Million Dollar Consulting® Mindset
From Alan Weiss
Volume 4 Number 9
Our mission is to spark new thinking and ideas for creating a thriving business and rewarding life.
Convincing the Buyer to Accept Value Based Fees
Here are some reasoning points to use to convince the buyer that a value-based fee is always in the buyer's best interest.
- There is a cap on your investment. You know exactly what is to be spent and there are no surprises.
- There is never a "meter running." You do not have to worry each time my help is requested that I might be here for an hour, a day, or a week.
- It is unfair to you to place you in the position of making an investment decision every time you may need my help. Otherwise, you're trying to determine the impossible: Is this an issue that justifies a $2,000 visit or a $500 phone call. No client should ever be in that position.
- Your people should feel free to use my assistance and to ask for my help without feeling they have to go to someone for budgetary approval. This only makes them more resistant to sharing their views, and at best delays the flow of important information.
- If I find additional, relevant work that was unanticipated but must be performed, I can do it without having to come to you for additional funds. In those instances, legitimate, additional work would otherwise be viewed as self-aggrandizing and an attempt to generate addition hours or days.
- If you find additional, related work that must be done, you can freely request it without worry about increased costs.
- The overall, set fee, in relation to the project outcomes to be delivered, is inevitably less of a proportional investment than hourly billing.
- If conditions change in your organization, you won't be in the difficult situation of having to request that the project be completed in less time. The quality approach is assured, since the fee is set and paid.
- If I decide that additional resources are necessary, there is no cost to you and I can employ additional help as I see fit.
- This is the most uncomplicated way to work together. There will never be a debate about what is billable time (e.g., travel, report writing) or what should be done on site or off site.
Feel free to add others to my list as you come across them for your practice. The important thing is that you introduce this concept early, use as many of these arguments as you have to in order to convince the prospect, and ypu do so in the relationship building part of the sequence. In other words, although the prospect sees fees for the first time in the proposal itself, the buyer is educated to the point that he or she expects to see a single quoted fee per option, and not a per diem or per head fee assigned.
The key to achieving any kind of interpersonal change is to convince the other person that the change is in his or her best interest. That's why you have to marshal your arguments around the prospect's improved condition, and the sagacity of using a project fee approach. Any and all work required in the early stages is more than justified by the outcome in the acceptance of the fee structure in the proposal. That's why preparatory work is so important in gaining business.
One more hint in buyer education. If the buyer says, "You're the first consultant to propose a single fee," or "We're accustomed to evaluating hourly fees for these projects," respond, "Exactly, that's what makes me different and so popular with clients. I've removed the uncertainty and questionable investments entirely. Here are some reasons that my approach works entirely in your favor..." Then go back to the reasons above.
© Alan Weiss 2014
© Alan Weiss 2014. All rights reserved.
You may reprint and excerpt this newsletter provided that you include our copyright, the source, the author, and ï¿½reprinted with permission.ï¿½