SVP asked in another post:"What can I do to make my assignments more profitable? It's a serious question - I want to do fewer hours for more money, and reverse the downward pressure on daily rates that I've been experiencing lately. Do you have any little tricks I could use, e.g. quoting a fee then sticking a 5% office charge on top of it (every little helps)... would love to hear from you."If the question is serious, the answer is quite straight-forward. Charging admin fees is a terrible way to raise fee income, and it smacks of being cheap.No, the best way to make assignments more profitable is to increase your hourly rate. In order to do this, you'll need to demonstrate two things:1. The value that you're bringing to your client2. The unique proposition that you bring that your competitors don't.Point one addresses the fact that clients tend to gulp when they see fee rates north of £4K a day. That sounds like a lot of money. But if three months work can bring about a £1m annual cost savings, spending £240K seems a little more palatable. If the cost savings are £10m, it's more palatable still.Point two is about protecting your services from becoming a commodity. If your services are commoditised, you'll forever be competing on price. Fee rates will erode over time -- this is typically what's happened to all the big IT consulting and SAP houses.You need a value proposition that distinguishes your services from your competitors -- be it that you are the leader in your field, that you have a totally unique approach, a specialist technical skillset, a global reach, whatever. Just something that differentiates "you" from "them."

Thank you VI, I appreciate this.I have in the past attempted to demonstrate 'measurable benefits' (particularly financial ones/cost savings) in order to sell work, but have usually found that people are skeptical of this approach. In principle it sounds great, but in practice I'm not sure it helps me actually sell any work. Many of my projects don't necessarily focus on saving costs - e.g. an assignment might be about understanding customers better, which does of course eventually affect the bottom line but the direct link is difficult to convincingly quantify. I could just be going about it the wrong way however?I think your point about commoditisation and somehow differenting my offering is spot-on, though. I'm increasingly facing competition from small outfits and even freelancers, and it's difficult to keep up when "Mr Smith and a Laptop Ltd", ex-CEO of one of their main competitors but who retired last year, is offering his services at £600/day and I'm trying to sell a team of 3 fresh-faced graduates at £1,200 a day each.I'm anxious that I may need to start finding new turf... but if there is any way I can stay in the same sector albeit with some kind of different pricing proposition, this would be my preference.

well at least you've blown your cover. SVP? mid-level minion.

I refuse to believe that you can't create a value proposition for your work -- if your customers are buying the work from anyone, they must have a return-on-investment in mind.The easiest way to understand the value they're trying to achieve is to ask them directly.Take your example: understanding customers better. The dialogue would go something like this:You: "What about your customers would you like to understand better?"Them: "We want to understand what influences their purchasing behaviour when selecting a package holiday."You: "Why do you want to understand that better? What will you change about your own business in response?"Them: "Well, by understanding our customers better, we could accurately offer "bolt-ons" that help increase margin"You: "With a good understanding, what percentage of customers do you think you could sell bolt-ons?"Them: "10%"You: "And how many are buying bolt-ons now?"Them: "About 5%"You: "And how much is each bolt-on worth?"Them: "About £50"You: "So by improving your understanding, you could potentially sell a £50 bolt-on to an additional 5% of your 800,000 customers?"Them: "That's right"You: "Well, that's about £2m a year in incremental sales. I think we could accomplish this with an eight-week piece of work, led by myself and supported by three business analysts. Our professional fees would be £200K."Suddenly, you're not selling them a piece of market research or customer understanding. You're selling them a £2m/year sales improvement. And that's a lot easier to buy, and your fees are a lot easier to justify.

I'm not posting under any kind of 'cover'. I own a small consulting firm (~40 staff) which is doing OK but could as always be doing better. If for some reason my handle conjures up images of Donald Trump in your mind, then that's your fault, not mine. And for what it's worth, I've been a partner in a much bigger firm and left by choice because I wanted to get away from the corporate treadmill.

VI - thanks for this, the example has made it a lot easier to see what you mean. It looks like I may need to spend a little more time at the start of the sales process asking a few more questions and building up a 'unique' proposition for each client rather than just churning out boilerplate replies to their briefs!

VI - The more I think about it, the more I really like that example. It does create a direct link between something that may not be valuable in its own right, and the bottom line. If we take it a stage further back, how would you go about proving the value of, say, an IT project (e.g. putting together an IT strategy)?

