Pricing Q&A
I believe in being open about how I do things, including how I set my prices. This Q&A should help you understand the thinking behind my pricing:
Q: Why don't you just have a single hourly rate that reflects the quality of your service?
A: My skills or effort do not vary by client, however the amount of value I can add to their business does. All other things being equal, it is obviously harder for me to add $20,000 of value to a business with revenue of $100,000 than it is for one with $1,000,000. I could simply set one rate and only work with larger clients (or small clients with huge problems!). However, I love working with small clients and with non-profit organisations, so to avoid pricing myself out of their reach and missing out on doing some of that work that I love, I've set a lower rate for those clients.
Q: Why do clients that sign a retainer agreement get a lower rate?
A: Marketing is perhaps the largest cost for smaller consultants – not in terms of cash, but definitely time. The more work I can get from existing clients, the less time I have to spend marketing to new clients. What better way to thank my regular clients than via a lower hourly rate?
Q: Why publish your rates on the website when many firms think it's a bad idea and would prefer that you contact them directly?
A: We are all price sensitive, particularly given current economic conditions. Regardless of how much value I can add to a client's business my fees are always going to be an important part of the equation and one of the first questions a client will ask.
I do not believe in forcing a potential client to contact me to ask about my rates. Firstly, it is simply an inconvenience to them and I never want to knowingly be an inconvenience. Secondly , I do not want to risk having a potential client not contact me out of fear that the rates might be too high and they may have to come up with some excuse to avoid having to say “I cannot afford that”.
I have few overheads and am able to keep my rates lower than most professional services providers (eg. other consultants, accountants, lawyers, etc). There is no reason to hide this from prospective clients.
Q: Why do you place a limit on the number of clients you will work for?
A: It is important to me that I have enough time in my schedule to be able to respond to client requests in a timely manner, and so that they don't have to book time with me weeks in advance. By restricting my client list, all of my clients can be assured that I will have time for them when they need me.
Q: Why don't you charge clients for short phone calls… many other professional service providers do?
A: I have used professionals (usually solicitors) in the past that charge in 6 minute increments, and while I know that is within the terms of our agreement it still seems a bit petty to me. In my mind it says “you gave me an opportunity to charge you for something else and I'm going to jump on that opportunity no matter how small it is. That extra $20 is worth more to me than how you view our relationship.” It is no different to an airline charging you for going 1kg over your baggage allowance, or selling drinks for $5 that cost $2 anywhere else. Nobody likes this.
I have structured my rates so that once the original terms have been agreed, almost every interaction I have with a client will be at least as expected, if not a positive surprise. Charging a client for a short phone call, photocopying or the cost of postage is not, in my mind, a positive surprise, nor is it likely to improve a client's view of me and lead to them talking to others about me in the positive light that I strive for. I am therefore happy not to charge for these things.
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