If you're in the consulting business, you're all too familiar with this question: "What do you charge; what's your day rate?" How you answer often determines whether you make the sale, and it affects your overall success. The price you set is not just a financial issue. It's a marketing issue that determines how you position yourself and how the market perceives you.
Name a price at the outset and "you're dead," says Tom McNeil, president of Executive Career Resource Group, a Wellesley, Mass., firm that advises executives and consultants. "You'll only get talked down and never talk yourself up." Here's what else can happen:
Your price is too high, and you knock yourself out of the game.
Your price is much less than the client was prepared to pay, and you lose money.
Your price is much less than that of your competitors, and you are perceived as offering less value.
The client accepts your price but then decides that your services aren't worth it, because you haven't convinced him or her of your value.
Many consultants determine their fees by deciding how much money they want to make on an annual basis, then work backwards by figuring the number of billable days in a year to determine an hourly or day rate. But this is "amateurish and self-limiting," argues Alan Weiss, author of Million Dollar Consulting (McGraw-Hill, 1997, $29.95), considered by many to be the "bible" of consulting. Instead, says Weiss, the way to become wealthy is to base fees on the client's perceived value of your assistance. Make the conceptual sale first, then attach a value to it--and ask for it.