Charge what you're worth - How to raise your rate today to win business tomorrow

[00:00:05] Emily Stringer: Good afternoon, everyone. It's one o'clock Eastern, so we will go ahead and get things started here. Thank you so much for joining us today, for this afternoon's interactive webinar, Charge what you're worth how to raise your rates today to win business tomorrow, featuring Melissa Lieberman, executive coach, and founder of Melissa Liberman Coaching LLC. My name is Emily Stringer, and I'll be your moderator this afternoon. A little background on me, I work as a program manager here at MBO partners, and I've served in an advisory capacity to independent consultants, using our services for the past ten years. In total I've been with the organization for twelve and a half. Next slide, please. Here at MBO Partners we are contractor engagement and compliance specialists, and are the chosen workforce optimization partner for over a third of the Fortune 100. Our mission is to make it easier for large enterprises and top independent talent to work together. We make it easy for independence like you to start, run, and grow their business through our unique dual-sided platform. Leverage the MBO platform while you work with one of our enterprise organizations, find your next project in our marketplace, share ideas and earn cash and innovation challenges on MindSumo, or other, or join other like minded professionals for networking and community building in our MBO advantage program. There's something for everyone here at MBO. MBO has always been committed to advancing the next way of working, and we are far from done. We will continue to drive change on the ground, delivering the innovative solutions that enable both organizations and talent to thrive in a consistently changing workplace before we get started this afternoon. I have a few housekeeping items and friendly reminders for today's presentation. Number one. Please ensure that you are muted. Number two. At the end of today's presentation we will host a formal Q&A session. You can use the Q&A function to send us any questions you would like Melissa to answer. Number Three. We will be emailing a slide deck and recorded copy of the entire Webinar to all registrants within the next week. Number four. Lastly, you can follow along virtually in several different places. Visit us on the web at www.mbopartners.com/insights. Follow us on Instagram @MBO_partners, or follow the Great Realization or MBO Partners on LinkedIn. Next slide, please. [00:02:49]

[00:02:51] Emily Stringer: At this time it is my pleasure to introduce you to our speaker, Melissa Liberman. She is a former software executive who helped build a software as a service company from startup to exit. For the past ten years Melissa has been an independent consultant, just like you as a business coach who specializes in working with the independent consultants. Melissa is passionate about helping her clients create businesses. They never imagine where possible Melissa has developed a proprietary scale-IC framework that helps her clients profitability, and sustainably scale their businesses to a million dollars without sacrificing their business and life balance. She's the host of the grow, your bit grow your independent consulting business podcast. Melissa. At this time I will turn it over to you. [00:03:42]

[00:03:45] Melisa Liberman: Thanks, Emily. I appreciate it. And i'm so happy to be here today talking about how to raise your rates. So rates today. So let's not wait until next year. We're going to focus today on the formula for you to raise your rates. And not only um increase your income here in Q4. But also set a really strong foundation for 2023 or next year. So with that, what I, what we are focused on helping you to walk away with today is a playbook to help you raise your rates. You know how to raise your rates and when to raise your rates, and for whom to raise your rates and some very tangible strategies in order to do that. So between the content that I'll share with you here at the beginning and the Q&A time that we have together. We've made ample room for Q&A today. So be sure to you thinking about your questions. We want to make sure that you walk away with a very clear plan about how you're going to go and raise your rates for your business and start putting what we're talking about today into practice. Ultimately we want to help you make more money, not only in Q4, but, as I said, really set the stage for a thriving 2023. Doesn't have to be dependent on what the economy is doing or any of those external factors putting the types of practices in place that we'll share with you today is going to say this stage for a really predictable more thriving income stream for you next year. [00:05:20]

[00:05:21] Melisa Liberman: So with that, let's talk very specifically about the agenda. First I'll walk you through, why now, and is the best time to raise your rates versus waiting until January, for example, or waiting for maybe in your next project. Then the second thing we'll talk about is the ways that you can raise your rates so very tangible ways that you can raise your rates both from a quick to win perspective, as well as a quick to deliver perspective, so that you're creating those revenue infusions. And then we're going to talk about how to determine how much to increase your rates by, and give you some tangible tools around that, and I'll share with you an important prerequisite that you want to have in before you raise your rates. Most people don't think about this. It's incredibly important, and then we'll wrap up with the five steps you can use to raise your rates, including a case study around that. And then, like I said, our goal is to give you some ample time for Q&A so that's what we're focused on here today for our agenda. [00:06:21]

