Barriers to Raising Fees

From the Electronic Discussion on Group Facilitation

www.albany.edu/cpr/gf/

 

The contents of this resource file were compiled by Peter Meyer and Herman Holtz of

 

The Meyer Group

883 Cadillac Drive

Scotts Valley, CA  95066-3303

(408) 439-9607

fax (408) 461-0211

PeterEva@aol.com

 

They represent the results of the survey question:

 

"WHEN (IF) YOU WANT TO RAISE YOUR RATES OR PRICES,

WHAT ARE THE THREE TOP BARRIERS TO DOING SO?"

 

The 1750 word summary is divided into three sections -

        A) The responses

        B) Comments by the responders that I found interesting

        C) Comments from Peter and Herman

 

- There were almost 50 responses, from consultants in all fields, from

independent specialists in training, and from independent professional

facilitators. (For the sake of convenience, I refer to all of them as

consultants.) Several stated that they did not have barriers (see C). Of

those who did, you see the trends.

 

- As you would probably agree, there is no right or wrong response, only more

common ones. These are ranked by frequency as I grouped them. I have

identified the relative rankings with Number 1 being 1.0. Number 2 occurred

86% as often and so on.

 

- In numerous cases I asked for clarification to answers. I always got it,

thanks! That does not mean I understood everyone correctly.

 

- If you have any questions, or want to get background information on the

answers or the programs, please drop Peter an Email or give him a call.

 

 

A) THE RESPONSES

 

1. Internal Standards - Value - Normalized score of 1.0

 

It is clear that for most respondents the most important barrier is inwards.

The "consultant's beliefs about the value of the services offered, level of

self-confidence, and attitude, attitude, attitude" shows up as the biggest

concern. A fair summary of the concern is "I believe the biggest barrier to

getting one's rates is one's own mental set. You have to believe that the

rate you ask is right for you, you are entitled to it, and there is no

question that it is a fair exchange for what you do for a client. You have to

believe it before you can make a client believe it."

 

Another expression of it is through lack of confidence. "My own confusion

about how to estimate my time and worth.  I never know what I 'should'

charge, so I'm not confident about asking for a certain amount. "Feeling

comfortable with the amount of increase/reason for increase."

 

 

2. External Standards - Competition - .86

 

Closely related is "What are my competitors charging?" This is the second

strongest concern. Several responses make it clear, however, that many

consultants do not feel constrained by competition. While some of us feel "I

believe that prices do have to be "competitive" and "I don't know what the

range of acceptability is in higher fees compared to the next consultant."

many do not. They have found a way to dismiss competition (please see C.)

 

 

3. External Standards - Protect an Existing Client Relationship - .75

 

This is a combination of judging the 'Comfort-zone' of clients with regard

to old/new prices" and "If I am going to raise my price, I might hold the

existing price for a period of time for a client with whom I have a long

standing, ongoing relationship." It implies confidence, but is explicit in

the concern that old clients will not agree to an increase.

 

 

4. External Standards - Value (Am I perceived as valuable?) - .57

 

Some feel that "Probably the top barrier is perceived value" as the client

sees it. "Will clients value my services enough to pay the higher rate?" This

is a problem even if the consultant sees the value. It begins to put the

emphasis on the value as perceived by the client, not the consultant.

 

 

5. External Standards - Client Wants Low Bid - .43

 

"Clients whose companies expect them to negotiate the lowest rate" and

"Clients who want proof that you've charged (and received) this rate

elsewhere" are a concern as well. Some consultants responded that they are

limited by "People (who) get praise within the organization for getting a

cheap price." whether they are government or private.

 

 

6. External Standards - Budgets - .21

 

Some consultants find they are constrained by client budgets ("Don't want to

price myself so high that they decide not to do the work or figure out how to

do it internally") or their economic condition ("One wants to keep his or her

prices within the budget of even struggling firms.")

 

 

7. Internal Standards - Are We Truly Understood? - .21

 

Some consultants feel that "Clients don't realize what a professional

writer/instructional designer (or other skill set) brings to the table." This

is not quite the same as 4, as the focus there is on consultant output, here

on the lack of understanding of the complexity of the task.

 

 

8. External Standards - What Level Am I Positioned At? - .14

 

Several consultants said their concern is "Not being able to get to the CEO

level. Not being able to get the organization to tell me exactly what it is

they 'really' want to get fixed." Some of these consultants draw a direct

link between high contact and total lack of concern about price by the

client.

