Yes, very often consultants are regarded as outsourced laborers and get paid in proportion with the sweat on their brows and the amount of manual labor they perform. But this is just a positioning problem. Who gets more price objections, the Ford or the Ferrari salesperson?
These consultants work like dogs because "the job must be done." Mistakenly, they sing this erroneous mantra: "The clients come first, and our job is to be their servants." Holy sausage, this must be a miserable way to work and live.
They run around with their mobile phones permanently plugged into their ears because they think they must be available 24/7. I know an IT guy who puts his mobile phone under his pillow, in case the client calls him at night. If the client does call, he can instantly answer and charge his "premium" rate of $75 per hour.
In my experience, this "client comes first" approach is rather flawed. Unless you want to position yourself as situational elbow grease (a wage slave), you have to make sure that the perceived value of your services doesn't lie in the manual labor you perform. Because if it does, then you are not a service professional but a service slave, which is just a tiny bit better than a poke in the eye with a sharp stick...on some days.
So, let's see what you can do to increase the value of your contribution to your clients and shoot up your fees accordingly.
According to a survey on the consulting profession by the Professional Consultant, 76 consulting practices have been analyzed in depth with the following results:
- Those firms that are selling manual labor on a piecemeal basis (also known as time-based fees) had 87% lower profits than those firms that worked on a fixed-fee basis.
- When profits and salary were added together, the piecemeal pricing group had profits and salary that were 95% lower than their fixed-fee colleagues.
- For those consultants using time-based fees, profits were 32% lower, and profits and salaries were 36% lower than the consultants using both time-based and fixed fees.
And these fixed fees are estimated on the amount of work to be performed. That is, you are higher-paid than with piecemeal pricing, but you are still getting compensated as an "outsourced laborer" for the manual work you do. So, let's kick off our discussion with this pricing premise.
1. Understand that your value to your clients has nothing to do with the number of your working hours. If it does, then you're likely to be perceived as a service slave, working for the client as a subordinate, not as a service professional, working with the client as a collaborator. You must be perceived as a "partner in crime," and not just a circus monkey who comes in, does the somersaults and scurries away with the peanuts. Yes, there are some clients out there who firmly believe that you should sweat and slave to earn your fees. They expect that by the time you finish your work, you're battered and beaten, and thus actually deserving of your money. It's up to you to avoid such clients.
2. Detach your fees from time and other arbitrary "measuring" sticks. Dispensing intellectual capital is not the same as shoveling manure from one pile to another. Unlike that manual labor task, dispensing intellectual property doesn't have a preset cadence and rhythm. It is the result of haphazard juxtapositions of often seemingly random bits and bobs of information. For instance, John Lennon wrote “A Hard Day's Night” in just a few minutes. But, during those few minutes, he drew on a lifetime of experience to crystallize the random pieces into a song.
Make sure that both you and your client focus on the outcomes of the project and the qualitative, quantitative, and personal impact the completion of the project will have for the client. Just because some accountants and lawyers work with a wage-slave mentality due to piecemeal pricing, it doesn't mean we all have to follow that skewed point of view .
3. Commit to working towards specific objectives, but steer away from committing to spending a certain number of hours performing tasks and creating deliverables. Communicate to your clients that the value of your intervention has nothing to do with the so-called visible work you're performing, but with what's going on in your head. If you take 10 minutes to double the response rate of a company's Yellow Pages ad, which brings in $1,000,000 in annual sales already, it would be silly to charge them for only 10 minutes of your time. After all, the client should be paying you for the extra revenue—not simply for the time you spent to create it.
4. Focus on maintaining or even increasing the "intensity" of the project. Intensity is about effort, focus, commitment, challenge, use of resources, energy, enthusiasm, passion, devotion to excellence, responsiveness, and level of access and interest. When your job is dispensing customized intellectual capital, the above factors make the difference, not the number of hours of manual labor or poundage of deliverables. An "intense" two-week vacation in Hawaii far outweighs a dull two-month vacation lying by the pond in your back garden. An intense strategy-setting weekend is more valuable than six months of aimless tactical drifting and plodding. A 45-minute fitness session with a personal trainer is worth more than 2 hours of half-hearted, half-asleep wandering around in the gym.
