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Formula for Value-Based Fees

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

Written by

Alan Weiss is a consultant, speaker, and author of over 60 books. His consulting firm, Summit Consulting Group, Inc., has attracted clients from over 500 leading organizations around the world.

Comments: 2

  • July 23, 2013

    Alan,
    Although I feel this formula to be a great startingpoint (also read it in your book about valuebased fees), it would be very helpful to see some examples of realistic fees that come out of your formula-starting point. Preferable (withoud mentioning names) based on reallife examples.

    Tx so much for your contributions, Pieter Jan Doets

  • Alan Weiss

    August 2, 2013

    You’re welcome to see them if you join my Mentor Communities where we have scores of compilations. But this is my IP and there’s a point at which you have to begin paying for it. Have you read Value Based Fees, for example? About $16!

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