Formula for Value-Based Fees
Here’s a formula for establishing fees of major projects:
Tangible Outcomes X Annualization
Intangible Outcomes X Emotional Impact
Peripheral Benefits + Improved Variables
___________________________________ = ROI
Fixed Value Based Fee
Basically, your monetized outcomes (e.g., increased sales, decreased costs, etc.) times the duration of the benefit; plus the emotional impact (better repute, more comfort, etc.); plus peripheral benefits (e.g., easier to retain talent); plus other variables (e.g., insurance costs will decrease); divided by the value-based fee will equal a huge return on investment for the buyer.
All of this requires a trusting relationship with a buyer and your ability to demonstrate and manifest this value so that price is nothing more than an intelligent investment for a great return.
© Alan Weiss 2013