Consulting Proposals: Establishing Your Value to the Project

Proposal Writing Consultants

Under almost every circumstance a consultant should not be charging clients on an hourly basis. If you’ve been reading any of my articles relating to consulting fees over the last several years you know that already.

As I coach and work with many consultants from around the world, it’s become clear that many people aren’t clear on how to establish the value of their projects…

Charging according to value is the approach to take. And as I work with and coach consultants from around the world, it’s become clear that many people aren’t clear on how to establish the value of their projects…

…which makes it rather challenging to set your consulting fees.

Today I’m going to share with you how to establish your value so that you can justify your fees, write effective consulting proposals and earn more.

What’s the Value?

To find the value you’re contribution to the project will deliver you must begin by asking questions. These include:

  • How much will [this] save you over the next 2-5 years?
  • How important is the success of this project?
  • How will your company benefit when these objectives are achieved?
  • How will you feel when the results are delivered?
  • How much is each [x] worth to your company?
  • How much money will this add to your bottom-line annually?

There are many more questions you can ask. What’s important is that you ask questions that will help you understand the true value you will be enabling.

Look at the Return on Investment (ROI)

There is no one-size-fits-all formula for calculating your consulting fees based on value.

However, one thing to keep in mind is ROI.

If you can deliver a positive ROI that the buyer deems acceptable (or better yet, superb) then you’re in a great position.

If you’re solution will enable the client to save $1M a year, a fee of $100,000 can be easily justified.

A 5-to-1 return may be great in some industries, while in others you’ll want to aim for a 10-to-1 return.

Setting Your Fee

In your consulting proposal you want to layout your fees based on the value that you will deliver the client.

If you’re solution will enable the client to save $1M a year, a fee of $100,000 can be easily justified.

On the other hand if the result you deliver will make your client an extra $10,000 a month, a fee of $50,000 (while it still makes your client more money) will be viewed less favorably.

You need to uncover the value you’ll create. Once you’ve done that, writing down your fee in your consulting proposal becomes easy.

If you’ve found certain questions to be effective in uncovering value please share them in the comments below.

**CONSULTING PROPOSAL GUIDE: Get consulting proposal and contract templates in our detailed Consulting Proposal Guide here**

  • Johanas

    You are right I believe as this point on value is very good. Thank you!

  • Claude

    How would you go about characterizing the value of a strategy review engagement, that is, where the client wants me to review whether or not he should adjust his business unit strategy (his business is profitably growing at around market rate and the market he is in is growing)?

    • Claude – what is the impact on your client’s business that your service will have? How does that translate into dollars?

  • Ranjith

    Hi Mike, This is Ranjith here! The biggest challenge i face while characterising the value of a strategy is that, there are many external unpredictable factors that can affect the outcome…and may be because of those reasons, clients are not able to get the expected ROI which can question the worthiness of a consultant..How can we go about?

    • Ranjith – clearly state what role you and the client will play and outline what is expected of each. When you do that, and if something unexpected comes up, both you and your client can refer back to that in the proposal. The guide we have here has more details on this.

  • Stefan Drew

    Michael, so many people seem to fear proposing value based fees with their clients. The fear is in their head and if the rationale is carefully explained to clients the majority will accept it. Those that don’t probably are not the type of client most of us want.