[00:06:22] Melisa Liberman: So let's dive into the first thing, which is, why now, why now is the best time to raise your rates. So often I hear consultants tell me I'll wait until next year, or as soon as it's the as soon as strategy, As soon as X, Y, or Z happens, then i'll raise my rates as soon as I know, for sure the client is happy with me, I'll raise my rates, as soon as maybe the next quarter comes I'll raise my rates. Is this a sort of we'll call it elegant way of it sounds very rational, but it's really you kicking the can down the the road. And so we want to help you with that today. So Emily's first going to talk about how Q4 can be pure profit is such a such a great way to look at why Q4 is a great time of year for your own business, and then I'll talk with you a little bit more about deciding when to raise your rates for different scenarios. So Emily, tell us why Q4 is A. Is a great time to raise your rates. [00:07:22]

[00:07:22] Emily Stringer: Yeah, Melissa, you and I had a great talk around this yesterday and one of the unique things about Q4, especially for many of the consultants that MBO services, you know so many of you have already hit your social security tax gap for this year at $147,000. Once you finish paying into social security, you're effectively putting 12.4% of whatever you are paid in taxes back in your pocket. So if you would hit that cap, you are taking home additional profit. It's an additional revenue infusion into your business, and that is why Q4 is the time to capitalize. [00:08:00]

[00:08:01] Melisa Liberman: So good we don't often think about that. So it's such an important thing to think about as a business owner. And then the second thing you want to be thinking about about why now, So why? Q4, specifically, is a great time to raise your rates. As I mentioned before, the common mistake made by consultants is that we think later is usually better. There's a lot of justification and rationalization that later is probably a better time to raise rates. And so we kind of build our business model around that. And then, you know, I've worked with clients who who come to me consultants, independent consultants, who say, I actually haven't, raised my rates in two years or three years, or sometimes never, never have having raised rates. And so that's a common mistake that consultants make is not infusing this idea of revisiting rates and raising them as part of your business practice as part of your business practice. And so it really has nothing to do with the time of year, a quote unquote being the best time. There's nothing about January that's more special than October, certainly right now is a great time to be talking about clients to raise rates, because they may already have their budgets in place for next year. They may be working on their budgets for next year. So you want to be baked into that at your new rates, and not them making assumptions that you'll be continuing to charge the same rate, moving forward. And also they they a lot of clients of your consulting clients have budget that's left over that they need to spend, and you want to be able to take advantage of that. So there are so many reasons why now is the best time to revisit your rates, no matter what time of year it is, the you know. It's always something you should be thinking about as a business owner, and one of the ways to do that is to really set some business policies around what it looks like to raise rates for you. It might be always raising rates prior to your next engagement. It might be raising rates at the point, you know, talking with clients a month before your contract is due to run out, and you're needing to do an extension. So putting those business policies in place for yourself, so that you know exactly when you're going to have these inflection points. You can schedule them in your business calendar, and ultimately avoid that second guessing and avoid that rationalization that occurs in the moments through that process. So that's about, why now? [00:10:50]

[00:10:51] Melisa Liberman: Now let's talk about ways to increase your rates. So these are those quick to win and quick to deliver revenue infusions. I've given you quite a few examples here on this slide. I'll touch on a few of them. But the most important thing that I want to emphasize here is that you are a business owner. Sometimes it's easy to get stuck in the trap of thinking of ourselves as contractors, or you know someone who, especially if you have one client, a longer term client. It almost feels like you're actually, you know, an extension of their organization, versus you are a business owner, and it's critical for you to ask high quality questions of yourself and answer those in order to find the the opportunities that you have in your own business, based on your own experience and business model. [00:11:41]