Some light reading for you, if you haven't read it before and want a structured sales methodology to help ask the right questions:http://www.amazon.co.uk/SPIN-selling-Neil-Rackham/dp/0566076896SPIN Selling (Situation, Problem, Implication, Need-payoff) By Lawrence P. HoworthAsk the Question, Shut Up and ListenThe best salespeople are like expert detectives searching to find the exact needs of their customers and prospects. These needs are not exactly clear, so the detective looks for clues and puts the pieces together to better uncover the potential customer's hot buttons and close the sale. The best method for uncovering clues and needs is to ask the right questions. Here are a few ideas to help you understand how questions can separate great sales people from those that are average. Facts Don't LieIn the book SPIN® Selling, author Neil Rackham, discusses traits of the most successful sales people. Rackham observed 35,000 sales calls over a 12-year period and analyzed why some sales people succeed and others fail. He found that the best sales people are highly skilled at matching the needs of their products and services with specific, customer-defined benefits. This is easier said then done. Many sales people can claim to understand this concept, but only a very small percentage can pull it off. It is the art of asking the right questions and listening for solutions. Types of Questions to AskRackham found that top producers in sales ask four types of questions: situation, problem, implication and need-payoff, thus the title of the book SPIN® Selling. The book reviews what the best sales people do when qualifying prospects. They use probing questions to best meet customer needs and add real value. Situation QuestionsThese questions are used to gather the facts and data. They are concerned with the specifics of the situation and the customer. Examples of good situation questions include: What is your budget and time frame? How many employees do you have? How long have you been in business? How many children do you have? Other than you, who are the key decision makers? What do they do? What are you looking to do? What are your greatest challenges and goals? What is your vision for your business? What is your level of commitment? You get the idea; fact and data collection. Most sales people have very little difficulty in this area. However, the problem is most go no further in their question asking process. Problem QuestionsProblem questions are used to uncover the pain experienced by the prospect. This is step one in getting a handle on how you might actually help the prospect. Understanding why they need to buy your product or service is connected to what they are looking to change or fix in their lives. This can be described as the pain you are going to take away from them when they buy from you. Experienced sales people generally have a handle on these questions, however the real pros realize that before the sale can be closed, there must be a direct connection between the pain experienced by your prospect and the solution you are recommending. Examples of these questions include: Where are your problem areas? What would you like to fix? What is your current problem? What kind of obstacles are you facing in this area? Implication QuestionsThese questions are very important, as they determine the consequences of the pain and how it is unique to your prospect. Implication questions include: Why is solving that problem important? What would it mean for you? What are the implications of fixing that problem (cost/time saving)? How do you see this moving forward? Need-Payoff QuestionsThe final set of questions reveal how the product or services offered can add real benefit. These questions bring it all together so your solution makes sense to your prospect and they are ready to buy. Examples: How can I help you reach your goals? Why is this important? How would that help? Where do you see returns? How can my product or service help them/you do it better? Would it be useful if...? Is there any other way this could help you? What kind of benefits would you like to see?

IT Strategy questions to drive value:Q: Why do you want to change your IT Strategy? What isn't it delivering?A: We have too many disparate solutions around the organisation. Q: Does that make it more difficult to accomplish projects?A: Absolutely. We spend ages on configuration and trying to get our techology to talk to one another, and the bespoke nature of our solutions means we have significant vendor spend.Q: Are you considering moving to a more standardised, vanilla solution?A: Yes, that's where I think we'd like to go in the futureQ: How much vendor maintenance cost do you think you would save by moving to a more vanilla model?A: About £3m a year.Q: And what would having a responsive IT function mean to your business?A: We could respond to market conditions more quicklyQ: And how would that impact the bottom line?A: We could turn our inventory more quickly, reducing working capital requirements.Q: And how big do you think those savings would be?A: About 10%.Obviously this is a very truncated version of the real conversation you'd have. The point is this -- you're selling principle of the new strategy by demonstrating how it will operationally affect the organisation in question, and you're demonstrating how the new strategy will help the organisation improve effectiveness and reduce cost at the same time.Heck, you've just identified c £5m savings. The £150K for a series of strategy workshops, vendor shortlists, and strategy document seems like a bargain.

like the thought process VI - just a quick question. Would you not need to also know the margin on sales made by the client. So,extending your example of hol packages, if their margin was 5% on the £2m incremental sales, their profit would be 100k - eaten up by your prof fees so you may have to look to lower fees perhaps. However, if margin was 20%, then it may be more feasible to charge 200k as they'd be making 400k profit.I also know other factors have to be taken into account i.e. if the solution provided is sustainable, then it may generate a higher return in future yrs from a one-off expenditure on consultantsor am i completely barking up the wrong tree?

