You’re speaking with a current client as part of your firm’s adopting IMPACT based pricing. This is a significant change from hourly billing.
In most cases, it takes a knowledge services firm several months to fully adopt the IMPACT Based Pricing mindset: “We deliver life changing IMPACT for a fee proportional to that IMPACT.”
Now you’re excited to share the good news with clients.
And they say
- “I don’t understand.”
- Or “How will I know I’m getting my money’s worth?”
- Or “I like the old way better.”
The Client-Provider Conversation
I designed two powerful conversation guides to help you. You do not need to make it up as you go!
The ISSUE Chart
This is a familiar quad chart that puts the issue and the client’s status regarding the issue into a clear picture.
Once you’ve introduced the fact that your firm is adopting IMPACT Based Pricing and you’ve heard the client’s comments or objections, you introduce Issue Chart.
In case you missed my point: Do not try to overcome their objections. They’ll dig in deeper, and you’ll get nowhere.
You say, “let’s talk about the issue you’re currently facing.” The client agrees.
You show them a printed or digital version of the Issue chart and ask them where are they?
Is the issue an annoyance, or is it on the critical path? Whatever they say, you have to extend the conversation. Simply say “Tell me more.” And then LISTEN!
Once they’ve said everything about this, ask them if they are making progress or if they’re stuck.
Again, after they select one, say “Tell me more.” And LISTEN.
The Continuum of IMPACT
Once you’ve repeated your understanding of both the issue and the progress status, you can look at the Continuum of IMPACT with them.
Ask them where on the Continuum, from Minor (1) to Monumental (10), the IMPACT they want falls.
It’s so simple: “If we delivered this IMPACT to you, where would it be on a Continuum of 1-10?”
They might pick a spot right away. Or they might want to discuss this with you, in light of other things going on. This is a huge conversation. Take your time with it.
You could learn enough to keep you busy with this client for months or years.
What’s Happening Here…
You have turned the conversation from billing practices to the real topic: the reason they’ve chosen to work with your firm in the first place.
And, by inviting them to select the status of the issue and the status of their progress on it, you’ve given them control of defining the need and the solution.
This is the exact opposite of what sales trainers say to do.
- “Tell them ‘we have the solution that’s best for you.’”
- “Convince them why this is.”
- “Tell them that the price or fee they will pay makes sense.”
The Issue Chart lets the client define the problem and the solution.
The Continuum of IMPACT lets them control the fee through the location of the IMPACT delivered.
This control is the ultimate response to “I want to be sure I’m getting my money’s worth.”
What is the Fee?
Notice, I am not saying that the client is in control of the dollar amount you charge. They know the range of fees they’ve paid before or what a firm like yours charges.
What they have done is given you guidance on the range of fees that makes sense to them for the life changing IMPACT you will deliver.
If they’ve located an IMPACT at the 8, 9,or 10 point on the Continuum you know they’re expecting a fee at the high end. You’d be undercharging if you don’t make an offer proportional to that location on the Continuum.
If they’ve placed the IMPACT at the low end, your fee needs to be proportional to that location. If that fee would cause your firm to miss your profit target, you can either decline the work or scope it tightly to ensure you make that profit.
Start with what you know
Your firm knows its required profit margin and its expenses. You have a track record of similar work for other clients.
Start with these figures. The first month or two of IMPACT Based Pricing may be a bit less than perfect. But soon enough you’ll get so practiced at this conversation and at pricing in proportion to the IMPACT that you’ll hit your profit target.
Don’t Just Read this post, DO this post!
You may need to read it a few times, but don’t wait till you’re an expert to start adopting IMPACT Based Pricing.
Have a few practices with colleagues to get the fumbles and stumbles out of the way. Build confidence.
Then invite three or four of your best clients (one at a time) to talk about your commitment to delivering IMPACT to them. It’s not an invitation to talk about pricing, it’s an invitation to talk about life changing IMPACT.
Adopting IMPACT Based Pricing is a process that includes your clients. It can’t happen without them.
P.S. If hourly billing is on your critical path and you’re stuck, I’ll help you get unstuck. Call or text 703-801-0345.