To raise or not to raise prices? That is the question | Opinion

When it comes to prices for professional services: To raise or not to raise, that is the question.

And just as in Shakespeare’s famous scene, in which Prince Hamlet hems and haws over taking action, this pricing question is often fraught with indecision, perhaps now more than ever.

Hamlet suffered from a lack of self-confidence. And so do many of us. Which is why far too many outstanding professionals undercharge for their services.

A few years ago I told a friend, “You’re great at what you do. Your clients are getting incredible value. You should be asking for much higher fees.” He had enough confidence in himself and in the quality of his work to take my advice. Today, his consulting practice nets $1 million per year.

That’s rarefied air. But if you consistently deliver outstanding work, you can move toward that lofty goal with a dose of self-confidence and the following tips:

First, understand this: The value of your work is not based on how long it takes you to do it. The value is based on the outcome. The more often you do something, the less time it takes. But the final result keeps getting better and more valuable.

This is especially true for repeat business. The more often you work with the same people on similar business challenges, the more deeply you understand their needs and how to get things done in their organization. And, the more valuable you become.

Isn’t it ironic that “volume discounts” or “grandfathered rates” mean so many of us are earning our lowest fees from our “best” clients for whom we deliver the greatest value?

So the first step in earning higher fees is to break this vicious cycle. Here’s how:

Don’t charge by the hour. Charge by the project. Don’t focus on how long it takes. Focus on the value of the outcome.

Maintain a close relationship with the senior executive over the area in which you work, not just with subordinates, or the human resources department or accounts payable. Develop an ongoing understanding about how your work addresses that executive’s deepest concerns about the business. Then, make a new proposal in which you offer increased, mutually agreed value commensurate with higher fees.

If your proposal isn’t accepted, respond by offering to remove a piece of the value. Or, offer a 5% or 10% discount in exchange for payment in full, up front.

New clients, on the other hand, are a different matter. You haven’t established a track record, so your services are more of a commodity and your fees are easier to comparison shop.

Here’s how to close new business at higher fees:

Establish a relationship with the decision maker and first come to verbal agreement on the objectives, performance measures and your value before you make a proposal. Avoid discussing your fees prior to this.

During the initial meetings, provide as much value as you can. Don’t hold back. Your potential client should be thinking, “This person really knows what she’s talking about. I should hire her.”

When you do eventually make your proposal, start by articulating the value, the objectives and the measures of success for the project. Then, position your fees as an investment with an ROI, not as a cost.

I’ve found that raising fees can result in losing the bottom 10% of your market. But that’s fine. Your higher fees make up for the lost work and you’ll have more time to devote to more lucrative business.

So go ahead, make Shakespeare proud by “throwing off the slings and arrows” of low fees and going after “outrageous fortune.”

Adam Snitzer is a revenue strategy expert and president of Peak Revenue Performance, a consulting firm that specializes in designing and executing innovative pricing strategies to increase revenue and generate cash. He can be reached at adam@peakrevenueperformance.com.

This story was originally published December 4, 2020 at 12:00 AM.