someone who understands your pain and the cause of it. You want to know that they can do the job and they’ve got the bedside manner to see you through. Does the price matter?
Imagine now that you’re a small business owner. You need a new website. The one you have now is laughable and even your friends tease you about it once in a while. Clients sometimes call in, tying you up, because they can’t find information they need. You now you’re losing business, that you’re not putting forth the image that will support sales, and you’re spending way too much admin time on managing the site. Realizing you can’t go on like this, you bring in a few contractors and narrow it down to two. An established company you really like with experience and higher consulting fees. And an upstart company, where the owner is new to consulting, and says are really new to this and that they’ll cut their hourly rate if you’ll take a chance on them.
Which would you choose here?
Here’s the thing. The hourly consulting fee matters less than the solution and that value of that solution. If one person charges $200 an hour but does it poor, has little experience managing clients, and takes 100 hours to do it, you’re in for $20,000 and you may still be in pain. If the person who charges $500 an hour gets it done and does it right, you may be so glad to be out of pain that you won’t be sitting there counting pennies. In fact, because they’re more experienced, perhaps they’ll get it done faster. Or maybe they’ll end up charging $25,000, but they’ll put this problem behind you, you’ll never hurt again, and there’s really no risk. Would you care if the first person discounted their fees?
Now look at your own consulting business. It’s not about your rate. It’s about the value you offer to clients. Perhaps you’re not yet ready for Solution-Based Fee(tm) pricing. That’s okay – you’ll get there, and you can charge one of these other models instead. But you can – right now – start to point clients to the value of the solutions you offer. You can point them to the vision of a better tomorrow and to the hope of getting through this. You can show them your portfolio, your testimonials, your references. You can talk to them about your methodology and more. But if you tell them, “Hey, I’m new at this, so I’m going to charge you less”, you’re telling them that you’re not worth more than that, that there’s a risk in working with you, and that you’re not confident enough to charge what you think you’re worth. And that client will now know they can get you for less, because you obviously discounted just now. So the ground is made of quicksand, which is hardly the place to build a strong relationship.
So think twice before you tell the client you’ll cut your rate. It makes far more sense to point them to your special methodology that allows you to move more quickly, your lower overhead that you pass on in the way of lower fees, or other reasons you can offer a special rate. (And, ideally, you move on to Solution-Based Fees, so that you haven’t got the meter running and you’re not hamstrung by your own success in getting work done quickly.)
If you need help with setting your rate, take a look at Consulting Fees: A Guide for Independent Consultants here.