I feel sorry for IT professionals who compete on price. I hope you are not one of them, because this is what you will face:
- A reputation as a cut-rate consultant or, if you own a firm, a reputation as a "body shop." Clients assume they get what they pay for, and will therefore assume that you must not be very good.
- Projects that are of marginal importance to your clients. If they were important, they would pay more for right consulting professional.
- Clients that care about price, and not relationships. Every time I have cut my fees for a new client, I have regretted it. Clients that focus on price end up being more demanding, less grateful, and much less loyal than clients that understand value of services I offer.
- Difficulty attracting enough clients to generate revenue you want to make. Attracting a few clients at higher fees saves you time and hassle compared to chasing many price-sensitive clients at lower fees.
- Employees (if you have or want any) that are dissatisfied and look for opportunities at firms where clients value quality of their work. The psychology of pricing consulting services is not so different from psychology of pricing Vodka: The higher price, better quality people think they are getting. In case of consulting services, price-quality relationship is often true.
Here is a strategy to raise your fees while attracting better clients:
1. Become authority in your target market in order to establish your credibility and value. Do this through a variety of strategies:
- Develop valuable educational and informational messages that help your prospects associate you with solutions.
- Compile a mailing list of prospects in your target market, and follow up in ways that are valuable and important to them.
- Be visible to your target market through a variety of media: speaking, articles, audio CD's, videos, fact kits, your web site, etc.
- Collect and post testimonials, case studies, and articles about you and collect references.
2. Talk less about what you do and what you know, and more about specific business and personal results you get for your clients. How much money or time do you save them? How much do you increase profit? How do you help improve quality, reduce employee turnover, and provide peace of mind? Where have you done this before? The more results you can show, more you can demonstrate that your high fees are still very inexpensive compared to what their problem is costing. You should still provide excellent information about your service offerings, but focus first on solving your prospect's pressing problems.
3. Demonstrate that you have a consistent, proprietary, unique approach to get results, and that this approach goes far beyond what competition does. Describe your methodology. Tell them about services you offer that competitors do not.
4. Explain why your experience and qualifications set you above others. Talk about your education, years in field, certifications, and past clients and employers.