Offline Consultants Should Charge More Money!

13 years ago

I disagree.

Sure, if you're established and already have a bunch of references and happy clients, you can easily charge what your services are worth. Once you show that a past client of yours made their money back from a four-figure investments, it's not too hard to convince another business owner that you can replicate the success and do it over again.

...but for those just starting out (and MOST people on this forum are), trying to charge four-figures right out of the gate isn't really going to work. Everyone wants that big payday, but that type of success doesn't come all at once.

It's MUCH easier for a new offline expert to charge a couple hundred bucks (what most business owners are comfortable spending) and get a few happy clients under their belt.

First off, it helps with your mentality and confidence. If a newcomer was ONLY willing to land a four-figure client, they might work months before getting that perfect prospect. And lets be honest... how many of us would REALLY continue to work for months without seeing any type of results at all? Not too many.

...whereas a newcomer should be able to surface in a new market and close small $300-700 deals all day long, even if it's just for web design. If you don't believe me, check out some posts by John Durnham and all the success stories that he has. It'll really open your eyes to what's possible.

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tdpubs

13 years ago

The best way to avoid the problem of under charging in the first place as a new offline consultant is to offer basic services and work a client into more in-depth services later. Why get elaborate with a prospect who doesn't know what you can do for him or her at the start? Charge the going rate for increasing their exposure with basic SEO at the going rate and ad video and any other components as your relationship develops. The minute they get the increased exposure or first sets of phone calls, get their response on video or audio and you now have a testimonial. Keep adding services but start everyone off small in order to get them involved in the process right. No one wants to pay more later if you start them off at ridiculous prices. I've been there years ago and learned the hard way.

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Will Perkins

13 years ago

Originally Posted by tdpubs

The best way to avoid the problem of under charging in the first place as a new offline consultant is to offer basic services and work a client into more in-depth services later. Why get elaborate with a prospect who doesn't know what you can do for him or her at the start? Charge the going rate for increasing their exposure with basic SEO at the going rate and ad video and any other components as your relationship develops. The minute they get the increased exposure or first sets of phone calls, get their response on video or audio and you now have a testimonial. Keep adding services but start everyone off small in order to get them involved in the process right. No one wants to pay more later if you start them off at ridiculous prices. I've been there years ago and learned the hard way.

Very true! It's late otherwise I would have said something similar :p

Whenever I start off with a client, I never charge them more than $2,000.00 upfront. Ya that's a lot, but that's also if they sign up for EVERYTHING at once, and I offer/provide quite a bit.

Have the "advanced $x,xxx.xx per month" package on the pricing page you present right next to the basic package. Just mention that once they see some good results, they'll probably want to upgrade to the newer package.

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MichaelHiles

13 years ago

The real answer is that the business owner will understand what their ROI is for the service that you're providing and ferret out the good from the BS pretty quick.

At $200 or at $200,000, if you're not creating value in the many multiples of what your fees are, you're not going to keep that client for very long.

I'm an advocate of charging more - but not just for the sake of charging more. I actually understand how to calculate the cost of acquiring a new customer and what the value of that customer represents for a business over the longer haul.

So it's not just an arbitrary, "well hell I'll just charge more money just because someone will pay it".

This is where the entire discussion gets pretty complicated for a lot of people very quickly... but it's the gap for competition to come in and slaughter you.

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sdentrepreneur

13 years ago

I agree with Michael (as usual..haha)
I have charged at little as $250.00 per month, up to $9,000.00 per month over the years. It really depends on the client and level of service. I prefer to for for 12 month contracts, lock them in, steady income and gives you time to prove your results.

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seomoney

13 years ago

Originally Posted by sdentrepreneur

I agree with Michael (as usual..haha)
I have charged at little as $250.00 per month, up to $9,000.00 per month over the years. It really depends on the client and level of service. I prefer to for for 12 month contracts, lock them in, steady income and gives you time to prove your results.

Do you think there is a good chance that you are giving them the impression that you work for free or your services aren't that valuable at $250.

I heard that coupon mailers alone cost at least $850.

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sdentrepreneur

13 years ago

Good point on the mailers, I haven't had a $250 per month client in 2 years. I don't try to talk business owners out of direct mail, I mainly talk to ones that understand Internet Marketing/Social Media. Those are the ones that are ready to spend money. We did a direct mail campaign and rewarded the client with a gift for becoming a Facebook Fan. Now we don't have to mail to them anymore.

