The Right And Wrong Way To Increase Your Fees

Ignore unsound advice about increasing your fees and do this instead.

This thread popped up in my feed over the weekend:

These kinds of stories tend to be catnip for consultants. They’re cherished like profound wisdom because they validate what we want to believe.

If only I charge more money, I will attract bigger and better clients.

The problem is it’s just not true.

Stories Like These Are Almost Always Apocryphal

Whenever you hear a story like this, consider it apocryphal.

There’s no evidence to support it, we have to simply take Shane’s word for it. But this is where it becomes problematic.

1. The author provides no evidence to support it. This isn’t the biggest strike against the story, but you can’t verify anything happened so we should keep an open mind about such claims.

2. The author sells courses on growing an agency. He promotes this course at the end of the Twitter thread. The story is presumably told to promote the course. This makes it essentially unregulated advertising. How much do you trust claims made by advertisers? The story reads precisely like an advert [I used to be like you…now I’m successful….buy my course and I can help you be like me].

3. Would you really want future clients to read this kind of story about you? Imagine you’re a past, present, or future client of the author’s agency (an agency he neglects to mention). Would you hire his agency knowing he had quadrupled the fee beyond what it needed to be?

4. The story doesn’t make sense. If the agency’s feedback was they would have hired him if he had charged more, then they simply could have requested him to increase his fee and hire him. But if you have three agencies giving a good estimate and one getting it wildly wrong, the problem isn’t the price.

5. Why would an agency want to spend $100k to $150k? It’s not because they hate money! It’s because they probably want the full expect experience a $100k+ agency can offer. This includes account managers, project managers, a team of experienced staff who have proven they can work well together etc. The problem isn’t that the author’s agency didn’t charge enough, but they aren’t suited to this client and they don’t know it. Undercharging is a symptom of a deeper problem - not being the right fit for this project.

I might be being incredibly harsh on the author. The story might be 100% true and the lesson clear and profound. But after a decade of working with clients big and small, it doesn’t feel legitimate.

But the point isn’t about this single thread, but the entire category of simple-sounding advice which is presented as profound wisdom, makes the reader feel good but is ultimately tragically misguided.

Quadrupling Your Fees Is Bad Advice

Quadrupling your fees is bad advice.

Your fees reflect your positioning and strategy. As we have spoken about before, each fee tier entails different expectations. You can’t simply quadruple your fee and expect to get more clients. You instead will face a different level of competition. Above $100k and you start getting into competitive pitches against agencies who hire people full-time to work on RFPs.

Worse yet, consider the opposite. Imagine if you come in at $100k and your three competitors come in at $25k. You’re going to be laughed out of the room and harm your reputation.

Big organisations do tend to have bigger budgets. But they don’t expect to pay more simply because they’re big. They’re not stupid. They tend to allocate a bigger budget because their needs are more complex and their scope is broader. They want to work with organisations that can provide the resources to match their needs.

The obvious takeaway from this story is simple. You should always check what the budget is before creating a proposal.

The obvious lesson from the story isn’t to quadruple your fees but to ask what the budget is in advance.

And if the organisation isn’t sure, give a broad range and then check you’re in the right ballpark. This saves both of you a lot of time and a lot of money.

How To Really Increase Your Fees

If you want to significantly increase your fees, instead of engaging in any silly trickery, simply offer more value to your clients.

This means you need to design services which solve more of your client’s problems than before.

If you want to significantly increase your fees, instead of engaging in any silly trickery, offer more value to your clients.

For example, if you sell a service at $20k and above, it’s usually feasible to add on additional services you know the client might really need. For example, if we’re helping a client develop a comprehensive strategy at $50k, we can usually offer discounted training sessions or in-house workshops for $2k to $5k. This is a ‘win-win’ for everyone.

The more you learn about your clients the more you should learn about the problems they are struggling with. You can then develop the skills and services to help. This is how you increase your fees.

This doesn’t mean coming up with an idea and offering it. You have to genuinely do the work to be able to offer the service.

For example, we knew many organisations in our sector were struggling to prove the value of their work. To tackle this problem, we first needed to develop the service. So I hired a full-time data analyst and began offering data analysis as a service to clients. Thus far it’s proven popular.

Again it’s not simply a case of changing the words we use or promising we can do something different. It’s a case of investing the time and resources to develop a real service that offers immediate value to clients. This might mean hiring staff, learning new skills, and gaining new certifications so you can offer these services.

Our philosophy for increasing fees is to do the hard work to increase your value. This probably isn’t as catchy as saying ‘quadruple your fees because big companies want to pay more’, but I’d suspect it’s far more useful.