Alan Weiss, consulting guru, has written a book called Value Based Fees in which he talks about the approach you should take when determining your fees for a consulting project. In the book Alan explains the importance of developing a relationship with your client and truly uncovering the value of the project to the overall success of the company.
He recommends asking questions that help the customer understand the dollar value of the results of doing the project and conversely the cost if the project isn't completed.
In a recent blog he talks about the reasons behind a prospect having sticker shock after reading your proposal. One of the eight reasons he mentions concerns being too quick to draw up the proposal:
You don't have the relationship you thought you did. This is a buyer, but you were so nervous about forging agreement that you accepted shrugs and moans that had nothing to do with agreement or disagreement. You were too anxious to get to the proposal and afraid to truly explore objectives, metrics, and the project value with the buyer, for fear of being rejected. You acceptedfriendliness for a true, trusting relationship.
In our excitement to make a difference or work with a new client or make a paycheck , this can truly be a concern.
Just like with everything in business; it's all about the relationship. People buy from those they like and trust. That isn't something we can manufacturer in an instant. As one of the commentors on Alan's post mentions, you plant the seeds and it may take a year or more to get to the point where you can successfully put a proposal together that nets you the amount of money you desire to make while providing the customer with the value they need to make a difference within their organization.
Of course once you come to an agreement, don't start work until you actually receive some cash. I was in a meeting this week and one of the participants, Ivana Taylor of Strategy Stew, said that she had a customer ask if she'd started work on their plan. She asked if they'd mailed in their deposit and was told no. She said "I don't start thinking about you until I receive the initial payment."
I love that. I don't even start THINKING about you, let alone doing anything, until I've received a downpayment.
What challenges do you have with sticker shock?
Deborah Chaddock Brown