Episode 179: Feeling More Confident About Your Consulting Price—with Deb Zahn
Deborah Zahn: Hi, and welcome to this week's episode of the Craft of Consulting Podcast. On this podcast, I'm going to talk about how to feel more confident when you're naming your price for your consulting services and particularly to prospective clients.
Now notice, I did not say how to feel 100% confident all the time about your price because one, I don't think that's realistic, but two, you don't have to feel 100% confident to do hard things like naming what your price is. But it does help to make sure that you have enough confidence that you're making good decisions and avoiding common mistakes. Because if you have low confidence around your price or even generally about your consulting business, and you let that low confidence take the wheel, chances are you're going to end up making choices and doing things that aren't going to help you build your consulting business or worse are going to harm your consulting business and get in the way of you having the life that you want. So this is why I want to pay attention to confidence to help you get it high enough so that you're making better choices, and you're avoiding some of those mistakes.
Now, the big mistake that I tend to see with folks who are consultants and usually when they're starting out their first couple years, although sometimes well into it, is artificially deflating their price. So what I mean by that is, there's prices of what folks charge in the market, and for some reason you're deciding to put yours either below that or at the bottom of that and deflating it, regardless of the value that you're actually able to provide to clients.
And you might be doing that because you think, "Well, that's the only way I'm going to get clients to say yes." And by the way, clients might say yes, but that doesn't mean that that's the price that you should be picking and whether or not clients say yes is only one of the factors you need to consider when it comes to your price because there is so much that is connected to your price and to what it is you're doing in your consulting business and in your life.
So for example, you pick a price andm if it's a deflated price, now you have to work a whole bunch more to earn the income that you want to earn. So either you have to say, all right I'm cool with not earning a lot or not earning what I did before when I was in employment. And that's going to be because I'm going to offer a lower price and I don't want to work anymore, or no, no, no, I really do want to make what I make made before, or I want to make more, but now I got to grind, and I got to work all the time to do that. And in part it's your price that is driving that. So that's the stuff that you actually want to avoid. But again, there is so much else that's connected with whatever it is you choose related to your pricing strategy. So for example, if let's say that you're grinding all the time and you got to give something up, there's only so many hours of the day.
And if you're spending all that time working, and if that's what you like, hey, good for you. If it's not what you like, then something's got to give. And that's usually family time, usually sleep is one of those, or other things that you like to do. So it has an impact beyond your consulting business and that's why it's so important to have enough confidence to make good decisions about your price. Now, the other thing that's connected is a client's perception. So when you name what a price is, whether you know it or not, you're actually communicating something to a prospective client. So if your price screams cheap, then they're going to think that they're going to get less. And it's interesting, I'm not just making this up, they've actually done research on this and they've done research where they looked at the neuroscience behind this, and essentially what happens is your brain has to take shortcuts just to reduce the amount of work that your brain has to do.
And so one of the things it does is it just puts things together. One of those things that they've studied is that the more expensive something is, the more people assume that it's of high value. The less expensive is the more they assume that it's of lesser value. And that's just a short that naturally a lot of human beings take. Now that doesn't mean you artificially inflate your price. We're not talking about that, but keep in mind that it's always communicating to the client what it is that they're ultimately going to get. Now, so I want to dig into that, so by the end of this podcast, my goal is that you're going to feel more confident to make those wise choices about your price. But this does assume that you've picked a price or you've at least picked what your pricing models are.
So the price is what you charge and the pricing model is how you charge. And if you haven't done any of that, or you're not really sure even how to approach it, or you want to take a look at it again, I just want to let you know that I'm going to be doing a free live training on LinkedIn called How to Price Your Consulting Services. And in that I'm going to go through the pros and cons of each pricing model. I'm going to talk about when I would use them, and when I wouldn't, I'm going to talk about how to approach pricing and how to validate it in your market, how to get clients to say yes, all kinds of goodies related to the price. So that's going to be September 29th, 2022. Don't worry if you're listening to this podcast after this, I'm going to be doing it again because this is a really hot topic.
It's going to be September 29th, 3:00 PM PT, 6:00 PM ET, and it's going to be on LinkedIn. So if you go to my LinkedIn, you can actually sign up for it. Or if you go to the show notes of this episode on my website, you can also get a link and you'll be able to sign up for it.