 

 

9. Other Issues

 

Two other issues came up - One is "Cash flow" (do consultants ever lower

price to get cash when they need it?) The second is "Forgot to think about

raising prices."

 

 

B)  COMMENTS THAT I FOUND INTERESTING:

 

- "I avoid such an issue by not quoting the client a rate, I only quote

them the cost for the entire project.  That way I avoid hassles over whether

my rate is too high, or why am I raising my rate, etc.  I have done this for

over 15 years and find that it works for me.  The only time I charge by the

hour is as an expert witness when there is no way of telling how much of my

time will be required."

 

- "We are experimenting with base plus pricing - taking a percentage of

the gross profit improvement.  Vote is still out on how successful that will

be.  We set in motion with two clients - now if they'll make application!"

 

- "Well, if you present yourself professionally, then a rule of  thumb in

Australia is AUD$400/day - beginner, AUD$600/day - relatively experienced and

AUD$800 - expert (Professor, etc).  How do I know this?  Because I have done

my market  research." (NB: at recent conversions, this is $300, $450, and

$600 per day respectively.)

 

- "The dollar amount I present to the client allows room for negotiation,

but is based on whether I feel having new clients at a higher price is more

valuable to me then keeping the one client at a lower price. This may appear

cold-blooded, but I am constantly updating my client base to people who not

only value my service, but are willing and able to pay fair market value. I

feel both sides will maintain a more satisfactory relationship."

 

- "I tend to work by having achievable, measurable milestones that are

also decision points for the client because they establish and minimize risk

of taking on the next stage and also set the goals for the next stage. So far

the clients have decided to proceed because we keep making progress."

 

- "Beyond that, there really are not any barriers, at least in my case. I

usually find little resistance to my new fees. If any thing I weed out those

who really can't afford professional marketing anyway and get only clients

for whom my work will actually make them money because they can afford to

test their mailings and advertising --- something smaller firms often can not

do. Or, worse yet, refuse to do."

 

- "My internal messages that say don't ask for a high price because

   a.  You will not get the work.

   b.  Are you really worth that much?

   c.  If I work 15 days a year I make more money than my Dad ever did

       working a whole year as a meatcutter.  He raised 6 kids, I have

       raised 0 kids - am I really worth that?"

 

- "My own Internal Editor, who tells me my experience is not enough or my

quality is not high enough to charge more.  This is total bull****, but it's

just that little voice inside."

 

 

C) COMMENTS FROM PETER AND HERMAN

 

There is a real link from internal to external view. The first feeds the

second which feeds the first. Based on the work we have done, we believe that

one secret to being able command the fees you want is to specifically work

with the client to bring the two into agreement. Many consultants do this

with something similar to the 7 Step Process (see postings on this or the

Raise Your Price program. For more information, drop Peter an Email.)

 

Most of the consultants who responded try to evaluate themselves against

either:

 

- What the competition is doing, or

- Against their own perception of the value of the work.

However, some intentionally measure themselves against the client's view.

This minority say that they do not have problems with raising fees. Most do

not report issues with competition.

 

Among consultants who do not report barriers or competition, charging by the

project (not hour or day)  seems more common. At the extreme, two consultants

(seemingly at the upper end of the fee range) do not always tell the client

what the price is going to be until they are done. Part of what this group

does is to move the focus from a standard of self or other consultants to a

standard of value recognized (and agreed to) by the client.

 

There seem to be both  "Me too" consultants (I do what others do but I do it

better/cheaper/faster) and "I am special" consultants (No one does what I do

for you because I am different and special: I have and offer a USP [Unique

Selling Point]. A 'me too' consultant can only offer to do what competitors

do and promise to somehow do it better, faster, or cheaper. Maybe a client

will pay a bit more for that and maybe not.

 

An 'I am different' consultant has a different situation: The client cannot

compare you to competitors because you are unique. But it is up to you to be

unique and thus able to name your own price. You must come up with a USP so

that you are indeed different and special. How do you get a USP? There are

frequent postings on this, but it is something that we clearly need to

discuss in the program.

 

We asked the fees question to help fine tune the Raise Your Fees program.

From the answers, it seems we have a clear need to address the way

consultants and clients see value. If we understand the value ourselves, we

can help our client understand. This, luckily, can be done systematically.