In the professional world, one of the single biggest determinants of success I have found, is the ability to charge appropriately for the value you provide.
Having worked with hundreds of businesses in the Professional Services space I have heard just about every rationalisation for what level of fees/cost is, or is not appropriate, to charge a particular client.
In case you hadn’t already realised, I am obsessed with patterns, and the patterns when it comes to Advice related professionals are pretty clear. So let me get right to the point and share with you what I have learned about Professional Services and Fees/Costs.
*Hint: you may be a little surprised by what I have to say.
- Most (I estimate 60-80%) are hesitant about the discussion of fees/costs with clients. It is a topic to be ‘massaged’, ‘brushed over’ or a million other variations of obfuscation.
- An Adviser being hesitant about fees is the number one reason for a client being hesitant about costs. My observed correlation is above 95%.
- Most Advisers fail to paint a suitable value hypothesis for a client and attempt to explain value in terms of ROI (tax saving or investment return etc) or in the amount of time spent to carry out the process (over emphasis on a service offering that shows actions and process). Hint: a real value hypothesis is about the effect on the client’s life and the nature of the relationship.
- Many of the best Advisers I have encountered are significantly undercharging their clients. This means they fail to build scalable businesses and create efficiency models that allow them to serve their existing clients better and help more people.
- The principal reason Advice Professionals under charge is that they struggle with their own concept of self-worth. The pattern has shown me over and over that you are always worth what you believe you are worth.
- Charging is not about ethics, it is about value. If you are trapped by a fixed perception of how to give value to your clients and what that value is, then you are also fixed in the amount of value you can provide and how you can articulate it.
- The happiest clients I have found are most often the clients of the Advisers I have worked with who are charging the most for their services relative to their client’s ability to pay.
- The reason they are the happiest is because, in order to charge those fees, the Advisers in question are 100% certain of the value provided and continuously explicitly state it to their clients. That is to say, the Advisers are not in doubt about the value provided and so neither are their clients.
- The firms that overcharge clients almost always do so by hiding and confusing the cost to clients. This is always a strategy for short term gains and long term loss.
- All of the above 9 observations are true irrespective of whether a business charges fees directly or indirectly (via commission or invoice).
I am not writing this to suggest that you all increase your fees. However, I do suggest that you take a look in the mirror and ask yourself whether you are charging enough that your clients are getting what they deserve, that you are building a truly sustainable business and that you are honouring your ability to attract and serve more people who need your help?