But the whole goal of the training is to help make sure that you're able to price your services, you're going to get clients to say yes, and most importantly because this is really the goal is that you should be paid for every itty-bitty ounce of the value that you're providing clients. You should be paid for all of that because you're doing good things for them. And that's what we're going to talk about and would love to have you join me.
It's going to be live, so we're going to have a good time and I'm going to be answering a whole lot of questions. But let's say for the sake of this podcast, you've made choices. You've been out in your market, you've been saying prices, you know how you're going to be charging, but you aren't really feeling that confident about it, or you're brand new and you haven't picked it, and what I know is a lot of new consultants in particular, they do everything else before that because it's emotionally fraught. You're actually going to assign a dollar amount to be the worth of what it is that you do, and that can be really, really tough. And for some reason it feels different than a salary negotiation, I don't know why it feels different, but that's often the time it can be really tricky to do it. But there could be lots of reasons that it's happening.
So it might be different ways that it's actually showing up. So one could be that you have a price, but for some reason every time you open your mouth, a lower price comes out. And, I was actually talking with someone and she'd picked a price and it was a very specific price for a discrete service. So it wasn't like, "Hey, here's the engagement I want now to go back and price." It was a very discrete service that she offered, she picked a price, and she validated in her market so she knew that it was perfectly reasonable for what she did and it wasn't going to be out of line with what they would see from other potential folks. And she had it in her head what the price was, she had it on a piece of paper in front of her, what the price was. And something happened in the journey from her brain to her mouth that when she opened her mouth, a lower price came out and she said, it surprised her that this different price came out and it was lower and it had everything to do with confidence.
It wasn't about anything else because she had done all of her homework and she felt awful because of course they were like, "Yeah, that sounds great, let's do that." Because they were probably expecting to hear that higher price, and then when they heard that, they're like, "Wait, I get you for that, that sounds awesome, let's do that." So she missed an opportunity to earn the income that she should have earned simply because low confidence somehow changed the signal between her brain and her mouth and artificially deflated the price, instantaneously. So it could be that you also do what I did at the beginning. So I was really, really lucky because I was at a firm and the firm set our prices, and so I didn't have an opportunity to deflate my price because I would've, and it all would've been related to confidence.
Oh my gosh, I would've said it. I would've said it so much lower. But luckily, I didn't have that choice, but what I did is my low confidence found a way to express itself, and what it did is I would offer discounts before a client even asked. I mean, and I did it... Oh God, I just cringe when I think how I did. So it literally would be something like here's my price, but I can give you a discount, I wouldn't even finish the last sentence about the price, and I would offer them a discount. And of course they're not silly people, they would take the discount and it wasn't until I decided one day, you know what, let me do an experiment and not offer any discounts and see what people do. And that's really the exercise I just decided, I just want to see what happens and what happened is, no one flinched at my price when I said it, and very few people asked for a discount.
And yeah, I was wrong the whole time. So that was helpful to know, but I wish I had known that so much easier, but again, for me it was all related to confidence. And for folks who often do that, usually what it is because you don't have enough confidence to think that the clients are going to be willing to pay your price, and what you might experience, what again I experienced and the person I was talking about experienced, someone might say, "Oh yeah, that sounds great, let's do that." Which by the way, if they say that, that quickly and that emphatically, or they seem surprised, that is a clear sign that you set a price that was too low. But, when I look at this again, what I find is at the root of it is low confidence.
And generally it's about not believing that you as a person or your services are worth enough to command a reasonable or a premium price for what it is that you're doing. And, it really gets to that sense of often self-worth that everybody else I know has it usually has some version of going on at any given time. And here's the thing is, it's generally not based on what reality is in your market, right? So when you're looking at this from the lens of self-worth, you're not looking at this through the lens of what's actually going on in my market and then what is it I'm doing to position myself relative to that market. So that's how you've got of the wrong thing in charge of making the decisions. And sadly, I see this happen all the time with consultants is you let those feelings related to self-worth, take charge, and look, I love feelings, I'm a big fan of feelings, but they're just not the best tool for making decisions about your pricing.
