I Need To Know How To Hold ‘Em and When to Fold ‘Em

When you are selling your own services, one of the most difficult things to do is to set your own price.  When I work with entrepreneurial or emerging consultant clients, we typically go through an exercise to determine market value, cost of good/services, market share strategy and regional pricing tolerance (where applicable).  However, the after that data driven exercise, complaints start to creep up regarding reducing prices and “free/pro-bono” work eating up too much time without any return.  Here are five things to do to avoid losing your livelihood and your sanity. 

1. Find out early in the sales process what the client’s budget is.  You want to ask them a budget question before they ask you a price question. If their budget is in line, then proceed.  If it is not, then quickly let them know that their budget is below your standard pricing.
2. Help them afford you – if you are consulting to help a company save money, then you can structure your contract to be your full price but has two pay components.  A base price (their budget) plus the savings realized up to 5% over your standard fee with a guaranteed minimum (your fee).   If you are facilitating a workshop, you can structure the contract to be your full price which includes the base fee for the workshop plus X number of presold workbooks.  They can either gift the workbooks to their employees, or ask the employees to pay for workbooks to make up the budget gap.  The key is to keep each invoice at or above your market value. 
3. No free-bies unless there is WIFM value (What’s In-it For Me).  If you can garner exposure (verified in advance), marketing, a chance to sell other products, etc. then it is a good idea to do some “free-in exchange for” work.  But be cautious.  For some crazy reason, friends and family often assume you want to work for free.  What’s up with that?  You can politely but directly say “that is something do for clients, and my fees are X.  If that is not something you’re comfortable with, I completely understand and I’d be glad to point you in another direction.”   When was the last time you asked an attorney friend to review a contract for you for free or an architect friend to draw up some plans for your new beach house?  Hopefully never.
4. When you are asked (in case you don’t get that budget question in first) “what is your fee, say something.  Even if it is “what is your budget?’.  Anything is better than, “um” “well” or nothing.  That’s the first clue that you are flexible or will negotiate – i.e. talked down.  If you have a price and stick with it, you can at least say it confidently and work on the details of the project as the conversation progresses.
5. Hold your own.  Don’t change price based on pressure of the prospect.  If they indicate the price is too high, ask them why they feel that way.   Ask them what they were expecting and where they are getting their price base from.  You may learn that a competitor is charging less – and you may have to either explain how your services differ or be willing to match price.  At some point if there is a competitive pricing issue you have to decide if you want to “compete” on a price, quality, or product differentiation.  Or, you may decide that you don’t want to compete and fold ‘em and move on to the next opportunity.