[00:11:42] Melisa Liberman: So the question that I would encourage you to ask and answer yourself as part of your own business is, how can I make X dollars, or whatever your currency is. We'll use dollars for now. How can I make X dollars more per quarter, for example, without working more? Or how can I make X dollars per month without working more? Ask yourself those types of questions, the types of questions that what like, such as why can't I get past this particular bill rate? Those are not very helpful. Your brain will tell you all the reasons why you might be stuck where you are right now versus shifting the nature of the question to something where you want the answer to this. How can I make X dollars more per quarter without working more? And you'll come up with some answers like I've shared with you today to get you started, that you can start implementing for yourself in your business. [00:12:40]

[00:12:40] Melisa Liberman: So a few examples, quick to win examples might be increasing your rates for existing clients. Sometimes we think that's off limits. You may have a contract in place. You may have, you know just an agreement in place. You don't want to rock the boat. Now I'm not telling you a 100% you should go out and raise your rates for existing clients, because I certainly don't know your particular scenario. But what I will say to you is assuming that you cannot raise your rates is not going to get you to potential solutions where you realize, you know what there is opportunity for me to raise my rates even in the middle of an existing contract and exploring that versus just deciding, you know It's not possible for you. So often I work with clients, and they tell me things like, you know this is just the standard rate for my industry. I've done market research. I've talked to other consultants. This is what we all charge. This is, you know, a fairly mature industry, this is just how it is, Melissa, and so, as we dive into their business and understand more about the nature of their experience, the nature of the problems that their clients are wanting to be solved, the value that the clients are getting and it's nine times out of ten where those clients realize, you know what this industry rate that I was arguing with Melissa exist isn't actually applied to me. That there are so much more latitude in terms of the rates that i'm charging, and I don't have to be feeling stuck in some in some rates that feels feels like a plateau, so that gives you a an example of the quick to win, and you'll want to look through these ideas that i'm sharing here. [00:14:31]

[00:14:32] Melisa Liberman: For other ideas that might, you know, spur some, some thinking for you about what you want to pursue, and then you will also want to be thinking about the quick to deliver side of this equation. So quick to deliver is also a a huge benefit because these are things where you can get in and out at a clients. They're typically much more profitable than you charging by the hour, for example, and allow you to even potentially bring on multiple clients at one time rather than being stuck working at one clients, you know, for multiple months, or even sometimes years on end. So these types of quick to deliver projects or something to look at as well for you to increase your bottom line essentially, and your business things like strategy work where you really coming in, and maybe it's a two week engagement or a six week engagement, you really coming in and creating a strategy for the clients helping them to charging them, based more on the value of that strategy versus on the amount of time it takes you to create it, and then you free yourself up to decide. Do I want to work on the actual execution and implementation, or do I want to turn that over to someone else? And ultimately, you know, create a revenue stream for myself with someone who's delivering while I'm doing more of the upfront work. That's a great example. You might also take on retainer type work where it's only taking you an hour to a week potentially, but you're bringing in that type of revenue, additional revenue stream for yourself. So those are a few examples I've given you some others here as well for quick to deliver, but I just want to re-emphasize for you to ask your own question about your own business. How can you increase that amount? You're bringing in every quarter without needing to work? [00:16:21]

[00:16:23] Melisa Liberman: You'll come up with some great answers for yourself that you didn't even realize that we're kind of percolating in your brain. So now let's talk about how much to increase. So I want to share with you a couple of tools here. One of them is a great tool, the MBO has on their websites, the link is here, or you can just Google MBO bill rate calculator, that's what I did when I was writing this slide, and it came up. And then you'll go through four steps, it asks you, and this is really important, because it's not only asking you to set bill your bill rate, and what you think is, you know, appropriate, based on the scenario and your experience, and what the client is wanting, but it also is important because it helps you to think about what you're charging more holistically. It helps you think about what your expenses are, for example, and your margin, and so many times when i'm working with independent consulting business owners. This concept is not something we think of purposefully we think about what the bill rate is, and we think about what very naturally you know what the clients are paying us, but you know I've had clients come to me and say, look, we'll sign billing out over a million dollars a year in revenue. But i'm taking home less than a hundred thousand dollars in revenue. That is definitely not a business model that any of us would want to sign up for right. And so this is a great calculator from a bill rate perspective, because it helps you to look at it much more holistically, and we'll give you a data point. Now again, you don't want to rest on just one data point. But this is a great data point to fold into your strategy. [00:18:07]