I mean, unless it's your instinct saying something right here, in which case, yes pay attention to that, but if it's really feelings related to how you feel about yourself or insecurities or things like that, that's not what should be in charge of this. It doesn't mean you can just erase them and let them go, but make sure that you're conscious of them so that you can step forward and actually make good decisions. And I want to give a really concrete example of how this happened as I was coaching someone. So I started to coach this absolutely brilliant woman, her name was Gwen, and she had this incredible wealth of experience in her market. So I knew that the type of expertise she had was extraordinarily marketable and she had results that clients cared about that she could easily point to.
And she had real-world experience from her days as being employed, that she could point to where they would say, "Yeah, she actually gets it because she's had to do it." So it was really clear to me just how extraordinarily valuable what she was doing was. So one of the things that we do in coaching is we figure out what the pricing was, and we were generally thinking through, we picked some of the pricing models she wanted to do, and we were coming up with some basic pricing strategies that then would be applied to an engagement, in a particular engagement she had in front of her. And so we had the session, we finalized her price, and again it was all based on knowledge of her knowledge of the market, and I happened to know her market really well, so I actually knew that what we were picking was totally legitimate.
She agreed, yep price makes sense, that makes total sense, but she admitted, she was still struggling with, "Oh my gosh, is anybody going to be willing to pay her that amount?" And I could easily picture someone paying her that amount again in a market that I knew quite well. So we talked about let's look at other consultants that are in the market, what are they charging? What can they help their clients achieve relative to what you can? What are other clients paying for the type of work that you can do? What is it that you can do that is going to be above and beyond what they've experienced? What kind of experience you can give them soup to nuts that are going to make them feel like they're really with, as someone who gets out to be a consultant and can create a soothing experience for them?
So that was in the evening. I think it was about four o'clock is when we finished that. And 6:00 AM the next morning, I got an email from her where she went and did her homework and she laid out her prices, and I looked at them and I was surprised because they were about 20% lower, than what we had discussed at 4:00 PM the day before. So I'm like, "OK, let's just hop on a quick Zoom call and talk through that." And so we got on and I asked her, "Since 4:00 PM last night, is there anything that had changed in your market?" And I of course knew nothing had changed in the market, and she said, "No, no, not that I know of." And I said, "So did something happen to you, where you can't suddenly do all of the stuff that we talked about and you can't help clients in the way that we talked about?"
She said, "Nope." But then she came out with what it really was, which is look, "No one's going to pay me that much." And so it wasn't even the specific price, it was something about the size of the price that she looked at, how she was feeling relative to the magnitude of that price, and she couldn't reconcile the two. And that was all because of low confidence. And so I asked her why and we got it, and again I'm not a therapist when I coach, but I asked her why, and what she revealed was that in her past job, she wasn't valued, and that was communicated in big and small ways too often. And she knew that it was the culture. She knew it was that people respected her, she knew it was happening to other people all of the time, but it didn't matter. She still had that experience and as somebody whose job before I became a consultant also beat me down, I totally get what that's like and you walk out and it's really hard to think that you're valuable even if you knew it when you went into that job.
So she recognized that she had achieved important things. She recognized that people in the larger world, including people in her market praised her for what she did, but she still knew that she felt beat down after all of those years. And that was really driving her low confidence related to what the pricing was. So look, that was her. Everybody has their own version of that, I had my own version of that, when I first started and it's really easy to fall into traps like that. And so when it comes to price is if those distorted feelings that were again sparked, or reinforced in the past worlds that you've been in, or even the current world that you're in, it's really easy to have that drive decisions you're making about your business generally and your price specifically.
And so the goal is to embrace to the best that you can, at least until you get experience that shows you that there will be people that are willing to pay you for that. And in fact, they will feel great paying you for that because you're going to give them the value that's associated with it. And, it's hard to believe that when you first start or when you come from an environment that tells you something different. And, I know that... Oh my gosh, the first time I had to tell a client my price, I was embarrassed. And again, I was really lucky that I didn't have a choice, and I had really smart people who knew exactly what a reasonable price was for what I could do. And, I remember, this is before I actually didn't do a discount for this one, but I said it and I literally was bracing myself for them to say, "Yeah Deborah, are you kidding me?"
