The reason why people choose to hire your consulting services is to get a deal. They believe what they are getting (value) is worth more than what they are giving in exchange for it (price). This means the bigger your value/price ratio, the more attractive your offerings will be.
The easiest way to increase this ratio is by lowering the price. It's also, 99% of the time, the wrong decision for the business.
Getting more clients to hire you is not the goal of your consulting business. Being profitable is. And lowering prices will never be a sustainable strategy - how low can you go? Are you willing to provide your services for free?
As Dan Kennedy said:
"There is no strategic benefit to being the second cheapest in the marketplace, but there is for being the most expensive."
The goal of your offering (and the best way to test your positioning) is to sell more projects at a higher price.
If you are wondering how, it is as simple as it gets: your value/price ratio will need to increase. First you increase the value delivered and perceived. Only then you raise your prices.
Clients can still get a good deal no matter the price - would you pay $50,000 to get $500,000 out as value? No doubt about it.
Before raising prices, make sure to review your offerings - how can you deliver even more value to new clients? Can you find more expensive problems to solve for your current clients?
Just because consulting services are intangible doesn't mean you can shoot clients any number. You need to justify it, and be able to deliver on your promises.
By Danilo Kreimer
May 23, 2022