They sound like an amazing idea - but they're not practical for most consultants when we consider the challenges in estimating value, risk imbalance, and competitors.
Definitely agree. The only scenarios I have seen consistently favorable for value-based pricing are when firms with a massive brand power apply it. Hard as a smaller firm.
Otherwise, I would always recommend a fixed-price, outcome-based commercial model when it's very clear what your scope is, otherwise charging by the hour (yes! Charging by the hour) is the way to go when the scope of the work is too unclear (sometimes it happens).
Great write up! Take a look at my stuff a lot of synergies! tanya.seda@substack.com
Thanks Tanya - will do!
Definitely agree. The only scenarios I have seen consistently favorable for value-based pricing are when firms with a massive brand power apply it. Hard as a smaller firm.
Otherwise, I would always recommend a fixed-price, outcome-based commercial model when it's very clear what your scope is, otherwise charging by the hour (yes! Charging by the hour) is the way to go when the scope of the work is too unclear (sometimes it happens).