8 Steps to Making More than 2500 Dollars in Daily Fees
The consulting industry is highly inequitable. While some consultants work hard for their fees, others will be leading a good life by traveling first class and by charging more than more 2,500 dollars a day. How do you reach that? The key is to break the 3 major limits that all buyers have in mind: the value limit (Do I get enough value for money?), the market limit (Can I have the same, cheaper?) and the fair price limit (Is it normal to pay that price?). The lather may seem obvious but it can be your biggest barrier. For instance, in everyday life, most people wouldn’t give 15 dollars or more for a cold bottle of coke simply because they think that it is not a fair price for a drink. That rule doesn’t just apply to bottles of coke, but also to consulting. For example, some clients will always think that consultants are overpaid. They will be reluctant, for this very reason, to accept your price, even if the ROI is great. So what can we do about this?
1- Focus On Vital Decision
Both strategy consultants and investment bankers are paid at relatively high rates. They are masters in breaking the value limit. Whatever they charge their clients, their fees will seem to be relatively low in comparison to the value that they will create for their clients. They benefit from an optical illusion. Because high-level consultants are able to minimize the overall risk for their clients, they are able to sell themselves since the economic value that will be created will be perceived as infinite.
2- Sell To The Boss
What you charge depends not only on what you sell, but also to whom you sell. Selling to the CEO is difficult, but it has its advantages. They’re the ones that have the deep pockets and you charging them 2,500 dollars a day will be a lot less shocking for them than to junior members. Their vision of the fair price limit is different from the one of a junior manager with a low salary. All of your marketing strategies should, therefore, be focused on meeting the CEO. Downside: it takes time to approach CEOs and you have to constantly adapt your sales pitch. You need to be both concise and less technical to gain their attention otherwise you will not be able to close the deal.
3- Focus On Expertise In High Demand
A consultant I know makes a huge amount of money within the Finance industry. This person is neither exceptionally clever, nor friendly -at least in my opinion. But he understood the market trends and his niche. The finance sector is being highly challenged by new regulations such as Basel III. In order to be compliant with the law, banks will have to carry out big projects in a short time period. The time constraint directly pushes up the market limit. Leveraging this unbalanced market allows him to negotiate high rates.
4- Get Some Strong Reasons To Believe
Doctors and consultants can somewhat relate as they sell both expertise and advice. It’s easy to notice that many doctors achieve incredibly high daily rates. It’s rather easy to realize why doctors achieve such incredibly high daily rates. The relative difficult of both obtaining a medical degree in addition to a recognized expertise will definitely help in convincing the client to accept and pay the bill (well, that and them having sometimes saved their patients’ lives). There should always, therefore, be a reason for why the client should believe that you are worth the price that you are asking for. It may be a technical certification, client testimonials, a PhD, or other prestigious references – whatever it is it will benefit your ability to gain that extra money. Take some time to get some ideas.
5- Work On A Success Fees
Working off on success fees is just another way to get your client focused on your value. It's successful in breaking the value limit since it minimizes the overall risk that the client will have. A wonderful tool in avoiding the fair price limit, success fees will allow for the client to not truly know how much time you had worked with their project. A company that I know of has managed to develop a practice of 20 millions dollars just by selling advice on tax optimization. They will only charge the client, however, if there is a real tax saving, and if there is; they will then take an outrageous 22 % cut on the savings. Bottom line: they often get an astonishingly high daily rate. The same principle can be applied to any cost cutting case or business development projects.
6- Stop Charging Daily And Hourly Rates
A friend of mine never mentions daily rates to his clients even if they demand to see the data in sales proposals. He then forces his clients to buy a result rather than a number of days. It is a clever way to break the fair price limit since clients can make no relation with what a fair salary would be for the job that he would take. Some of his clients will of course try to estimate the time needed to complete a given deliverable. Because he’s efficient, they systematically overestimate the time that he spends. They are, therefore, convinced that they had made a good deal.
7- Develop Efficient Methodologies
Methodologies allow you to do faster the things that others would not be able to do in the given amount of time. Efficient Consulting Café’s Marketplace to download templates and archived deliverables from your peers.)
8- Leverage Emergency
I know a crisis management consultant who has a cool demeanor, but whenever there is an explosion in a factory, a train collision, or any other sort of disaster humanly possible, he may be called upon to help. He charges 700 dollars per hour and sometimes the day can be very long. According to him, clients never negotiate the fees. What’s the secret behind this?
His value is tremendously high: he helps clients to avoid huge communication mistakes and he is the only one who can keep a cold view on hot problems. Given the emergency, people will not take time to compare price, thus making the market limit disappear. By selling to the boss, he has no real fair price limit. By eliminating the 3 limits, he really is given the best that consulting has to offer.