If you want to charge higher fees, you can’t be a run of the mill consultant. When people really value what you have to offer, it’s because of scarcity.
Now, economists talk about scarcity all the time. You’re heard of the supply and demand curve. And prices emerge where the two lines cross. Where there’s a supply of services and a corresponding demand. If there is a scarcity of supply and demand is strong, then prices will be higher.
Now, some people will tell you that consulting fees can’t be considered in terms of supply and demand. They’ll tell you it’s all about the value you create.
But the thing is that moving to solution-based fees and charging based on the value of your solutions is all about scarcity.
You see, the value you offer comes from trust. When you’ve got a deep, trust-based relationship with a client, they will pay more for your services. And why’s that? Well, it’s because of scarcity. It’s hard to find a great consultant you can trust. Great consultants are scarce! When you’re a client hiring someone on the basis on their reputation and skillset, you’re hiring them for things that are invisible. So when a consultant who looks like a credible expert comes along and creates a fantastic relationship with you, clients are going to value that consultant a lot more. Because a great, trustworthy, credible consultant is a rare thing.
If you are one of the few consultants who can provide a certain experience for a client, you’ll be in a position to get paid more for your work. A scarce consultant will get paid more than one who’s completely undistinguishable from everyone else out there, assuming there’s demand.
Think about it from the client’s perspective. The client has a big problem and needs someone to solve it.
So, first, the client thinks about supply. Who can solve this problem? Are there many people who can solve it? If there aren’t very many people, then the value of their services goes up.
And then the client thinks about demand. Just how much do I need this problem solved? Do I need it done soon? If I want this problem solved right away and my need is high, the client will place more value on solving the problem.
As the client reviews the available consultants – the supply – and considers his or her demand for a solution, the client will no doubt start thinking about trust. How much do I trust this person to do a good job? The more the client trusts the consultant, the greater the value of those services. People who need a problem solved soon and properly will place more value in a consultant who gives them confidence that the job will be done well.
So that’s the client’s perspective.
How do you approach this as a consultant?
You need to think about what it is you need to do to show that you can solve the client’s problem. You need to give them confidence in the solution you have to offer. You need to prove that you have just the right skills, experience and integrity to get the job done right. You need to help the client focus their attention on what the job will look like when it’s done right.
And that all comes down to understanding your clients’ needs, positioning your services to help them, and building and implementing a trust-based marketing plan that works for both your clients and you.
In the end, it comes back to scarcity. A good consultant is hard to find. If you show you’re a great consultant with an excellent track record, you’ll achieve scarcity and thus be in a position to charge a premium.