[00:18:08] Melisa Liberman: Another data point that I will share with you, I created for you is a what I call the independent consulting pricing assessment, so you can go ICPricing.com, the letters, I and C, and then the word, pricing.com. And I've created this very specific assessment for you where you'll answer twelve questions, and then it will give you a personalized action plan to help you to understand where you have opportunity to raise your rates and to increase your revenue, and to start folding in pricing methodology and process into your business, so that you can ultimately increase your revenue and your profit in Q4 and set yourself up for next year, as we've been talking about. So those are two really helpful tools that will help you to start figuring out how much you want to increase your rates by. We'll talk a little bit more about more details about how to figure out those steps here in a moment. [00:19:11]

[00:18:08] Melisa Liberman: But before we do that, I want to talk with you about a prerequisite. Most of us completely overlook this prerequisite, and it's incredibly important and valuable for you to implement as part of your process wherever you're thinking about raising your rates, whether you're charging by the hour, or whether you're charging more of a fixed fee type of a model, or even when you're moving into value based pricing, this is really important. And what it is is the way you're thinking about yourself, the way you think about yourself and what you do, the way you think about the work and the value of the work, and the way you think about your clients, and what value they are associating to you, and the work that you're doing. So let me give you an example of this. I had a consulting business owner client who was ready to raise his prices, and as he was going about it I started noticing language as he was describing it to me, That made it very clear that he felt up as himself as a vendor. He thought of himself as a vendor or a subcontractor to the clients that he was working with, and he felt as though you know it came across in a very subtly, but you could tell that he felt very subordinate, and even inferior to those clients that he was working for, with, and for. And so, as we started building out his strategy of how he was going to raise his rates and start shifting in away from a time based into rates that value based rates. What we realized is that, that shift was incredibly important for him to start thinking about himself very purposefully as a trusted adviser, as someone who is an expert in what he does, as someone who's up here to the clients that he's working for and with, in order to approach and work. You know everything from the way that he was emailing them to the way that he was, communicating with them in meetings, to understand that our requirements and build on a proposal to the language in the proposal and the way he was carrying himself. You can imagine the difference, though, that stark difference between approaching a process where you're talking with your clients about money and about rates, and about billing when you're thinking of yourself as someone who's subordinate to them, or as a vendor to them, versus when you're thinking about yourself as a peer and as someone who's an equal and a trusted advisor and an expert, it becomes a night and day in terms of your ability to articulate your value and sell whatever it is pricing that you're proposing to them. [00:22:10]

[00:22:11] Melisa Liberman: So from that, let's read and finalize here the slides, and then we'll dive into Q&A. So I want to share with you to hold all of this together the five steps to raise your consulting rates. So the first step is, and I'm just going to skip to the next slides because I'm going to pull this in with a case study. The first step is to get clear on why you're raising the rates. Why are you raising the way you calculate your rates or your bill rate, whichever and whatever your pricing model is, why is that? A lot of times we think about it in terms of you myself, right? Why am I worth $200 an hour versus a $150 an hour, and thinking that we need to justify our own value, our own experience. But what I'll share with you is really think about this from the opposite perspective. I had a client who came to me, this is the case study, you know, and that's the way she was thinking it, Melissa. How could I possibly be worth? You know, $225 an hour, $250 an hour? And she gave me all the reasons why you know she didn't think that she was worth that. And so what we did is start thinking for her about what is the value that you're delivering to your clients. What are the outcomes that you're delivering to your clients, and for your clients, and with your clients? Why do they value that? What value do they associate to it? What is the cost to them of not doing the type of work that you do with them, and start thinking about it from their perspective versus your perspective and trying to justify why you're worth $200 versus a $100 an hour. As an example when you start thinking about it from the value, perspective, and the outcome perspective, even if you're charging by the hour you start identifying new and unexpected ways for you to to articulate your business case.  [00:24:14]