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seomoney

13 years ago

Originally Posted by sdentrepreneur

Good point on the mailers, I haven't had a $250 per month client in 2 years. I don't try to talk business owners out of direct mail, I mainly talk to ones that understand Internet Marketing/Social Media. Those are the ones that are ready to spend money. We did a direct mail campaign and rewarded the client with a gift for becoming a Facebook Fan. Now we don't have to mail to them anymore.

It just pains me to hear offline consultants undercharging a lot for their services. There is absolutely no reason why online marketing should cost less than the cheapest form of advertising in the area when it has the most potential to generate the most amount of business.

You should always move on to the next business if a chiropractor claims not to understand the power of the internet. NEVER lower your prices. It is much easier to sign them at a "higher" price than to convince them to pay you higher fees in the future.

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sdentrepreneur

13 years ago

I can at least relieve your "pain" in regards to me. I consult for a start up company with 30+ small to large corporations, I don't even deal with charging clients, billing or even doing any data entry... :-P

Originally Posted by seomoney

It just pains me to hear offline consultants undercharging a lot for their services. There is absolutely no reason why online marketing should cost less than the cheapest form of advertising in the area when it has the most potential to generate the most amount of business.

You should always move on to the next business if a chiropractor claims not to understand the power of the internet. NEVER lower your prices. It is much easier to sign them at a "higher" price than to convince them to pay you higher fees in the future.

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seomoney 13 years ago

Do you think a chiropractor, dentist, lawyer, or mechanic would charge a very low price for their services just because they are "new"? As long as they get the job done they can charge what established businesses charge.

It's all about the return on investment and how well you present yourself. Customers do not know how established or experienced you are when you talk to them. They automatically assume you are the expert simply because you do this for money. Business owners know that your prices are justified when charging $#,###.00 per month. Those that claim not to understand the value you offer are usually a pain in the butt to work with and not worth taking on as a client.

There are businesses happy to pay $#,###.00 monthly. Just don't say no for them. Charge them more money!
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- Steve Solem 13 years ago
  
  I can understand both points of view here, so how about meeting in the middle and offering a low initial price to get a foot solidly in the door, with the understanding that once you prove the value of what you're doing, the price goes up to xx dollars a month or project etc...
  
  Originally Posted by seomoney
  
  Do you think a chiropractor, dentist, lawyer, or mechanic would charge a very low price for their services just because they are "new"?
  
  I can only speak from my own experience, but I see all these businesses and more doing exactly that all the time! They don't give away the store and they don't do it forever, but a cheap or free new customer offer is a great way to get clients that can be worth thousands over their lifetime into their office.
  
  All things being equal, if I was new in a town with 5 chiropractors who all had similar prices but only 4 of them have been in business for 5 years or more, the new guy wouldn't stand a chance of getting my business.
  
  Cheers,
  
  Steve
  
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Fernando Veloso

13 years ago

This is always a controversial issue, isn't it?

Personally I really don't care anymore. If people don't want to pay what I know it's fair, let them choose some other company, why not. I DO know this: my time is precious. My knowledge is precious. If a customer doesn't want to pay me (or my team) to deliver them proven channels so they can make more money... it's fine:

Me and my team will use our dedicated work and knowledge in MY network and make more money this way.

Different technique, same result: profit.

Offline business owners have to step up their game, and realize the world is just a little bit different from 1980. If people prefer to keep their head on the sand I simply don't give a doink anymore.

New markets are born everyday. Thousand and thousands of new web users are born everyday. This is getting a world wide business that is getting BIGGER everyday.

And who KNOWS the in's and out's of this new world? WE DO.

So why bother?

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enterpryzman

13 years ago

This may sound too harsh but exactly how much do you think a chiropractic ( PT ) customer is worth to the chiropractor ? If using health insurance, $ 1,000. is most likely very high. If private pay, it will be too high, the only way I can see this much value would be an accident or work related case.

I know several of these Docs and 2/3 of the ones I know ( not my clients in any way ) are having a hard time earning a living because of too many Chiropractors.

