How to Set Fees
post # 330 — March 14, 2007 — a Client Relations post
A reader asks:
In light of some things you teach, ideas from Rob Nixon, and the VeraSage institute; it seems a very bad idea to bill by the hour, especially if you are a new consultant just beginning your practice. Yet, most smaller clients one would probably start with would think in terms of hours. Ultimately, you would want to find some way for them to pay you according to value added, right? But how is this done?
The best I can come up with is offer a free consultation (a few hours or whatever) just long enough to show them you are worth your fees and long enough to find out if you want to work with them). Have in mind what your time is worth to you. Estimate with them the length of the project. Come up with a (fixed price) estimate. If they feel like the price is worth it to them, then you are essentially measuring the value added (maybe lower than value added). Then if it takes longer or shorter, it was based on their value and not your hours. And in the future, as you get more efficient, you still bill the same for the project.
Is this the right approach for a beginning consultant?
So, what does everyone think? This seems to be toay’s conventional wisdom on pricing, but would anyone else provide different advice?