What Should B2B Consultants Charge Clients? An Updated Strategic Guide To Setting Your Fees
Pricing isn't a game of guessing what the maximum a client is willing to pay - but a choice of strategies you're pursuing. Here are are seven strategies to consider.
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I covered this topic a year ago. It’s one of my most popular posts and already needs an update.
The Problems With Guessing The Maximum A Client Is Willing To Pay
You’re going to waste a lot of time on projects which won’t go anywhere
Many new consultants take a crude approach to setting their rates.
They ask a few questions to tease out what kind of budget a client might have, estimate the maximum a client is willing to pay, and hope for the best.
There are several problems with this approach.
You will waste time chasing no-go projects. If you’re trying to guess the maximum a client will pay, then it’s likely the client has no idea what your services are likely to cost. this means you will waste a lot of time pursuing projects which will be rejected. Your final quote shouldn’t be a shock because you’ve already checked you’re in the right ballpark during the sales process (begin with the contact page).
You might win a poisoned chalice. Imagine you typically charge $10k to $15k per client and then quote $60k for a big-name client. The difference in expectations between the two projects is huge. The latter will require a lot more stakeholder engagement, professionally designed deliverables, superior project management etc. If you haven’t played in that sand pit before you might get a great pay day, but also have someone who speaks negatively about their experience working with you in the industry.
It’s impossible to grow your practice sustainably. If your fees are set by guesswork, it becomes difficult to develop templates and processes which scale. Every client will need a very different approach and it will be challenging to grow anything that scales beyond you.
But the biggest problem is that guessing the maximum a client is willing to pay simply isn’t strategic.
Your Fees Reflect Your Strategy
If you’re not sure what to charge, you don’t have a fee-setting problem - you have a strategy problem.
The fee you quote a client is the place where your marketing, positioning, and ability to deliver a project converge.
Your fees reflect the audience you’ve decided to target, the services you’ve decided to offer, your positioning relative to competitors, and the investments you’ve made in yourself and your services.
If you’re a new consultant with a pamphlet-style website targeting mid-tier organisations, then charging $50k would be a terrible idea. It simply doesn’t align with everything else you’re doing.
If you’re a veteran consultant with an industry-leading reputation, a case-study-rich website, and regularly upgrading your skillset through new courses, $50k might make perfect sense.
If you’re not sure what to charge, you don’t have a ‘fee-setting’ problem, you have a strategy problem.
Your fees should reflect your strategy. It should consider:
What kind of services are you offering? Are you selling turnkey projects with a high degree of automation and clear, templated, processes or fully customised services to suit the needs of a specific client? This should reflect what you’re capable of delivering and the demand you’ve seen from prospective clients.
What kinds of clients are you targeting in your marketing? Are you looking for small to medium clients where you can deliver a big impact? Or are you looking for industry-leading brands? The differences in marketing to each are huge.
What is your reputation? Are you just starting or do you have an industry-leading reputation? Have you differentiated the value you can offer to clients that no competitor can match?
The answers to these questions will determine what you should charge more than the client’s budget.
Treat the above diagram as an approximate guide and adapt it as you need (high-res version here).
As a B2B consultant, you should decide which buckets you’ve decided to play in and align your entire strategy to it.
Are you the turnkey consultant delivering quick results for small to large businesses? Or are you working on large projects which take months (and entail far more risk)?
No option is better than the other. You can thrive and make a great income following any of the approaches in the diagram. The problem begins when you’re not sure who you’re targeting.
Regardless of the approach you take, you still need to select the right niche and deliver the right service to that niche.
Strategy 1: Target Small Businesses With Quick Turnkey Projects
In this approach, you automate as much as possible and aim to build a reputation within a specific niche of small businesses. You need a market where there are a lot of potential customers (e.g. realtors).
Your sales process is 80% automated, and you have templates created to deliver the work within a few days. The challenge here is selecting the right niche and gradually working out what does and doesn’t work in the sales optimisation process. You’re means of attracting clients is usually outbound sales messages - not inbound.
At this level, you’re often working with 1-person organisations or, at least, the founder of the company.
Strategy 2: Target Mid-Tier Organisations With Turnkey Projects
This approach is similar to the above, except you’re using templates (which you adapt to each client) rather than a purely high-volume automated sales pipeline. Your sales process is thus 50% automated and you adapt each template to the unique needs of the client.
The challenge here is finding the right decision-maker and ensuring you can deliver the project within the budget range. At this level, you might find yourself delivering IT, financial, or marketing consulting to agencies, professional service firms or hospitality companies. Your primary methods to attract clients are outbound messages and referrals.
These projects should still be turnkey - you shouldn’t be adapting the process to serve the clients at this budget range.
Strategy 3: Targeting Mid To Large Organisations With Custom Projects
In this approach, you’re targeting larger organisations (typically 250+ employees) with single, customised, projects.
You might still be working from templates you’ve created, but the outcome is customised to the specific needs of the client. Typically here you’re helping clients solve a problem which is causing them some stress but doesn’t have a specific value assigned to it.
At this level, you begin promoting yourself as much as your service and aim for inbound requests to generate as much revenue as outbound. Your sales process is customised to the needs of the decision-makers.
