Value-Based Fees and You

Upland Consulting - Value-Based fees - Music score - black and whiteYour Own Best Interests?

Here’s what value-based fees mean to Upland Consulting.

Is it in your best interest to pay me (or anyone) to spend a certain quantity of time on your issue?  Does it make sense for you to pay for inputs (time) rather than outputs (results)?

I don’t think so — not if we’re talking a consulting engagement.  You should expect a consultant to improve your business: by bringing to bear skills, experience, knowledge and insights, and to plan the process and outcomes in consultation with you.  On the other hand, someone who helps you implement a project or task you’ve already defined is a contractor.  That’s fine too, but let’s not get the two confused.

So this is how we should define a consulting engagement and fee: it’s an exchange of value. You get value in the form of an agreed benefit, I get a fee.

This is what I mean by value-based fees.  Some of the most progressive and respected professional services firms are adopting this model.  It’s “fair to all concerned”, as they say in Rotary.

If you want an implementer, a contractor to knock off a task or project you’ve already defined, please tell me.  It’s perfectly OK.  But, as I’m a consultant by instinct and training, I might offer you some views on improving the outcomes!

Other Benefits

Here are some other ways value-based fees are good for you:

  • There is a cap on your investment. A budget is a budget.
  • There is no meter running. Only change of scope means change of fee.
  • If I need travel, or co-consultants, I’ll do the work of managing that. It’s included in the fee.
  • It’s uncomplicated. We will never find ourselves debating what is billable time and what is not, or which tasks count and which don’t.
  • We both benefit from getting the job done quickly.

To give our work together clarity and direction, we’ll need to agree a project scope.  So we first invest the time to define what outcomes (value) you need — the why. We’ll want to visualise the future, clarify objectives and results, agree our approach — but we would want to do that anyway, whatever the fee basis.  Wouldn’t we?

Then I will propose some options, each with a fee based on the value to you.  Expect me to apply both domain knowledge (what do do) and process skills (how to bring it off).  If I can’t justify my fee in terms of value, you shouldn’t engage me.  My proposal will include a clear statement of what actions or changes are needed on your side for our collaboration to work.  And my fee will include all the discussion and consultation with me you need.  You don’t get charged for picking up the phone to clarify something.

My side? Think of this: if you pay me an hourly or daily rate for an agreed outcome, I have a conflict of interest. I make more money if I drag it out. Not good, would you agree?

What Will It Cost?

One more thing. Can I give you a ballpark estimate, right now? Sorry, NO. It won’t help either of us:

  1. Mentally, we will immediately lock that in as “the price” (plus or minus), before we have even understood what you need.
  2. We just locked out any opportunity to think creatively around how best to improve things for you. We’ve set ourselves on the tram tracks before we’ve even thought through the possible destinations.

That doesn’t help either of us, does it?  I will give you budgeted options as soon as we both fully understand the why, what and how.

That’s what I mean by value-based fees.  Let’s talk it over. Contact me, and we’ll have that conversation.

 

“Upland Consulting provided a friendly and efficient service. Added to this, the end product was on time, on budget and included the rare combination of being practical and innovative.”
Bob W., Local Government
“In my experience Iain delivers great value, great service and great results.”
Stephen Gaebler

Value-Based Fee Resources

Check out the Verasage Institute for more on value-based pricing.

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