Q: As a consultant, from time to time, I need to adjust my pricing due to changes in offerings and alignment with the market. How should I handle existing clients in those times?
Savvy Noodle Communications
A: In decades of consulting, I generally hold the line on pricing for existing clients, who have helped me weather slow times, especially if they pay on time.
Consider it a “lifetime value of the customer,” and the fact that your time with the client also reduces the lost time spent on nonbillable preparation such as understanding the market. Certainly, at some point, squeaking those rates up a little bit at a time can keep things closer to your new client(s) rates.
One thing that’s important in dealing with your existing, or, in some cases returning, clients centers on your need to establish the reasoning for the change, and the continued value at the new price point.
Clients have no way of knowing the “going rate” for many services. Often, as a solo practitioner, even at your newly adjusted rate the firm gets a service for much less than it would from a larger firm.
Along those lines, it may be helpful to both you and the client to consider things from a more project-oriented approach.
Again, the market value of the finished work may be significantly more than your estimate of time and materials, but the client may not need the detail of dollars to hours in order to make a decision.
Other factors to take into consideration may include whether the work is directly for the client or through an intermediary, like an agency.
Intermediaries commonly markup subcontractor fees and the margin can range widely.
It may be as little as 10 percent, but more commonly it will be 20-30 percent. Sometimes the subcontractor fees may be more than 30 percent.
Remember that markup covers their cost of sales and a certain amount of administration that you do not have to do.
Perhaps, for a “golden egg,” I would go with a 50 percent markup, but for pedestrian work with pedestrian clients, more standard rates would apply.
Mike Porter is the faculty director of the MS in health care communication at the University of St. Thomas, Opus College of Business.