I mean, it's someone I knew, but I thought they were going to say, "Deb, that's kind of high. I mean, come on." That's what I thought I was going to hear, and the prospective client didn't even push back, didn't even flinch at that. And we were off and running and could have a conversation about what we were going to do together. And part of it is that she was happy to pay that price because she trusted that I was going to be able to get her the results they wanted. And, the other thing I have come to recognize is that it doesn't mean that people aren't going to push back on price or have objections or have questions about it, often if they push back it's my experience, it's generally because they have budget limitations, which actually has nothing to do with your price, that's not your limitation, that's their limitation.
Sometimes you get somebody who just likes to lower prices all the time, and that's their thing, and that's who they are as a person. And when they go to a garage sale, they do the same thing and they do it at work. Occasionally, I've hit those people. Most of the time, it's really about budget limitations, in which case we don't need to talk about my price, what we need to talk about are the budget limitations and what they can afford to do within those that are still valuable. But you have to have enough confidence to know that, or you have to have enough confidence that if somebody has a question about the price, and I actually had this happen a couple months ago, where someone asked a question about price and I had prepared, so I always liked to be prepared.
I had thought through what could potential objections be? I was ready to address those, she had a question about the price, and I assumed that a question meant objection in my early days, but I now know that's not true. And, she just wanted to clarify a few things because she had to go justify getting some additional dollars because it was more than what her budget was. So she had to go elsewhere and get some of those dollars. Again, my price wasn't the problem, her budget was the problem. And those were really just questions. So what do you do? I mean, there's all kinds of things. Again, I'm not a therapist, but there's all kinds of things you can do to raise your confidence, I've done a lot to raise my confidence over time. But the first thing I would say is, if you know and if you can feel that confidence is a problem for you, and this might seem counterintuitive, but really don't trust yourself.
I mean, just don't trust your lack of confidence as the source of information. And really what you need to do is replace any opinion, we'll call it an opinion that your low confidence has with reality with what's actually true in your market and relative to what you can actually do for clients. So and you got to recognize, particularly if you're just starting off as a consultant, your confidence is going to take a hit. You could have been super confident in your last job, but now you have to do things that you've never done before, and one of those is you have to place a price on what you do, which for most people they've never had to do before. So just recognize, yeah your confidence probably going to take a dip to be expected. And if you can expect it, you can plan for it. And so the other thing is I also recognize just going back to, again Gwen's experience, my experience is, like many people, your perceptions may be impacted by past or even current trauma that you're experiencing that might make this difficult.
And I will tell you until I started coaching, I didn't know how widespread this necessarily was and the trauma can come from all different places. But, if you came from some place that was toxic or had awful abusive power dynamics, or it just had constant drama, then you could still be carrying that with you. And that is going to potentially cloud your judgment when it comes to actually what your price is. And this is why it is so important to not just rely on your feelings, but also try and get some additional information that can replace those perceptions that are based on real things that have happened or are happening to you, but replace them with something that's going to be a little more helpful to you. So one way to have to do that is to separate your price from yourself.
So it's really easy to think that I'm going to charge this amount for me. And in reality, you're not what you're charging is a price for what you can help clients achieve. So you're charging them a certain price to solve this problem or these problems, you're charging this price to help them achieve these aspirations that are important to them and your skills and ability matter in your ability to be able to do that. And that's part of what goes into your price, but really it's ultimately what's valuable to them that you can actually help them achieve, and it's not you. So you can distance it a little bit, if you can from the actual feelings of self-worth because you're not selling yourself, you're selling the things you can help them achieve. And, I found that really helpful when I started to think about my price and trying to get more comfortable with my price.
So you think of it from your client's perspective, which is the outcomes you can help them achieve and why that's valuable to them, which by the way, and I'll get into the different pricing models on my free training that I'm going to do on LinkedIn on pricing, which is, this is one of the reasons that some pricing models are a little bit better than others because if you're trying to pick an hourly price, I find that those emotions come into that quite heavily because now you're trying to say, "Oh, this is what a unit of my time is worth." Which is a little harder to say, then this is what this outcome is actually worth to a potential client. But again, I'll get into that more in my training. Now obviously I do want to say because I respect that trauma is real, I've experienced it, I absolutely know.
