When you think about how you price your consulting services, what are you asking yourself?
Are you asking yourself what you are worth?
Or are you asking yourself what value clients will get from you?
If you based your pricing process on the first, more emotionally fraught question, it will be easy to go down a path that ends with an artificially deflated price.
The second question sends you down a better path, one that will lead you to a price that matches your value in your market and enables you to get paid for all your value.
But what does value mean in this context?
Value = Results + Experience.
It’s what clients are willing to pay for what you can help them achieve.
It starts with a demand that they have. A demand is a need that clients will pay to address.
They may have a demand for someone to help them solve problems or fulfill aspirations. Whatever it is, it’s essentially a result they want enough to pay for help in getting it. Value then is what they’re willing to pay to get that result.
But value has another critical dimension. It is also about the experience they believe they will have working with you.
This is especially true because so many prospective clients have had previous bad experiences with consultants. Even if they got the result, if the experience was frustrating, confusing, or just plain awful, they won’t pay for that again.
What they do want to pay for is an experience of being truly heard and cared for. They want an experience that reduces or eliminates frustration or confusion. They want to trust the consultant they’re working with and enjoy having them by their sides as they are striving to achieve something important to them. That is valuable and worth paying for.
Mindset Traps That Cause Underpricing
Your task then is to identify your value in your market based on the results you can help deliver and the experience you can cultivate.
But it’s common to get stuck in mindset traps that cause you to undervalue and underprice your services.
What is mindset? Mindset is your attitudes, beliefs, and habits of thinking that tell you what you think is true and not true about your environment and yourself.
The two most common mindset traps that stop you from pricing yourself right are:
A lack of confidence, which usually means you do not believe that you or your services are worth enough.
Perceived scarcity, which often translates into not believing that there is enough work you can get unless your price is low.
Getting Out of the Mindset Traps
The good news is that gathering the intel is your best way out of these traps! How? Interrupt and interrogate your narratives—the stories that you are telling yourself—and replace them with real-world evidence of what is actually true. The more you do this, the easy it will be to get out the traps and draw more reality-based conclusions.
If you’re not really feeling confident enough right now, then my advice is: don’t trust yourself. Don't trust your lack of confidence! Know that it is a common affliction among consultants, and your feelings of low confidence are best questioned, not believed.
Instead, recognize your feelings but focus on clarifying the value you bring to clients. What results do you believe you can help clients achieve? If it’s too difficult to think of results you could help accomplish, start with one successful project or accomplishment from your previous work and identify what you did to achieve or contribute to the result. Then think about how that could translate into a consulting engagement. Keep going until you start to see themes emerge about the value you have brought before.
Then get input from other people who know you, know your market, are honest, and have enough confidence themselves. You could ask questions like:
What do you think I do best?
What things do I do that you think adds to the success of projects?
What is an example of a contribution I made to a project that you think made an important difference?
Also, decide what type of enjoyable experience you will create for clients. Consider how to give them that experience from the first contact they have with you throughout the entire process of working together and after.
If perceived scarcity is your concern, know that it is generally caused by unverified assumptions. The best way to verify, adjust, or eliminate your assumptions is to do research about your market.
Gather intel about what clients have a demand for in your market that you can help them achieve and what they are willing to pay to satisfy that demand. It doesn’t have to be exhaustive! If your market has a source of professional market research that is specific enough to help you price your value for your specific market and niche, you can use that. If not, I have found one of the best ways to get enough intel to help you make decision is to have conversations with people in your market, including friendly, generous consultants.
Compete on Value Not Price
Another trap that can cause you to underprice yourself is believing that you can only get clients if you compete on price. That means positioning yourself in your market as a low-price alternative.
The problem is that that becomes your brand. You will be known in the market as a bargain and by your value. A low price also comes with mental baggage. The truth is that, even if clients hire a low-price consultant, they will believe they are getting less value. And that feeling is hard to shake.
Instead, you want to get some intel about the range of prices (and pricing models). The position yourself based on the value and experience you provide. My advice is not to place yourself at or near the bottom. Those are the folks who are trying to compete on price, not value.
So if you deliver premium value and a premium experience, you should charge a premium price.
Then just make sure that's what you deliver in your market. If you do that, your clients will not question your price. They will know that you are worth every penny. And they often will become your best marketers and tell people in our market that your price is worth it!
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