Value-Based Fees, 3rd Edition

CHAPTER 3The Basics of Value-Based Fees: It's Better to Be an Artist Than to Be an Engineer

Clients are traditionally somewhat stunned by and resistant to fees based on anything other than time and materials. That's because we, as consultants, have educated them all wrong. In fact, many consultants are somewhat stunned and resistant to fees based on value, so it's not surprising that the client assumes the same position!

Before we examine the components of the approach that reverses this mentality, let's examine a requisite philosophy: The goal of a consulting intervention is to improve the client's condition by meeting or exceeding mutually established project goals that are expressed as business outcomes. If those goals and outcomes are thus met or bettered, the resultant improvements will justify any reasonable investment required to achieve that particular return.

Whether quantitatively or qualitatively, whether analytically or viscerally, whether long-term or short-term, whether deep-water or blue-sky, we are seeking improvements that dwarf the fees of the consultant (see Figure 1.4 in Chapter 1). This is both art and science. Part of the art is that the resultant picture has to be enjoyable for the client. Some paintings are very lifelike, some are Cubist, some are abstract. But the point is that the client likes the resulting work. (If the client longs for landscapes, a picture of a soup can won't do.)

If the client is delighted, it doesn't matter whether your fee could ...