How to Value Price Advisory Services
Posted Mark Wickersham
Helping a client to build a more profitable and successful business is one of the most valuable things we can do. It would be crazy to price this work based on time—that would leave too much money on the table.
We must price strategic planning based upon the value the client receives.
But, there’s a problem:
Only the client can determine what that value is. And unless you’ve developed some incredible mind-reading talents, you cannot know how much they will value what you can do for them. More importantly, you cannot possibly know how much they would be willing to pay you for that value! The first step to selling your advisory services is developing value-based pricing.
You need a system, or framework.
The 5 stage value pricing framework
When you discuss price with a client, you must have a value conversation. This framework is a practical step-by-step system or process you can follow for every pricing discussion.
Here is an overview:
- Fact find: Uncover the client’s problems or issues. These are the questions you must ask the client before you offer a solution.
- Create your solution: Once you understand what the client really needs, you can build your solution and packages.
- Build up the value of your solution in the client’s mind: A key part of the value conversation is educating the client about the value you will bring to them, so you need a system for communicating the value of your solution.
- Calculate your price: You need a process for calculating price based on the value to the client of your solution.
- Involve the client in the pricing process: Pricing should not be done in isolation; involving the client will get you a better price.
Next, we’ll explore each of these five stages and some key strategies for pricing strategic planning work.
Stage 1: Uncover the real issues—fact find
Before you offer a solution, you must answer questions and gather data. I call this the fact find. The objectives of the fact find are to:
- Uncover the real needs and what is important to the client so you give the correct diagnosis,
- uncover their pain and the emotional impact, and
- identify quantifiable metrics of value (measurements for both the pain and the benefits).
One technique you can use when selling strategic planning is gap analysis. Ask the client what their goals and objectives are, financial or otherwise. For example, what do they want their revenue to be two years from now? Next, ask them where they are now. What are their current numbers? The difference between where they are now and where they want to be is the gap.
If they want to grow their annual revenue from $500,000 today to $1M in two years, the gap is $500,000. If you can help them get there through strategic planning, you have a quantifiable metric you can use in the pricing process.
Stage 2: Create your solutions—menu pricing
Once you have done the fact find and understand the real issues, you are ready to present your solution.
However, we don’t know what the client is willing to pay, so we create three solutions. This gives the client choice, and all customers like choice. By offering different packages, those clients who are willing to pay a higher price will choose the more expensive one.
This is called menu pricing.
When we apply menu pricing to strategic planning, there are two strategies you should use:
- Make your most expensive package very expensive. Not because you want to sell it, but to create an anchor. Because strategic planning is a service the client has probably never bought before, they have no idea what the price should be, so you need to create a reference price with anchoring.
- When you reveal your packages, always talk about the most expensive first. When you then reveal the high price and create a reference price in their mind, your middle package (which you show next) seems like so much less money when positioned alongside the high price anchor.
Stage 3: Build up the value of your solution in the client’s mind
You are now ready to explain the solution to your client. This explanation should focus on outcomes, rather than what you do. What will be the end result? What will be the deliverables? And what types of goals will you help your client achieve, or at least track?
This is where you revisit what you discovered from the fact find. For example, if the client stated they want to take their business from $500,000 to $1M annual revenue in the next two years, then what are the things you will help them manage to get there? How will your advisory services help reach that goal?
When you focus your client on the end result and use numbers, it influences their perception of the value of what you will be doing for them—and in turn, how much they will be willing to pay.
Stage 4: Calculate your price
You should always price based on value rather than the time it takes.
Helping the client to increase their annual revenue over the next two years by $500,000 is far more valuable than the two hours you’ll spend with them every month. The time you spend is irrelevant from a pricing point of view.
While this can be the hardest of the four stages, it can also be systemized. When you systemize the process of calculating a value-based price, it will make the next stage much easier. I have added a link to a video below which will help illustrate this point.
Stage 5: Involve the client in the pricing process
Once you have a pricing system in place for strategic planning, you must now involve the client in the pricing process.
Stages four and five are difficult because value pricing is inherently difficult. So, I’ve done a short 8-minute video to walk you through exactly how you can calculate and price for strategic planning and involve the client in the process.
Here are just some of the reasons (and benefits) for pricing with the client in this way:
- Clients like it because there is transparency in the way you price. They can see how the price is building up and that creates trust and credibility in your pricing.
- When you involve the client in the pricing process and they can choose from a menu of options, they buy more.
- When you have a system, you just follow the system. It makes pricing much easier, and you can price with confidence.
When you apply this 5-stage approach to the pricing of your business advisory services, you can systemise the whole process. Once you’ve identified the best questions to ask during the fact find, you’ll get consistent results. You can systemise stages two and three by creating standard packages and brochures, and you can systemise stage four with a software-based pricing system.
Remember, business advisory services are one of the most powerful services you can offer. When you master value pricing, these services will become the most profitable services in your portfolio.
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