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(usually somewhere around 10% of our total target fee income for the year)
Minimum Level of Engagement.
“This is the size of client it makes sense for us to work with, so if you decide at some point that you would like to work with us, we ask that you be prepared to commit to fees at or above this level over the year.”
Project work is a byproduct of pursuing a small number of more meaningful engagements. We use it to fill gaps in capacity, but it is not the mainstay of our practice.
“Before I say no, let me ask you a few questions.”
We must dispossess ourselves of the notion that we can operate on thin profit margins at the beginning of a new client relationship and then work to increase those margins over time.
We know that profit margin, like power, only diminishes with time.
We Are Hired to Begin at the Beginning
Our opportunity for profit margin in the engagement is greatest in these first two phases and diminishes from there.
No client will willingly allow us to reverse this natural trend and command more profit margin as time goes
A key test remains to win while charging more.
Guarantees → Clients may attempt to negotiate because they are unsure of the value of our services. In these situations we can consider guarantees as alternatives to discounting. Not guarantees of return on investment – for too many variables remain out of our control. Not guarantees on our entire spectrum of offerings – for they may be used against us late in the engagement.
It is appropriate to guarantee the first phase – diagnosis and prescription – of a phased engagement in order to reassure the client of the value of moving forward
There is far less risk in this guarantee than there is in pitching free ideas...
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before we discount we should consider offering favorable terms that let the client pay over time.
We Leave it to Last → First, we will ensure that cutting price is the last thing we
“If we were to agree to this price, is there anything else to stop us from deciding to work together right now?”
We will treat charity as charity and not confuse it with business development.
there is no shame in being upfront with a prospective client about working cheaply or for free to amass expertise.
Our premium pricing will cost us clients from time to time; but if we are not losing business on price occasionally, then we are not charging enough.
Conversely, if we need to win on price, we are not setting ourselves apart as experts.
Every client on our roster deserves our fullest attention, our best service and our commitment to fixing mistakes.
The surest way to commoditize our own thinking is to sell it in units of doing: time.
Later in the engagement, when the strategy work has been done and we are deep into implementation work, the client buys our time.
Our strategy – diagnoses and prescription – is how we do what we do. The strength of our strategic processes, rooted in our deep experience and systematic thinking, is what ensures our high likelihood of a high-quality outcome. This is the basis of the premium we command, therefore we should not be charging for it in units of time.
charging more improves our ability to help our clients and increases the likelihood that we will deliver high-quality outcomes.
We see what others cannot. We can conceive what does not yet exist. At our very best, we have it within us to lay out the future and lead people to it.