I think when I go and pay my co-pay, they get $ 20. from me and greatly reduced ( by health insurance ) payments for services.

I would love to see exactly how a $1-k value is determined.

Best wishes,
Enterpryzman

Originally Posted by seomoney

Offline consultants should stop thinking they should charge chiropractors and other offline businesses less than what it costs to advertise in the phone book, newspaper, mailers, etc...

Offline consultants should charge them more, not less than what the phone book costs. Lets say the phone book charges chiropractors $2000 a month and it only gets them 2 new customers VERSUS your services that generates that gets them 5 new customers a month. Why would you try to be cheaper than the phone book when you can easily charge $5000? You already know they are willing to pay $####.00 per new customer.

Also do not lower your prices when they say do cannot afford $####.00 a month. Remember you don't help your wallet by lowering prices, you only help the person trying to get a lower price. Chiropractors that consistently advertise in the phone book, newspaper, radio, mall kiosk, coupon mailers, and trade shows can easily spend north of $8000.00 a month.

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FormerWageSlave

13 years ago

The saying, "If you think you can or think you can't, you're right." applies here. It's not about whether you are just starting out or not. MichaelHiles is right. Can you calculate the value of your service and determine ROI before your first campaign? What is the cost to acquire and the LTV of that customer?

I could teach a total noob how to do it today and tomorrow he could be charging his first client appropriately.

It's not about how new you are, it's about whether you know what you're doing or not.

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grrr...

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MichaelHiles

13 years ago

Originally Posted by FormerWageSlave

The saying, "If you think you can or think you can't, you're right." applies here. It's not about whether you are just starting out or not. MichaelHiles is right. Can you calculate the value of your service and determine ROI before your first campaign? What is the cost to acquire and the LTV of that customer?

I could teach a total noob how to do it today and tomorrow he could be charging his first client appropriately.

It's not about how new you are, it's about whether you know what you're doing or not.

"How much value can I create for my client?"

"What is the value of what I do for my client?"

"How much does my client spend on average to get the same results using a different method?"

"Where does the result of what I do fit into my client's overall business process?"

How often do you see these kinds of questions being asked on Warrior Forum? We already know the answer. Instead we see things like "How much can I charge?"

Most of what I read from people on here is completely self-focused.

It has nothing to do with you. It has nothing to do with how long you've been doing it or how much you can get per month.

When a consultant gets over this particular hurdle in their perspective and their business, it's no longer an issue of how much you can charge, because that is already established based on the understanding of the value that you create.

And guess what? It's not cookie cutter because each business in each segment is different.

I'm starting to believe that I could make $10 million per month buying every lead that Warrior Forum readers generated in multiple segments at prices that would probably blow their minds, and simply arbitraging the lead to end user buyers for the real value.

That's because I know how to sell based on true LTV of the customer, which is a lot more than you realize.

What is the lifetime value of a customer to say... a dry cleaner?

$1500

That's what the average customer is worth to a single local retail dry cleaner operation... $500 a year for 3 years average. I happen to know this as a fact.

So if the average profit is say... 30% of that amount... or let's just say $500, what is it worth to them? 20%? $100?

Would you pay $100 now to get $500 over the next 3 years?

Maybe, maybe not. Probably more maybes than maybe nots.

So if you'd pay $100, then would you pay $1000 to get ten of these a week?

That would be how much? $4000 a month?

Of course, I'd better be delivering those 10 a week that stick, which means I need to generate far more than 10 to walk in the door.

Now this is just a hypothetical scenario (well not really, I have a pretty large chain of drycleaners as a client) but you can understand the thinking that goes into the formula -- and it starts with the value to the client and understanding the world in which the client lives.

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enterpryzman 13 years ago

I agree that all have a value and I think you would have to agree more need dry cleaning than many other services.

Completely agree with your % as well. I read all the postings here and it bothers me that some charge next to nothing but equally bothersome are those who say a certain value of a client not stating how or why or even if that value is correct.

As an example, I am a funeral director. Many feel that funerals are huge profits and I had a company try to sell me on a program by stating the average funeral is almost $ 10-k ( which is not actually true ).

I belong to an accounting/consulting group that handles bookwork / accounting for more than 5,000 of the firms in the USA. That is almost 25 % of the total.

