Value-Based Fees: How to Charge—and Get—What You're Worth: A Guide for Consultants, Second Edition

Interlude: A Case of Bottom-Line Blindness

I was mentoring an individual, Roy, who was getting start-ed in the consulting business as a second career. He was a quick learner and willing student.

He provided a proposal to a client, using my proposal templates and methods, with an option at $72,000 and another at $86,000. He offered a 10 percent discount for payment at acceptance for either option.

The client replied that he clearly needed the $86,000 option but had only $70,000 he could free up. Roy came to me proudly and said, "I'm sticking to my guns. It's the full amount or no deal. But I thought I should just test that with you." Mind you, this would be Roy's largest client do date, just nine months after launching his business.

"What if you asked for the full $70,000 up front?" I responded. "That sounds like a win-win to me."

"But that's giving him option two at option one fees," protested Roy.

Well, let's do the math. We would be offering a $16,000 discount on an $86,000 fee, which is 18.6 percent. "That's way too much," said Roy. "A 10 percent discount would come to $77,400."

"Right," I acknowledged, but you get seventy grand in hand, no expenses that aren't reimbursed by the client, and your biggest sale to date. You'll have a prestige client on your list, testimonials, referrals, and a chance to hone your consulting skills.

"Wow, I nearly blew this," said Roy.

Yes, he did. I advocate maximizing fees but not mercenary madness. I've always said that if you sell something ...