Consultants: Get Better Clients with Better Fees

I delivered a Modern Management Made Easy talk and ranted about 100% utilization. One of the questions in the chat was:

“Don't consultants want 100% utilization? If you're not working, you're not billing.”

Here's how consultants create utilization-based billing:

  • By the hour.
  • Even worse, in 15-minute increments.
  • Time and materials.

I don't do that. Why not? Because then the client and I have mutually opposing goals:

  • The consultant wants to keep the engagement going as long as possible.
  • The client wants to end the engagement as soon as possible.

This is a classic case of perverse incentives.

If consultants do that, they soon find they get worse and worse clients. That's because their clients aren't seeing the value the consultant offers. All the client sees is the cost. Not benefit, just cost.

Consultants Support a Client's Growth

My job as a consultant is not to work every hour of every day for a client—or for me. My job is to maximize my value for every client. That includes at least:

  • Learn about new ideas
  • Practice those ideas so my clients can use them.
  • Rework my older intellectual property to take advantage of those new ideas.
  • Decide what I will no longer offer so I can focus on how to offer better value for my clients.

Note that I increase my value with each of these activities. I can then explain that value to clients.

That's why I offer only project-based or value-based fees. I often work with the client to define that value together.

Sometimes, I decide what that value is, say for a brief talk, for a client.

The more I work with the client in advance to prepare the client for my fee, the more the client and I get satisfaction from the engagement. Even better, the more value we both receive.

I get better clients and better fees when I think in value, not time. That has allowed me to become a successful consultant. That's why I never bill based on utilization.

If you want better clients, learn to use project- or value-based fees. Want to practice how? Join me in the March 2021 Consulting Workshop.

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