You're navigating the digital strategy industry. How do you set your consulting rates?

To set your consulting rates effectively, start by comprehensively understanding the value you bring to clients. Assess your expertise, experience, and unique skills that distinguish you from other consultants. Consider the complexity and scope of the projects you handle and the tangible results you deliver, such as increased traffic, improved conversion rates, or successful digital transformations. Clients are willing to pay a premium for demonstrable value and results. Document case studies and testimonials that showcase your impact. This understanding of your value proposition allows you to set rates that reflect your worth and justifies higher fees.

When a company seeks an expert to enhance its online presence, improve customer experience, and boost sales, it needs to understand the activities to be undertaken, the timeline, and the costs involved. In my experience, I use the OKR methodology: we define clear objectives and tangible results within a set timeframe. This approach helps turn consulting into a “product,” making it easier for companies to purchase “productized” services. At this point, setting a price becomes straightforward.

Many consulting firms still use the traditional revenue model of time multiplied by hourly rates for resources involved in a project. In my view, this model is outdated. Today, companies are looking to purchase outcomes, not the time it takes to achieve them. Therefore, an effective strategy involves using the OKR methodology to define clear objectives, specific KPIs, and linking compensation to results by combining a fixed fee with a variable component. While this can increase the consultant's risk, it should be balanced by the potential for higher revenue. This revenue model enhances the likelihood of acquiring clients as it demonstrates a true partnership approach.

Field experience is essential, and showcasing it is a crucial step in improving client acquisition. However, many companies are increasingly looking for consultants with expertise in their specific industry. In my opinion, experience confined to a single sector can limit the innovation and vision necessary for a growth and digital maturity project. It is far more important to demonstrate to clients that you have a tailored approach to problem-solving, one that has been successfully applied across various sectors and companies. This shows a genuine problem-solving capability rather than merely recycling strategies from one company to another within the same industry.

It may seem obvious, but having a strategy to determine the right price is crucial to avoid creating a loss-making business model. For companies selling products, pricing is relatively straightforward, but for consultants, it becomes more challenging, primarily because it involves valuing your time—the most scarce and valuable resource we have, yet often the one we trade away too easily. Therefore, clearly define an outcome, clearly articulate the value you bring through a specific and identifiable KPI, and ensure you are compensated well when you achieve it.

In my experience, it is always advisable to work towards specific objectives. It’s crucial to accurately estimate the effort required to achieve these objectives, a skill that improves with time and experience. There will be times when we underestimate the time commitment, but as we gain more experience, we become better at making accurate time estimates. Remember, clients always buy the result, not the time it takes to achieve it. It is our responsibility to optimize our time, and today we have many tools and project management strategies available to help us do so effectively.

💡 Focus on Client Gains: Set rates based on the value you deliver, not just time spent. Align with Outcomes: Your fee reflects the financial impact of your strategies on the client's business. Motivate Success: This pricing model encourages you to drive meaningful results. Clarify Value: Explicitly communicate how your work directly benefits the client's bottom line. Build Partnerships: Aligning pricing with client success fosters long-term relationships. Value-based pricing not only enhances your earning potential but also solidifies your role as a key partner in your clients' success. By focusing on the tangible benefits you provide, you demonstrate your commitment to their goals, enhancing trust and cooperation.

Evaluate Market Rates: Research industry standards and competitor pricing. Assess Your Expertise: Determine your level of experience, specialization, and unique skills. Consider Client Value: Set rates based on the value you provide and the impact on client ROI. Factor in Overhead: Account for business expenses, time invested, and desired profit margins. Offer Flexible Options: Provide tiered packages or customizable services to cater to different client needs and budgets.