For professional be they an IT consultant or a graphic designer it would be considered by most, ‘natural’ that a professional thinking of how much to charge should aim to price their services at a ‘fair’ price; perhaps a little like Goldilocks not too high, not too low. The truth is that who you ask for advice in this area could determine the answer to the question.
Do I need to discount my fees to get clients?
Ask an entrepreneur who has been in business and who may have sold one or two businesses and they will say: “never sell yourself too cheaply.” Ask another, moderately successful practitioners and they’ll say “Don’t charge too high, people won’t pay it.” At a recent conference of coaches, I met a coach who specialised in coaching chief executives. He said he would not get any customers if he charged under $1,000 an hour. “They would not accept that I had the high-level credentials if I charged less than a rate commensurate with the potential value of the service.”
It is perfectly ‘natural’ to expect the potential client to question your ‘value proposition’.
But do note:
1. Discounting inevitable gives the pricing power to the buyer.
That may be valid who feel they have no power in the negotiating but this should not be a presumption upfront.
2. Discounting inevitably leads to a downward spiral in fee income.
Once established that you are prepared to discount your decision on how much to charge, it is difficult to claw back to the base level and even more difficult to position one as a “premier” professional.
The ‘natural’ expectation here is those good professionals should be appropriately compensated.
It is the biggest trap is for aspiring consultants and freelancers and the response is unanimous: don’t under-price your services. Too many set off to win business and price themselves with urgency as the driver; inevitably creating the impression that they are simply not up to the job. My experience based on more than 10 years of consulting is to build “posture” – not the physical body type – and to adopt an attitude of “can do”. It’s more important to project an image that you can add value to the client.
Your price is not negotiable because you have the confidence that will deliver the value expected from the engagement.
The value proposition when deciding how much to charge
Ask Zig Ziegler or any salesperson worth their salt and they will tell you the way to sell yourself or your services is to sell the benefits to the prospect. There is no shortcut here. In fact, it’s the methods which will secure the maximum fee.
Moreover, price is only one part of the customer satisfaction outcome. Correct pricing is as much about perception and customer satisfaction as it is about costly analysis. It’s important to know your customer satisfaction levels – dissatisfied customers won’t pay any price.