Strategy 4: Targeting Large Organisations With Multiple Projects
In this approach, you’re typically selling broad/multi-scope projects to large organisations in your sector.
You will usually be working from templates of deliverables, but they will be highly adapted to the needs of the client. You will often be helping a department optimise its processes and improve a specific KPI they are measured by at this level.
Strategy projects often fall into this bucket. You might sell a strategy which includes benchmarking where the client is today, developing customised solutions, and an implementation and monitoring plan.
At this level, your reputation and proof of past success become critically important. it helps if you’re known as the [industry] [service] person. e.g. the Manufacturing SEO man. Outbound sales are very difficult to pull off - most projects will be inbound.
Your sales process is entirely individualised to the client. You might have some templates, but your approach depends entirely on what you learn about the client.
Strategy 5: Targeting Industry Leaders With Highly Specialised Project(s)
The key here is you’re selling services which help clients solve seven to eight-figure problems. The sales process often involves helping the client scope out and understand their problems.
Helping clients solve their staff/customer retention problems, fix their sales pipeline, or migrate to a new IT system might also fit into this criteria.
At this stage, you shift largely to account-based marketing (h/t
). You spend a lot longer getting to know each organisation, and their unique needs, and develop entirely customised solutions which reflect their reality. You need to combine an industry-leading reputation with services specifically developed to match the needs of the organisation.Be warned that above $50k, however, many organisations are forced to put the project out to tender regardless of how much they like you. This is the outer limit of where a solo consultant can participate successfully. It’s hard to win an RFP as a solo consultant (not impossible, but hard).
Strategy 6: Targeting Industry Leaders With Long-Term Consulting Projects
At this level, one of two things is happening.
You’re the ‘go-to’ consultancy for helping industry-leading clients solve their problems. Assuming the former, this means you’ve developed a deep relationship with the client stretching back many years and they come back to you repeatedly to deliver work for them.
FeverBee, for example, has a couple of clients who spend $80k to $120k a year with us precisely because we have a long-standing relationship with them and they trust us to deliver on projects for them. Everything is custom-developed for their needs. Knowing how to market to former clients is critical at this stage as is structuring a contract for mutual benefit.
You’re a boutique, specialised, consultancy winning competitive RFPs. At the lower end of the scale, you might have a small team with expertise in responding to RFPs and clients who are keen to help you succeed. At this level, you need to be known within your industry to be invited into the RFP process.
It’s very difficult to get these kinds of projects as a solo consultancy. Above the $50k level, organisations like to know they’re working with a dedicated team of people, not just one person.
(You can also see a $500k+ level, but that’s primarily for the big-name management consultancies and agencies.)
Which Strategy Should You Pick?
This largely depends on your preferences and abilities. Every option has pros and cons.
At the lower end, it’s easier to get work, but you need to gain more clients to thrive. It might also feel a little exhausting flipping turnkey projects. But the great thing is once you’ve succeeded in doing it in one industry, you can always do it in another. The potential for expansion is higher as you’re less dependent on a core few clients.
At the upper end, it’s harder to attract clients (your reputation matters more), but it can feel great working on major projects or large firms. The competition is more intense and it can feel exhausting having to endlessly promote yourself.
A quick warning though….
High fees have high expectations
Working with industry leaders on big-value projects sounds great - but there’s a reason not many people do it.
I’ve written before about the absurdity of those sharing advice to ‘just increase your fees’. If you raise your fees without changing your strategy, you’re going to find yourself in a deep, dark, forest without a map.
Consider for example…
Do you have experience selling to large organisations? Do you know how to pursue account-based marketing? Can you get the right people in the room? Do you have existing relationships and contacts at these organisations who know and trust you? Can you navigate the process of engaging the key stakeholders to get buy-in?
Do you know how to develop a proposal which tells a compelling story and reflects what organisations need to hear? Do you know the difference between what the contact is looking for versus the procurement team?
Do you have the extreme level of trust required to sell a project at a five to six-figure level? No one is going to pay you $50k unless you can demonstrate previous projects at that level and their success.
Do you have the right policies, procedures, and certificates in place (insurance, data privacy and protection procedures, tax certificates etc…) so large firms can hire you? It might be embarrassing to win a large client and then not have the ISO27001 certificates they need to be able to share data with you.
This isn’t a list but it gives you the idea. There are vastly different expectations involved when paying $50 for a meal vs $500 for a meal. The same is true for consultants too. If you want to charge more, you need to ensure everything aligns with the new price point. That typically means investing significantly to get to that level.
Make Sure Everything Aligns
The final thing is to ensure everything you’re doing aligns.
If you’re going after turnkey projects, then everything in your promotion and the activities you take on should be aligned with that. You should be laser-focused to see the benefits. Your reputation matters less than the service you’re offering and your means of promoting it.
If you’re going after higher-budget, customised, projects then that should be reflected in everything you do as well. You want to build your reputation as someone who explains how organisations can solve the problems they frequently face and invest significantly in having a resource-rich website with lots of proof of your past work.
Any approach can work, just make sure you’re finding the one that works for you.
Good luck!
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Thanks for reading
Expertly laid out and explained. It's clear you've been involved in all levels here.
Very structured and clear thinking 🧐. Superb !!!