Yes, margins are important (although I tried to pick an example where the margins are sufficiently high for the sake of the example). But remember that even if the margins were low, theoretically these increased sales would be year-on-year -- so there should eventually be payback, you just need to work out how long it would take for the investment to pay off.On really big transformation programmes, payback often takes years.Both examples I've provided here are highly simplistic, but illustrate the point -- companies only ever spend money because they expect a return on it. If you understand the financial return they're trying to achieve for the spend, you'll understand how to position your proposal to meet those objectives.Remember that, in large companies at least, the economic decision-maker may not be the person you deal with every day. You may need to coach that person in order to get your proposal signed off -- "Look, boss, I know it's going to cost us £250K to do this project -- but this guy has demonstrated over £2m savings"

VI - you're good at this. Those easy-to-follow posts really are food for thought... in the space of 30 minutes you've convinced me that I really need to fundamentally alter my outdated sales methods!

VI - I appreciate your reasoning, but I think the theory can be quite different from the practice. Perhaps my client base is closer to SVP's in that it is actually fairly rare for them to have ROI in mind. The bigger drivers for the purchase of consulting services are that they are reacting to change elsewhere in the business model, in the industry, in regulation, or often as not in boardroom political balances. This makes it difficult to make an "economic" sale and lends itself to the relationship-based sale that smaller/newer firms can find it difficult to break into.However, I think you have brought up a very important issue which is understanding the client base and their reasoning process around the purchase of consulting services. Getting an honest idea of what drives the decision can be difficult enough when you're talking to your established client base who trust you; there is an innate tendancy to rationalise after the fact. Getting an idea of why clients who don't currently buy your services (the uncaptured market) don't buy them can be even trickier.SVP - Perhaps a targeted mini-market research project is in order. You can get an indepedent professional researcher to do this work on contract to reassure your clients that the results are anonymous. Based on this, your own intuition about your client base and the market, and comments from any clients-turned-consultants you can find, you might narrow it down to a couple of specific criteria where you can focus your efforts.For example, I've had public sector clients before who turned out to prefer having work structured as fixed-price, fixed-scope projects, even if these worked out more expensive than the time-and-expense alternative. This was because it was so much easier and quicker for them to get sign-off from elected officials and procurement departments. Getting consultancy support in a timely fashion, often with only a couple of days' notice, was their biggest need.Other clients I have worked with are more concerned about the risk of change and the net benefits. There are various approaches to risk-sharing that can go a long way to making the deal more palatable to the client even if, once the price schedules are risk-weighted, the services end up costing them a little more.

Anon, I agree that different projects are bought for different reasons. We started this conversation by talking about how to differentiate yourself and demonstrate value.In your response to regulation, the client doesn't have a choice -- being non-compliant is a deal-breaker. So if you want to charge premium rates for this sort of service, you need to demonstrate the economic risk of *not* buying your solution. Yes, you could by SOX work from the mid-sized firm of accountants, but how much would it cost you if it went wrong? Wouldn't you rather pay a premium but have the assurance that only a Big 4 firm can offer?Just throwing out examples for the sake of the conversation -- fully agree with what you've said.

SVP said: "VI - you&apos;re good at this. Those easy-to-follow posts really are food for thought... in the space of 30 minutes you&apos;ve convinced me that I really need to fundamentally alter my outdated sales methods!"Q: If you used these techniques with your clients, how much do you think you could improve your business?A: At least 10%Q: So 10% = 4 consultants @ £1200 x 200 days. That&apos;s an extra £192k in revenue.A: Wow, that&apos;s quite an improvement.Q: It sure is. My professional fees for this lesson are £10k. Where shall I send the invoice? ;-) <--- obligatory Claire smiley

VI! no no , thrice no!"Yes, you could by SOX work from the mid-sized firm of accountants, but how much would it cost you if it went wrong? Wouldn&apos;t you rather pay a premium but have the assurance that only a Big 4 firm can offer? "Well, they certainly offer *a* level of assurance when it comes to SOX!! They milk clients by wildly expanding upon the scope of work needed to achieve compliance, leaving clients in a mess when it comes to attempting to gear up for sustainment. What assurance do the clients get? They may become SOX compliant, but they also assure themselves that they’ll never go down the big 4 route again! I should know because I am making a future for myself by clearing up after you lot.

Well, you&apos;ve got to admit. The Big 4 are pretty good at keeping their fee rates up.