[00:24:15] Melisa Liberman: Then the next step of the process is to sell yourself first. So this client that I was describing to you, you know she felt terrified, that's what she told me, I just feel terrified to go in and talk with, you know this client that I have especially because it was a follow on project. So the client already knew that her you know what her past rate was, and she just felt terrified of having to go with feeling like she had to go in and sell herself and explain away why this rate was, you know, almost doubling. And so we work together. And this is something that's really important for you to do is to sell yourself first where you're going from, terrified to confident, because if you weren't sold on this process yourself first of whatever you're going to raise your rate to be, it becomes incredibly a shaky foundation from which you're trying to sell to your clients and create a business case for selling it to your clients. [00:25:18]

[00:25:18] Melisa Liberman: So that's the next step of the process is to do the work for yourself as a business owner, to create that confidence ahead of time, not based on how they're reacting, but confidence ahead of time, in order to make, you know, make a very clear and articulate business case for what the new rate will be, whether it's an existing client or a brand new client. The first step of the process is to create your plan. So what is your plan? And again, you may want to look at this from a new business perspective versus an existing business perspective. So for this client. Specifically we create a new pricing for her where she knew that she was going to increase her pricing for new clients. I think it became It came down to 35% or so, and as a stepping stone she's had multiple stepping stone since then and then existing clients. She decided that she could sell herself on a 20% increase. So it doesn't have to be across the board, but I also want to point out that you don't have to leave existing clients at zero, that you do have opportunity here to really think specifically about each type of client, and what makes the most sense from a business plan, a business justification perspective. Again based on the value you're the same person they've been working with. We're talking about the value that they're getting from the work you're doing, and adjusting your prices accordingly. [00:26:54]

[00:26:55] Melisa Liberman: Then you're going to want to go ahead and obviously implement this new plan. And so that comes down to creating specific account plans. So what does it look like? You might have one client right now that you're charging on an hourly basis. So creating an account plan for yourself. Think about things like who are the influencers, who might I socialize this rate increase with to get use as a sounding board within this organization before I present it more formally like, really create a plan for yourself about how you're going to message the rate increases, how you're going to navigate the rate increases and get buy in, how would it benefit your client to have a re-increase, for example, to consume the remainder of their budget for the year. It would be an example. And then, finally, after you've implemented those account plans, it's imperative to evaluate the work that all of the work you're doing on your business and fold those lessons learned into your sales process, so that you can continuously grow and continuously improve the way that you're operating your business from a sales and marketing perspective. So with that I think we're ready for the Q&A, Emily. [00:28:13]

[00:28:15] Emily Stringer: Awesome Melissa. I think this is great advice for anyone out there looking to give themselves a raise hearing Q4 for beyond, as we all need to do sometimes, it's one of the most frequent questions I get. So we've had a number of questions come in and why don't we start by laying down some framework here, so we'll start here. What are reasonable or typical bill rates? [00:28:41]

[00:28:43] Melisa Liberman: That's a great question, and very and incredibly varied. So it very much depends on the nature of the work that you're doing. It depends in some cases on the industries with which who you're consulting to, it can depend on the type of work that you. So we've talked about the nature of the work. It can also depend on the you know the level of whether it's more on the strategic end of the spectrum, or the more tactical end of the spectrum and ultimately what the value is to the clients. So are they looking for an extra pair of hands? That's one kind of one lens from at which to look at bill rates and typically clients will think about it, as you know, If I were paying a full time employee, how much would I pay this person? And that's the way they're thinking about it. You can start shifting that conversation by thinking about it, as you know, what is the value of them having an extra pair of hands? They don't actually need an extra pair of hands to have an extra pair of hands right? They're wanting to accomplish something. And so it's imperative for you to elevate that conversation so that they're not just thinking about you as sort of this partial, you know, FTE, they're thinking about you in a different way, and setting yourself up for that, so to give you numbers. I've seen, you can add to this too probably, Emily, because you see a lot of data behind the scenes. But I've seen bill rates that range from anywhere from $25 an hour. I wouldn't necessarily recommend that. But again, it depends on the nature of the work all the way up to thousands and thousands of dollars an hour. I have one client that i'm working with right now, whose goal is to generate a 100k per client per month. So I share that with you to help you to see that this is there's a huge broad range, and really the sky is the limit in the sense of figuring out. You know the rates that you might not even have crossed your mind are are being paid out there. [00:30:49]

