By Michael W. McLaughlin
Some years ago, I owned a home with a nasty construction defect. When
a strong wind pushed rain against the front door, the water flooded
inside and under the front entry, damaging the floor and leaking into
the basement.
My search for help turned up four contractors. Three of them quoted
an hourly rate without specifying how long or what it would take to
complete the job—too many unknowns with water damage, they said.
The fourth contractor told me that the damage and cause could be
repaired in one week or less at a specified price. He presented a stack
of references from other clients with similar problems and he promised
something his competitors didn’t: to fix the leak.
That contractor’s price was based on results, not time applied to the
project. He made good on his promises, and it was worth every penny.
Pricing on results, or the value of results, makes sense for
consultants too. Why shouldn’t clients pay you for what you help them
achieve, rather than the number of hours you log? And to take the logic
another step, if your work generates big savings for a client, shouldn’t
you share in that windfall?
Value-based pricing is a sound strategy, but it can be trickier than
it sounds. Make sure you consider the four realities below before you
try this pricing method.
Reality #1: Clients don’t care about your business.
Most clients try to get the most, at the best price, when they hire a
consultant—and they should. Of course, some clients will pay a premium
if they believe they can achieve faster, better, or more permanent
results with a higher-priced consulting firm.
read more http://mindshareconsulting.com/realities-value-based-pricing/
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