Would it surprise you to hear that the prices you can charge (and get paid) for your Consultancy Services are much less to do with ‘market rates’ and what you think your Clients will pay and much more about your confidence and belief in the value of what you are offering?
When you first start up your Consultancy Practice is easy to assume that you will need to start off charging low prices.
You reason that this is how you will build up a client base, establish a reputation and get some traction in the market. After all it is difficult enough to stand out in a crowded market without having to compete on price as well. You have a new business – you’ll just have to take the hit and undercharge while you are getting your business up and running, right?
I was exactly the same when I first set up my business but now one of my key messages to HR Professionals starting up Consultancy Practices is to avoid undercharging and instead to set your prices where you want them to be – right from Day 1.
Here are a few of the reasons why I recommend this…
- Low prices send a strong message to your potential clients that you don’t really believe in the value of what you are offering them. They have probably put off dealing with this problem for a very long time and now it is urgent that they get it resolved by someone who knows exactly what they are doing. Why would they take the risk when your prices tell them that you don’t believe in yourself?
- You will attract a low paying clientele – this may seem like a reasonable strategy in the early days when you just want to get started and bring in some money but what about 18 months or 2 years down the line – you will have created a business with a reputation for charging low prices – something which can be very hard to shake off. Why create something now that you will have to dismantle in a few years’ time? Create the business you want right from the start.
- Just because your Practice is new does not mean that you should underestimate the value of what you are offering. How much have you invested in being able to offer that service to your clients? Your practice may be new but your skills are not and they are very valuable.
- If you charge low prices then you will need to have high numbers of clients in order to have a sustainable business. This will have a negative impact on the amount of time you can spend with your individual clients which will in turn have a negative impact on the reputation you are building. What do you want to be known for? Low price, high volume or high end and excellent individualised service?
- Often it is just about a lack of confidence – after always having had someone else set a price on the value you offer (in employment) it can be totally nerve-shredding to suddenly have to do it ourselves. We worry about what people will think. We worry about over-charging much more than we worry about under-charging. The temptation is to play it safe and go low – much more in our comfort zone but ultimately self-defeating.
Your prices are a key piece of information for your potential clients and they will use then to come to conclusions about how good you are at what you say you can do.
So let me ask you again – What are your Prices saying about your Consultancy Practice?