[00:30:50] Emily Stringer: Melissa. I think that's wonderful advice. And for anyone looking for where to start, i'm figuring out what to charge, hop over to the bill rate calculator. It's a wonderful starting point. It's a great kind of a benchmark in terms of how to think about your rate. So it is certainly not one size fits all. So along those lines. What is a standard annual increase for consulting rates? [00:31:15] 

[00:31:16] Melisa Liberman: Yeah. So, i'll give you the the non-answer, and then a few ideas. I mean, the non-answer is really, there is no standard. You and I were talking about the other day so I was like asking you. You have so much data that you have access to there really is no standard. The standard that's the biggest problem that I see in our industry is 0%. That's the biggest, probably the most common answer that I hear again with a lot of justification about why now is in a good time, and why later might is definitely better, which is essentially a really a elegant way of staying in your comfort zone, and so I definitely would encourage you to not use 0% as your default, and really look at you know what makes sense? I mean from an inflationary perspective. I don't know, you might know this number, Emily. I think, the other day I was looking at 18%-19% look to be the current inflationary average at the moment, so you could think about it from that perspective, you could think about it from the perspective of you know, looking back across the last, you know X number of months that I've been working with this client, what are the tangible value that they haven't have experienced as a result of the work that I've been doing with them, and quantify that, also look at what the intangible benefits have been, and quantify that, and come up with with using that as another data point. So really, and you can use the bill rate calculator as another data point, so doing some research again to the point of being able to create a business case for yourself, and also to sell yourself on whatever the number is that you choose can be incredibly valuable. And if you just don't know and you feel stuck, you know, just pick a number 10% or 20%, and use that as a starting point. And then I have a many clients right now that are using that as their starting point. So i'm not just giving you that number out of the blue. It is something in real life, and use that as a starting point, and then figure out where your business case kind of fits against that. [00:33:27] 

[00:33:28] Emily Stringer: Absolutely agree. The worst they can say is, no. [00:33:30] 

[00:33:31] Melisa Liberman: That's right. Yeah, I think we get so worried on that topic, Emily, I think we get so worried about. I'm gonna burn up bridge. A client the other day, said I'm worried I'm going to offend them, I said, how would you asking for more money? What from a perspective of you know this is about you, the clients at the consulting client, not about you, the why you need more money. That's not the way you want to approach it. When it's about them, how would it be that they could be offended, or that you could burn a bridge? You're having a business conversation between two business people. [00:34:08]

[00:34:09] Emily Stringer: Absolutely, absolutely. Awesome. Thank you for that advice. I think a lot of people need to hear that, because you can certainly be an inhibitor. [00:34:17]

[00:34:18] Melisa Liberman: Yes, it is one of the main inhibitors. [00:34:20]

[00:34:23] Emily Stringer: On that note. How do you change rates for clients who are mid contract? [00:34:26]

[00:34:18] Melisa Liberman: This is another one where a lot of times we just think, you know so many of us are rule followers. I'm. I'm a role follower by nature. So we think you know it. We're not allowed to have a contract in place, we're not allowed to, or have permission to revisit the rates. Now, i'm not saying that you should back trade, and you know, if everything is exactly the same as it was when you created the contract, which most likely in our dynamic economy right now that probably isn't the case, there was 18% less inflation when you negotiated the contract. But with that being said, he is always important for you as a business owner to think about, does it make sense to revisit the contract that that we created and to talk with my client about the pricing. Most likely you know a lot more that you know a lot more now than you knew at the time that you that you created, that whatever that pricing was, so, the assumptions could be very different. For even if you're charging on an hourly basis, versus a fixed fee type of arrangement, your assumptions can be very, very different on the nature of work that you're doing on the types of deliverables you're creating for them and the level of expertise you're using on a day to day basis. Most likely you've there's been some scope creep that you just allowed to happen, which is not a problem. But that's whether it's scope creep in terms of the amount of time you're spending or scope creep in terms of the nature of the work that you're doing again. That's another reason why it might be important or very valid for you as a business owner, to reopen these conversations. So again, ask yourself from a perspective of why would it make sense to  reopen these conversations as both a benefit to me as the consultant, but more importantly to my clients, and then go to to work solving that versus making the assumption that it's not okay to revisit a conversation in the middle, you know a rate or pricing in the middle of a contract. [00:36:41]