So if that's part of your life, I certainly encourage healing from that. I encourage making decisions about your consulting business that reduce or eliminate any exposure to it because it's out there. And, I don't think anybody who's a consultant and running their business or practice needs to sign up for that period. So I do want to put that in because I don't want to just say, "Oh, well ignore your trauma and pick a price." That's definitely not what I'm saying, you live a full human existence, and I think it's important to pay attention to that. But, here's what I'm encouraged to do in terms of gathering that evidence about reality, that should be guiding the decisions about price. So what you want to do is you want to get evidence of what's actually true. And so you want to look back at your past experiences in the work world and that resulted in some good outcome.
And I find this is a really helpful place to start, particularly if you've got a confidence problem is, we'll look back at your past. So pick one example where you either did something and something good happened, or you contributed to something, and that was one of the reasons something good happened. And, think through what you brought to the table, what your knowledge was, what your skills were, what your particular flavor and expertise was that made that happen and made it to the valuable to the people who cared about that outcome that you helped make happen. And use that as an anchor to think about what your value is. Now again, you have to go through an exercise of thinking, well, who do you most want to serve? What do they care about? And what is it that you're offering? Which I won't go into here, but thinking of a positive outcome that you both either did or contributed to, will help boost your confidence a little bit.
And if I say that and you're seeing thinking, “Deb I can't think of anything.” That's probably a confidence issue. That's probably not reality. So I would say just that's why go and get that information from someone else. So if there are people that you've worked with, who you know are honest and who you trust, and understand what you're trying to do, go and ask them questions. I actually have done this go and ask questions about what is it you think that I do really well? What are the outcomes that you think that I helped create? And how did I do that? Is there an example of a contribution that I made to a project that you think really made a difference and chances are you're going to hear things that you didn't know before, and that's going to be really helpful in you thinking about what your value is to a client.
And again, help raise your confidence a little bit because it's going to give you other people's perceptions of your particular version of fabulousness. So I would say fortunately for Glen or Gwen, she was able to recognize that her confidence issues were her confidence issues, and that's really what was going on. And she did go have some conversations with other folks who knew her really well knew her work and were able to answer some of those questions for her. And it gave her again, not 100% confidence, but it gave her enough of a boost that she was able to focus on, "OK. I got to trust what I'm hearing, I got to trust the homework that I did to know that yes my price is right, and this is what I feel confident enough to go out into my market and start talking about."
And by the way, she started going out to market, it was no problem at all, which then gave her further evidence that she had made good choices. But again, that doesn't mean that the struggle about confidence didn't go away. She didn't let it dictate what she did. And so that action-oriented approach, which is all right, I recognize that this is a confidence issue, I'm not going to trust my lack of confidence here, I'm going to go get some evidence and then I'm going to start to take some actions like talking to people, testing in my market and things like that. So I can validate reality and that really paid off. And I will tell you, in her third week as a consultant, she was already negotiating a scope, she was using a pricing model she had never imagined using before, it worked great.
And she actually got her first six-figure deal, in her third week of consulting, which I know isn't true of everyone, but she was delighted and that let her know, "Oh yeah, that stuff that was going on in my head, that chatter in my head, it was good that I didn't ultimately trust that." And, the other thing you have to keep in mind is it's not like you raise your confidence and then you're good to go. It'll never dip again, I wish that were true, but it's not true. And so there are some things that you have to do, what I call regular confidence maintenance, the care and feeding of our confidence because it does ebb and flow. And so there is things that you have to do to sort continually evaluate and gather evidence of the value of what you're doing for clients.
So there was another person that I coached that used to keep, and still does, a spreadsheet where she would enter information about the outcome she helped achieve or compliments she got or accomplishments she had. And in a sense of what she was doing, was she was using the spreadsheet to build a case for why she was valuable as a consultant because in her head it was really easy to build a case about why she wasn't valuable. That's so easy and we're so creative and we can come up with all kinds of different ways to do it. But, any time she started to go down the path of low confidence, she had something that she could look at that was building up over time. So she could look at it and say, "Look, I'm doing some things right, doesn't mean I'm perfect, but I'm doing some things right."
And yes, now it makes sense that I'm charging what I'm charging. And she has since actually increased her rates and had no problem getting business because of that. So the other good thing by the way, keeping a spreadsheet like that does is when you need examples, when you're negotiating with a client, boom, you got them, you got them ready to go. So that's a double bonus, but there is one specific way that low confidence particularly related to pricing can pop up, is again when you think that you can't charge a premium price or you can't can't raise your price because, oh my gosh because then you're right back at the beginning of the confidence issues. But one of the things that I see that often drives that, is a lot of folks when they become consultants think that I can only be successful or I can only charge a premium price if I can do everything for the client.
