How to Establish Value in Your Consulting Fees

Would earning 100%, 200% even 300% more than you are now with your consulting fees be of interest?

If you’d like to learn how to increase your fees so you can make more with every project that you take on and spend potentially less time on each project this will be relevant for you.

In today’s article I’m going to explain how to establish value for your consulting fees.

Why Value?

If you’re not basing your fees on value or ROI you’re leaving significant money on the table. Put simply, hourly fees and daily rates compensate you for your time, not your value or contribution to the project.

Most buyers of consulting services are more than happy to invest at a 5-10X ROI.

If you spend 20 hours on a project at $300/hr you’d earn $6000.

There’s nothing wrong with that number, except, what if the work you did for that client helped them to directly increase their sales by $400,000.

Would that be equitable compensation? If you feel it is, you’re certainly leaving a lot of money on the table!

Most buyers of consulting services are more than happy to invest at a 5-10X ROI.

That means if you helped them realize a $400,000 gain your compensation could range from $40,000 to $80,000.

You tell me, $6k or $40k-$80k – which would you prefer?

And what if it only took you 15 hours to get them that result? It may take more or less, but in almost all cases you’ll earn significantly more by basing your fees on value.

There are two types of value to consider with all projects. When you understand what they are and how to identify them you can often earn even more than the example I shared above. You can do this through discovering additional value and communicating it to the buyer.

Tangible

Tangible value is easy to spot. It can include:

  • An increase in top line revenue
  • Growth in profits
  • Improvement in efficiency
  • Reduction in costs
  • Reduction in time spent
  • Improvement in satisfaction levels or surveys

Tangible value can be measured and typically has a $ sign or % mark attached to it.

Intangible

Intangible value is the area that most consultants get tripped up on. They feel it is elusive and hard to spot. That doesn’t have to be the case when you know what to look for.

Intangible value can include:

  • How something impacts someone’s stress level
  • Helping them to get a promotion or raise their status in the organization
  • Improve their health, wealth, family situation
  • Realize an accomplishment and reach an important goal
  • Creating a better reputation

I recently spoke with one client who felt unclear about communicating the intangible side of their fees. In our conversation it became clear that “reputation” was very important to this buyer.

“Why is it so important to them?” I asked.

“Because they want to be seen as world-class.” my client responded.

I continued peeling back some layers and said, “Great, and why do they want to be world-class?”

“Well, it will help them to attract more visibility and get more tourism and direct investment.”

Now we were making progress. “So their reputation is important to them because they want to be seen as world-class and that will allow them to attract more tourism to their country and increase their foreign direct investment, right?”

When you ask enough questions and dig deep you can uncover tangible value from what on the surface appears only to be intangible value.

“That’s right” my client said.

We went on to talk about the measurable value of tourism and direct investment for the buyer.

When you ask enough questions and dig deep you can uncover tangible value from what on the surface appears only to be intangible value.

Focus on the Conversation

The best way to identify both intangible and tangible value is to have a deep and meaningful conversation with the decision maker (aka. the buyer).

There is no replacement for this.

No shortcut.

If you skip or try to cut the conversation short without having a proper conversation you will leave money on the table 99% of the time.

That’s because to identify value and ROI you must take the time to ask the right questions.

Asking the Right Questions

The most important skill you can have as a consultant when you want to increase your fees and earn more with every project that you take on is to know how to ask great questions.

I’ve written more extensively about how to ask great consulting questions before. Here are some examples for you:

  • “What is your number one priority for this business unit during this fiscal year?”
  • “What do you believe needs to be strengthened in order to support achieving this?”
  • “What do you think the main challenge is?”
  • “What is working well?”
  • “What is working well?”
  • “What is the worst thing that can happen?”
  • “What is the best thing that can happen?”
  • “Why is that important to you?”
  • “What is the value of this to you (your company)?”

I teach my clients a formula and provide them with a script that takes them from start to finish and guides them through having a meaningful conversation with a buyer of consulting services by asking the right questions.

It sets them apart and allows them to earn significantly more with every project they take on.

Here are a couple of examples to show you the possibility and the opportunity for transformation when you make this shift.

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Ready to Earn Higher Fees?

If you’d like help to communicate greater value so you can earn higher fees consider applying for the Accelerator Coaching Program. In this program I personally work with clients to help them attract more high-value buyers, increase their fees and win more business.

Want feedback on a proposal? I’ll personally review it for you. Want help to ensure your marketing materials are up to par? We’ll get you that feedback. We do all that and a lot more for clients in the Accelerator Coaching Program. You can schedule a free 1-on-1 Planning Session to learn more about the program. Start by applying here

Please Share This Article If You Enjoyed It:

  • Ben

    Hey Mike, thanks for putting the article together. I’ve come across this type of argument in favor of focusing on the value created by a consulting gig in order to justify higher fees; however, I don’t think it applies to all avenues of consulting. For example, I work in a consulting role that focuses on regulatory compliance, specifically in regards to Occupational H&S regs. It feels like much more of a stretch to frame our services as creating value for the client (ie obtaining a gain), and more like they are working to avoid repercussions or penalties (i.e. avoiding a loss). I think when that switch is made (they are not gaining by hiring us, just avoiding loss), it is much more difficult to avoid unit costs, day rates, price competition with competitors etc. I’d love to be convinced otherwise though! Any thoughts?

    • @disqus_j6OsWQzjV1:disqus we’ve worked with many clients in similar industries where the client is looking to avoid penalties, etc as you mention. We can always find a way to communicate greater value to the buyer. You want to go beyond the surface layer and really consider all the tangible and intangible aspects of value by digging deeper. If you want help with this reach out here: https://www.consultingsuccess.com/coaching-for-consultants

    • Harold Fox

      Anything that doesn’t get payed out in fines and penalties drops straight to the bottom line as profit. Or when compliance is complicated and the price of a mistake is high and likely to occur, the thought of preserving x$ profit for an investment of several times less than x$ seems like a gain to me. Present the glass as half full.

  • Vikas SAXENA

    Hi Michael, I work with strict NDAs with my clients and that’s the reason I can’t give references. How to convince my prospects about this?

    • Vikas – you can mention the type of company that you worked with, often even industry and size, and still provide a case study without giving away the specifics of who they are.

      • Vikas SAXENA

        Thank you so much Mike, I appreciate!

  • Hal Little

    My two big projects are “start up” – they are new to this channel. So the cost of the project are investment / cost of entry….. Both projects are $300,000+ in total and my Consulting fee is hovering around 30% of the total project. Is that within reason? I have 30+ years of upper level sales and marketing experience in 2 multi national corporations in the veterinary industry

    • @disqus_pjMlWkuVAz:disqus always aim to provide your clients with a 5-10X ROI.

  • JD White

    Mr. Zipursky,
    I just wanted to say that your site is awesome, especially for someone such as myself that has just retired from the military. I myself plan on setting up a IT consulting business, at first it will just be me but my long term goal is to scale and eventually hire employees. Right now I guess my biggest hang up is deciding to startup now or wait to establish a LLC, before I put my first foot forward. Would appreciate your thoughts.

    • @disqus_TnXxhXTunc:disqus don’t wait. There’s never a perfect time. Start taking action now. The sooner you start the more progress you’ll make.