97. How to price your productized consulting services based on value
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Productized consulting is a great way to design your business in a way that is profitable and aligned with the effort you want to put into each engagement.
It's also easier for your prospects to buy, which means it's easier for you to sell.
What's not to love?
In this episode, I break down the ways you can price your productized services in alignment with the value you create for your clients.
We focus on four points:
1. Business outcomes
Value is determined by the business outcomes you create, not the work you put in. That's why it's so critical to understand and articulate the outcomes your clients want to accomplish, then build your services around achieving those.
Outcomes might include growth, retention, risk reduction, expansion of offerings, better visibility into numbers, systemization, hiring, or a whole host of other things individually or in combination.
2. The context behind the goals
In order to get a better picture of value based on business outcomes, you need to understand the context behind it. In other words, why it matters.
For example, your clients may want to grow, but maybe it's so they can raise more money or sell shares in the business at a better valuation.
Or maybe investors are getting angry because there is no visibility into the work marketing is doing. Maybe they want better reporting, systems, and processes.
The work you do may not even increase revenue, but it may reduce risk or ease tensions, which is worth much more than a few grand per month.
The context is a force multiplier for the value your work does. Understand why their goals matter to the bigger picture.
3. Determining value
Productized consulting is a great way to design your business in a way that is profitable and aligned with the effort you want to put into each engagement.
It's also easier for your prospects to buy, which means it's easier for you to sell.
What's not to love?
In this episode, I break down the ways you can price your productized services in alignment with the value you create for your clients.
We focus on four points:
1. Business outcomes
Value is determined by the business outcomes you create, not the work you put in. That's why it's so critical to understand and articulate the outcomes your clients want to accomplish, then build your services around achieving those.
Outcomes might include growth, retention, risk reduction, expansion of offerings, better visibility into numbers, systemization, hiring, or a whole host of other things individually or in combination.
2. The context behind the goals
In order to get a better picture of value based on business outcomes, you need to understand the context behind it. In other words, why it matters.
For example, your clients may want to grow, but maybe it's so they can raise more money or sell shares in the business at a better valuation.
Or maybe investors are getting angry because there is no visibility into the work marketing is doing. Maybe they want better reporting, systems, and processes.
The work you do may not even increase revenue, but it may reduce risk or ease tensions, which is worth much more than a few grand per month.
The context is a force multiplier for the value your work does. Understand why their goals matter to the bigger picture.
3. Determining value
Once you know the objectives, outcomes, and context behind them, you can begin to understand the value of the work you're doing.
Ideally you work with similar kinds of clients in a niche. That way, the value will be similar across the different companies you work with (of similar sizes/stages), which makes it easier to package productized consulting services.
Value can be determined by:
Ideally you work with similar kinds of clients in a niche. That way, the value will be similar across the different companies you work with (of similar sizes/stages), which makes it easier to package productized consulting services.
Value can be determined by:
- Opportunity cost - what happens if they don't hire you/take action? What is the value of the cost of inaction?
- Upside potential - how much do they stand to gain from your work in financial terms? Might include new revenue growth, increased retention, increased average order value, increases in margins or lifetime value, to name a few. Multiply this by the years in which the value you create is reaped by the client.
- Price anchoring - how much are your proposed fees in relation to hiring someone in house or even mundane expenses like cleaning costs? You can demonstrate the value by comparing it to other things they spend money on (which bring lesser value).
- Subjective value - how much pain do they remove by hiring you? How much more confident are they in the rest of their business as a result? What's the value of reducing risk so they sleep better at night? Don't underestimate subjective value - especially for people with more money than peace of mind.
There are many more ways to determine value, but these are what I cover in this episode.
4. Determine your price
Alan Weiss' Value Based Fees book (also available on Amazon) really opened my eyes to pricing based on value when I first got into consulting. I highly recommend buying it.
Even though you're selling productized consulting, doesn't mean you can't capture some of the value you create.
Your price should be a no-brainer relative to the factors above.
"If you keep even one client from cancelling, you more than pay for my work every month."
"If you can prove a systemized approach to customer acquisition, it opens the doors to millions in investment opportunity."
"If you can increase margins by 10%, it increases business value by 30%".
"For the price of what you pay on printer paper, you can sleep better knowing we're watching out for your blind spots."
Create a price for a service that accomplishes a business outcome, make it fair and compelling to everyone, and you'll have no problem selling your services.
The key is being able to articulate some or all of this in your sales page and conversations.
If you can't articulate the value of what you do, prospects may compare you to other things (like saving the money or hiring in-house) and not even realize the costs of doing those things.
Give this a listen and let me know what you think below!
4. Determine your price
Alan Weiss' Value Based Fees book (also available on Amazon) really opened my eyes to pricing based on value when I first got into consulting. I highly recommend buying it.
Even though you're selling productized consulting, doesn't mean you can't capture some of the value you create.
Your price should be a no-brainer relative to the factors above.
"If you keep even one client from cancelling, you more than pay for my work every month."
"If you can prove a systemized approach to customer acquisition, it opens the doors to millions in investment opportunity."
"If you can increase margins by 10%, it increases business value by 30%".
"For the price of what you pay on printer paper, you can sleep better knowing we're watching out for your blind spots."
Create a price for a service that accomplishes a business outcome, make it fair and compelling to everyone, and you'll have no problem selling your services.
The key is being able to articulate some or all of this in your sales page and conversations.
If you can't articulate the value of what you do, prospects may compare you to other things (like saving the money or hiring in-house) and not even realize the costs of doing those things.
Give this a listen and let me know what you think below!