[00:36:42] Emily Stringer: Absolutely, and you know I'm watching the Q&A chat here. I've seen a couple of people chime in on this, and it looks like we have a number of people who have been bold enough to actually ask for the increase. But they're clients haven't followed through on giving them the documentation to raise the rates, so that's where you've got to get it in writing, get it signed, get a new SOW, get the correct documentation from your client to really finalize that to make sure that you see that money come through to your bottom line. [00:37:15]

[00:37:17] Melisa Liberman: Yeah absolutely. And a lot of times, again as business owners, it can be easy to become passive around this. We don't want to be too pushy, we don't want to seem too aggressive. For those in the chat, it's like your bold enough to go have this conversation and so then it's a matter of following through and really making it as easy as possible for your client to process this I mean so often, it's kind of like dating in a way this happens so often where I see, you know clients say yes, I'll increase the rates, or they say, yes, I want to work with you, and then and then it kind of becomes a vacuum. It goes dark, and you feel in some ways you might even be ghosted. And then we make up all these stories in our head about why they change their mind, or why they don't want to follow through with it, because we've done something wrong, and really it boils down to, they were too busy to deal with the thing, and it just went on the bottom of their priority list. And so it's really important to make it the the process as smooth as possible for your clients whatever that might need to look like, for you know, to keep the ball moving forward. [00:38:34]

[00:38:35] Emily Stringer: Absolutely. Yeah. So to keep on this trend. Melissa, what would you say are the best practices for justifying that rating increase? [00:38:44]

[00:38:44] Melisa Liberman: Yeah, this is really important, because a lot of times what ends up happening is we tend to over-explain. So we go in there like I'm going to be courageous. I'm going to talk to my you know client about increasing the rates, and then we just sort of word vomit on them, and it becomes really awkward and uncomfortable for us. And so the way that I love to do this is using that five step process that I gave you a minute ago of really thinking about. Why is it about them and not about you? Why is the rate increase attached to the value you're delivering to them, attached to the outcomes that they're wanting and experiencing from the work that you're doing, and not you going in and saying, You know I don't think you would say this, but I've heard it in that, you know, from people where you know I need more money to be able to keep doing this work for you. You know, just to be really direct a client really doesn't care if you need more money, the client cares about them themselves, and so framing it in that way where you're able to make it about them, and why it's a value to them, and why you're really you're making adjustments your pricing to reflect that can be really important. And then see less is more, less is more, less is more. Make your case. You may want to have something in writing as a one pager, or it may just be something verbal depends on the nature of the conversation, but really going in feeling confident versus needy, and having that conversation from as business owner to business owner, not as client to vendor or client to contractor, but as business owner to business owner. [00:40:29]

[00:40:30] Emily Stringer: Absolutely and the less explaining you have to do, the more confident you sound in your case. So I love that advice. I think that is incredibly on point. So what are some of the common mistakes that consultants make when they are trying to raise their rates? [00:40:44]

[00:40:45] Melisa Liberman: Yeah, the first is really underestimating so much that we're good at comes naturally to us, and we don't even realize that this is a value to the clients. So a lot of times, you know, as we've been talking about thinking about the raising of rates from the clients perspective, and why what you're doing for them is more valuable than what they're paying you to do it. Thinking about where that value gap, and what might be come second nature to you. That's incredibly valuable. That you might think is just kind of anyone can do it when that's truly not the case. So first and foremost, really thinking about, and not on that mistake, is underestimating your value, and not realizing that what you're doing for that clients is incredibly valuable, and then the pricing and the rates should be commensurate with that. I touched on this earlier, but not making it about you. You don't want to make the mistake of making it about you and what you need. You want to frame it in the way of why this makes good business sense is a business case for the clients, and in a lot of times can even benefit them to pay you more. You're seen as more senior, you're able to influence, help them influence more within their organization can be a good example. There's so many examples, you consuming more of the budget, so they don't lose it next year can be a good benefit to them. So again, thinking about the benefits from their perspective, and definitely not delaying this is that mistake we touched on at the beginning is as soon as X, Y, or Z happens, then I will ask for for the increase. Really, flipping that on its head and thinking about why is now the best time to ask for the, you know, to make the case for the increase. [00:42:36]

