Value-Based Fees: How to Charge—and Get—What You're Worth: A Guide for Consultants, Second Edition

8.3. BORING IN ON THE SUBJECT

It's embarrassingly common for a consultant to negotiate all the shoals and rapids of project negotiations and arrive at the proposal stage only to find the buyer with a near-fatal case of sticker shock. That occurs when the client, despite having stipulated to seeking several millions of dollars of savings and improvements in the project results and believing in the consultant's ability to achieve them also believes—quite seriously—that the fee will be around $5,000, while the consultant's most inexpensive option, which the consultant considers a "good deal," is $55,000.

How can this happen so far into the discussions and after conceptual agreement? The cause is twofold:

1. Some consultants fail to develop a sense about the client's philosophy of return on investment and overall spending.

2. Some clients are totally out of touch with investment needs.

The reasons for the second condition are these (which you can use as red flags should you want to test for willingness to invest early):

• The client has never used consultants in the past and so is totally unfamiliar with investing in external help.

• The client used very inexpensive and inexperienced consultants in the past, which has caused an incorrect "education" and precedent.

• The client has tight cost controls and a zealous focus on the expense side of the business; doesn't see ROI, only costs.

• The client tends to focus overwhelmingly on the short term.

• The client's firm is losing money and in desperate straits. ...