Professional services firms are often hesitant to raise their fees in a challenging economic environment. But consider your firm’s growth in expertise and value to your clients as a proportion of the movement in fees you charge – you will often find that fee growth is lagging behind.
Increasingly, firms are pricing their services too modestly for the value they provide and perpetuate the problem by promoting themselves as the leader in their field with a “reasonable” price. Top clients don’t expect low fees for the services of real experts – you get what you pay for.
If it’s been more than a year since you last reviewed your professional fees, then this blog post is for you.
To decide if you need to rethink your fee strategy, ask yourself:
- Is the value you bring to your business keeping pace with the value you’re delivering to your clients?
- How are we better this year than last when it comes to delivering value to our client?
You may worry about compromising your competitive position by changing your fees in a tight market. But remember, the state of the economy won’t impact clients’ perceived value of your services assuming you’ve done a good job expressing that value.
The secret of human psychology in consumer spending: if you can show real value, then price does not become the pivotal component in the decision making process.
All things being equal, if two people offer the same service without a clear distinction between them, then price will be the ultimate consideration. So in order to justify charging a higher price (which you will as an expert), you need to distinguish your service from your competitors and be good at expressing your value to your clients.
Your clients may fall into one of three groups:
- Price-only shoppers – These clients will never spend more than the bare minimum and will drive across town to save three cents on a litre of petrol. They are frugal and unless you have the lowest price, you will not win their business.
- Top-quality shoppers – This group will never settle for less than the best and they can usually afford it. Quality is number one and they know they’ll pay more for it. Low prices will chase them away.
- Value shoppers – This group will spend more for something proven to be superior. When no proof is evident, price again, becomes the deciding factor.
If you are still struggling to justify a fee change or what you can do different to avoid becoming seen as a ‘commodity product’, please get in touch.
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