And I will tell you in my experience, that is not true. So I had some massive confidence bumps when I first became a consultant. But in general, I tend to be more confident of a person and generally have been in work. And that's helpful for me, but I'll tell you where it comes from, which is that I actually don't believe that I have to do everything. I believe that I have to do some things very, very well, extraordinarily well, and I have to do some things well. And if I have my superpower, I'm cool, I don't have to have every superpower, that's why the Avengers exist, that's why the justice league exists, for the DC folks, is you actually compliment each other's other people that can do fabulous things, I don't have to do all of them.
And that is actually where my confidence comes from, it doesn't come from thinking, oh, I can do anything, it comes from not thinking, I have to. And so that's one thing to also keep in mind is, your price doesn't have to be based on the amount or volume of things that you can do and if you can only do two things then your price should be lower. If you do those two things extraordinarily well, and if you are routinely able to get clients' results, or if you can look back at your past and you know that you can make those things happen because you've done it and you've done it in a real-world setting, then you can charge a price that is premium for that because if clients care about those results, they want to come to the person who knows how to do that.
They're not going to come to the person who says I can do everything because no one believes that no one believes that because it's not true, and they know it's not true, but if you do the things that you do extraordinarily well, or you're consistently getting results, or have gotten results in the past, that's what your price should be based on, not my gosh, do you have every superpower imaginable? So I do charge a premium price and I charge a premium price for the things that I do because I know my clients are delighted when I do them and they feel happy that I help them get the results, and I feel good about that.
And when I became an independent consultant, by the way, I did not lower my price. And I have since raised it a few times simply because I know what the value is, ultimately what I'm doing. And I also know that I value my life, and I value the things that I care about, and I'm not one of those people who cares about having a yacht, or I'd rather have a tractor to be honest, which I could get today. But I'm not trying to build a rocket, I'm trying to live a good life and have money that I can share with others to do good things, and I'm able to do that in part because I charge a price that is perfectly in line with the wonderful things that I can do for clients.
And that's ultimately what I want you to do too. Now, the other way that I want you to think about this, last thing I'm going to say about it is, that value is about the results that you can help clients achieve, but it's also about the experience that you're giving them. And so if you know that you want them to have an excellent experience or you even think back to when you were a client, or you were a customer, and somebody gave you just the best, and it was so easy, and it was such a wonderful experience, and you mirror that in how you're a consultant.
So everything is about, it's easy, it's low friction, the communications, great, things look good, and things are clear, so that you're not making your clients do extra work to work with you, then that is also one of the reasons that you can charge a premium price because the experience is often as important, or a really close second to them actually achieving the results. If clients have a consultant who can help them achieve their results, and this experience is one of the best they've ever had, then they're going to be happy to pay a premium price for it because there have been I'm sure and as I've heard, plenty of times that they've gotten neither of those things, and they pay to price for it and were disappointed. So if you not only don't disappoint them, but you knock their socks off, then it's absolutely reasonable for you to charge a price that is premium within your market.
That doesn't mean it's like through the moon, it has nothing to do with what the range is in your market, but it is at the higher end of the continuum as long as you're able to do those things. So that's what I would say. And you can approach, as you're thinking about your confidence and as you're able to do those things and make more decisions and you start to get more yeses, it's going to help continually raise your confidence and it's going to make it easier for you to state your price, like the badass that you truly are, for the fabulous things that you do.
Now again, I just want to remind you, if you want to go deeper into pricing models and you want to go deeper into pricing and how to think about it and approach it and get paid for all your value. Again, my free live training, How To Price Your Consulting Services is September 29th, 2022, 3:00 PM, Pacific, 6:00 PM Eastern, it's going to be on LinkedIn itself so you don't have to go anywhere else, but LinkedIn. And again, I'm going to go deep into this and you're going to get a goodie as soon as you sign up so that you can define your value clearly, which by the way, isn't only helpful when you're talking to clients, but it'll make you feel more confident about what you're doing as well. So I look forward to you joining me and again, go forth and do wonderful things.
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