According to their data, the average profit nationwide is about $ 400. USD per traditional funeral. Not very much for that 10-k total bill is it ?

My only point is that the money is not always what it appears to be meaning values can be easily over estimated.

Regards,
Enterpryzman
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rafterman

13 years ago

just starting out, you cannot charge four figures. It's impossible. You have no credibility. I'm charging about $300 per month for the clients I get.

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sgcattent 13 years ago

Originally Posted by rafterman

just starting out, you cannot charge four figures. It's impossible. You have no credibility. I'm charging about $300 per month for the clients I get.

Agreed, I honestly think as well that you could catch a Biz owner with half a brain, and he would figure out pretty quick that it may not be a good idea to drop 4 Figures on someone with no real results to show for anyone else in the market place. I know I sure as hell would'nt!
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Will Perkins

13 years ago

Originally Posted by pethanks

Maybe in some cases it is true but I think today you can also find cheap consultants who can deliver good result. Just look for them.

Not in an offline market though. If you do, like everyone has said... they're undercharging.

If you run a company, and lets say your average customer will spend $500.00 a year with you. Now I'm going to build you a web presence and draw in at least 100 customers a year. Now lets say I charge $1,000.00 a month to do services A, B, and C.

Considering I'm bringing you $50,000.00 in brand new customers, you should be able to pay me that $1,000.00 a month.

And when you think about it, if you're a good and quality offline business, the customers who like you are going to come back and probably spend more than $500.00 a year. Not to mention the fact that 100 customers is only the tip of the iceberg, the true value that could be brought to you is seriously higher.

Originally Posted by rafterman

just starting out, you cannot charge four figures. It's impossible. You have no credibility. I'm charging about $300 per month for the clients I get.

And you most certainly can if you position yourself right. I've done it before, and it's not too hard to do. Yea sure, clients are hesitant but if you stay persistent and are really going to bring some value to the table, they'll bite.

Small tip: Agree to only charge whatever it will cost you for the first month, show them the results, then require them to pay the four figure monthly payment from thereon.

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Fernando Veloso

13 years ago

When people start a connection with YOU with low cost services, they expect ALL your services to be low cost. Keep that in mind.

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MichaelHiles

13 years ago

WITHOUT QUESTION!

The fact that someone built a financial case on wholly faulty numbers shows that they aren't even in touch with their supposed market - what a crash and burn.

And you're supposed to trust these people waltzing in with BS numbers in some half-arsed ROI conversation? What ELSE are they BSing about?

This is the entire point. Successful B2B selling isn't some arbitrary pitch. It's purely ROI driven - which means that you must understand the prospect's business as well as they understand it. If someone goes in pitching some number without actually having an understanding to the RETURN ON INVESTMENT calculation for a business, and why their proposal is going to net that client a better ROI than what they're presently doing... what do you suppose will happen?

I harp and harp on this issue - because it is the critical dividing line between selling to tiny mom & pops who are barely making it, and selling to larger businesses. I am literally exposing the one key factor that a consultant needs to know in order to open bigger doors. Assimilating and properly leveraging the ROI discussion - which requires that one also understands their prospects present cost of customer acquisition, and the lifetime value of their customer.

There's a reason the focus around here is mom & pop - because it doesn't require an understanding in these gateway issues to getting bigger contracts, and mom & pops have no clue about their own ROI, LTV and cost of customer acquisition.

So you don't actually have to really build any business case - it's almost like selling an ebook on Clickbank via a slick emotional pitch in a sales letter.

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Kpick

13 years ago

I have to agree with the original post. I see some folks giving their service away.
I just signed a client that was spending $4,200 a month on advertising.
Our local service brought in twice what he was getting on the advertising.
It was a very easy sale at $750 a month for local SEO services.
Just take a look at what other advertising is costing a business in your area first.
A full page Yellow pages ad in my city is $3,600 a month.
Our local SEO services are easily worth the same.
Just my opinion...
K

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Vic Smith

13 years ago

I find that if you offer a set of services that will be around $750.00 to start and $300.00 per month, most small businesses think they can handle it.
I started out doing $4700.00 start with $300.00 per month. This was an all inclusive that went nowhere.

What are the sweet spots for all you warriors doing offline services?

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Offline Consultants Should Charge More Money!

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