Consulting Fees: Value Based Pricing

You’ve heard the term “Value Based Pricing” before, right? It’s been thrown around like a hot potato for a while, yet it’s still often understood.

The power of this pricing strategy can be offered by pretty much anyone in the service business, and it’s perfectly suited for consultants.

The Wrong Way, And The Right Way
Setting your consulting fees based on what you think your time is worth is the wrong way to go about this.

Charging based on the perceived value and results you’ll deliver to your client, now that’s the right way to go about it.

I’ll explain this in more detail…

How to Charge 5 Times More
Not too long ago I talked about the general lawyer that charges around $150/hr. That’s nothing to laugh at. But the international tax lawyer is getting $500 plus an hour.

Now, these two lawyers are both smart, kind and friendly. There’s nothing about “them” that sets one apart from the other.

What does set them apart is their positioning. One is perceived to be at a higher level, they are a specialist. Not necessarily because they’ve gone to school for longer or worked at a larger firm in the past, but because they provide solutions to more focused and perceptively more detailed problems.

Filling A More Serious Need
The other factor at play here is that the client that requires international tax help is likely in a more serious situation. Their needs, being international in nature, give the image of greater cost.

If you really want to make value based pricing work for your consulting business, find a niche need you can fill. You’ll be seen as a specialist and will as such have an easier time setting your fees at levels that are 2, 3 even 5 times greater than the generalist.