Fractional executives and high-level consultants should think about upping their rates in the new year. Why? Well, for starters, you've gained more experience and expertise over the past year, making your services even more valuable. By adjusting your rates, you're essentially putting a price tag on the top-notch insights and solutions you bring to the table.
Plus, with the demand for strategic guidance skyrocketing due to tech advancements and economic shifts, you need to stay ahead of the game as an expert. Raising your rates isn't just about keeping up with the trends; it's a signal to clients that you're committed to delivering top-tier services.
And let's not forget the practical side of things – costs are going up. A rate increase isn't just a reflection of the value you provide; it's a smart move to keep your own businesses sustainable. It ensures you can keep evolving, stay on top of industry changes, and continue delivering exceptional results. So, as the new year rolls in, it's time for fractional executives and consultants to consider a rate adjustment to thrive in the ever-changing business landscape.
In my experience, commanding a higher-than-average rate and confidently increasing your rate comes down to mindset. In this article, allow me to explain the features of that mindset so you can increase your prices this year without freaking out about it.
Why don’t we charge more?
In order to confidently increase your prices, you’re going to have to zoom back to the start of your independent career. Reflecting on where you’ve been really is key to figuring out your route forward.
It’s natural to have a tendency to keep your prices low when you start out. A few reasons for this include:
- You want to get clients quickly and they feel that high prices will put them off
- You don’t feel totally confident in your offering, so you keep your prices low to assuage any feelings of guilt or imposter syndrome
- You don’t actually know what the going rate is
There’s a lot to unpack here, but in almost all instances, you can probably trace low prices back to fear. What if I scare clients off with high prices? What if I can’t deliver? What if my peers find out my prices and laugh at me? If you’ve ever experienced such thoughts, you are far from alone.
“In almost all instances, you can probably trace low prices back to fear”
The thing nobody tells you about pricing
At times we can obsess over what we charge for, let alone how much. Do we charge by time or by project? Hourly rates? Day rates? Fixed fees? It’s a real can of worms, one that most consultants simply want to keep the lid on. But I’m going to pry open that can and spill its content all over the desk in front of you. Here, underneath those wriggly little thoughts that keep you up at night, is a secret:
Pricing is not about you; pricing is about the client.
Why is it that you can sell the same product to multiple people at different prices? The simple fact is because the value that you apply to a thing is not the same as somebody else’s assessment. Sometimes it comes down to cold, hard budgetary restraints. But in my experience, often it’s more to do with perception. It is in knowing this fact that your pricing confidence can begin to grow.
Clients value stuff based on their own perceptions
When I build websites for clients as a consultant, I know my offering is great. I am confident in my skill-set and I know I can deliver. But for the longest time, you wouldn’t believe me if you looked at my prices. I had a deep-seated sense that clients didn’t value what I was offering, and so I kept my fees low so as not to ruffle any feathers.
Over time, I noticed that some clients expected to pay more. They got it. When I observed this, I realized that I could increase my prices in-line with their expectations. I finally began to understand that what I thought didn’t really matter; it was all about what was going on in the client’s mind. And that, I went on to learn, can be influenced…
How to alter your client’s perception
What I’m about to tell you holds great power. It is your job to use it responsibly.
You can develop the best product and offer an amazing service, but people will judge it based entirely on how you frame it, how it makes them feel. The client must believe you, and for that to happen, you must believe yourself.
The fact is that a confident and friendly person can sell an absolute dud. But a coy person will struggle to inspire anyone to action. Here’s what you’ve got to do:
- Understand that your time has inherent and untouchable value. To quote the movie Fight Club, “this is your life and it’s ending one minute at a time”. Use it well.
- Know that your clients are lucky to have you, not the other way around.
- Understand that there is an abundant supply of clients and work out there, so you don’t need to worry about winning every project.
When you internalise these messages, the way you carry yourself changes. You transform into a more confident and able person. Clients will sense this, and they begin to expect a premium rate. And what’s more, you don’t actually need to change what you’re offering. You can literally work in the same way as you always have, because the client isn’t buying the end product, they’re buying into you.
When I started out I was trying to sell websites for $500. My reasoning seemed sound at the time - undercut my competitors yet still offer a great service and product. But I quickly discovered that I was not attracting very good clients. I was being approached by people who thought $500 was expensive, and ignored by those who knew that websites generally benefit from a larger investment. I decided to quadruple that fee and all of a sudden, I attracted a higher caliber of client. Their perception of me had changed, because I decided to hold myself in higher esteem. These days, it’s not uncommon for me to charge 20x what I started out asking for, and all because I shifted my mindset around pricing.
I hope that this story and the advice offered here helps you to do the same.
And that, in a nutshell, is how you can massively boost your prices as a consultant.
This post was written in shared partnership between Matt Saunders and Mylance. Matt is a business coach for consultants. He supports creative freelancers to build strong and sustainable businesses, to create a life that they absolutely love. You can find out more on his coaching website, and if you’re struggling to command a higher rate of pay, be sure to check out his book Thriving in the Face of Danger.
Every Mylance team member has done consulting. We're experts, and we've seen what consulting enables: more time with our families, traveling the world, more time on passion projects, or to start that business we've been dreaming about.