[00:42:37] Emily Stringer: Absolutely. I completely agree with that, Melissa. So on that note, you know, we have a number of folks shining in about, what happens if the client has cheaper options, or what happens when they can outsource? What would you recommend in those situations for folks who are up against that? [00:42:56]

[00:42:56] Melisa Liberman: Yeah, there are definitely a lot of situations where folks are up against. And so, one of the important things si to differentiate yourself. If you're truly consulting, I'll call it as a commodity, and it's easy to compare apples to apples, and it can be, you know, a risk to you and your business that a client would outsource something or offshore something, instead of paying you for the expertise and the quality of work that you're delivering, and the experience that you bring to the table. And so you want to be able to get to the place where you're differentiating yourself and what you create, what you deliver, and the value and the outcomes that why, it makes sense for clients, you know. I'll give you a great example. When I was consulting before I became a coach, when I was consulting, we had a situation where the client wanted to build a custom application for something, and so, as the client thought about it, it seemed very commoditized. It's like I just need this application. And it was it was a fairly straightforward application. It wasn't anything incredibly complex. So they thought, you know this is kind of a commodity, and they decided to offshore it. And so, as many of you on the call probably know that that's ended that you know that ever experience It ended very badly. They ended up throwing away a couple of hundred thousand dollars, because, even though it felt really kind of simple to deliver against, and they went that route. It would make much more sense to hire someone like you like who's an expert who can deliver against that, and it may end up in only costing them 150k. In this case it costs 350k, because they wasted the 200k. And then paid someone who had the expertise 150. So it's incumbent upon you as the consultant as the contractor to help educate the client. Help make yourself stand out that you're not a commodity, that you do have some value additional value to apps, and bring to the table, and therefore that's why your pricing is as it is. [00:45:06]

[00:45:07] Emily Stringer: Absolutely clients. Get what they pay for. That's why, you know, even if a client doesn't want to work with you at a higher rate, you keep that relationship, and you educate them so that they know who can do the work correctly, and that you bring to the table. [00:45:22]

[00:45:22] Melisa Liberman: They could be very well come back to you. [00:45:24]

[00:45:25] Emily Stringer: They very well may come back to you right. So, how can I shift into pricing that isn't based on hourly or daily rate approach? [00:45:33]

[00:45:34] Melisa Liberman: Yeah. So there's a very common term in our industry called value based pricing, and so that can be a an incredibly lucrative and also freeing business model for you to start transitioning into or making a goal of transitioning to. If you're not there already, and what that essentially means, and this is a very large topic, but to really boil it down very specifically, a lot of times people think that means that it's success based. So if the client made this much extra money, then you would take some percentage of it, or if the client saved this much money, you would take some percentage of it, that's called success based pricing. We're not talking about that we're talking about value based pricing. This is you really understanding as part of your sales process, what the ultimate quantify what the value is to that client, the outcomes that you're helping them to achieve both, from a quantitative and qualitative perspective and getting a business case together that says, you know what this is going to look like it's going to add a 100k to your bottom line to the client, or this is going to save you, you know, two hundred million dollars, you know, whatever the range of this of the work is that you're doing, and then helping and then pricing that accordingly, because think about it. If you're having a conversation with the client, and you both are at the place where you've create this business case, and you want, and you both agree that you know this is going to save them a million dollars or help them make a million dollars more, for example. And in the corporate real world a million dollars is really nothing, then, think about when you say to them, my pricing for this is a 100k. It becomes very more of a no brainer. The context is different. Versus when you come to them and say, my bill rate is $275 an hour, they think about it in the way of breaking down their own salary, and what they would be paid and so you want to have a different way to compare, to help the client compare and trust what they what they the way that they're comparing your bill. So you know, something else they may be familiar with contextualizing it. [00:47:50]

[00:47:51] Emily Stringer: Yeah, absolutely. I very much agree with that. So guys will have the time for a couple of more questions here for those that we don't get to. We'll address this for you via email, but we will get through as many as we can in this short amount of time we have together here today. So, Melissa, on that note I've got to tricky one for you what we typically deal with. How would you think someone in a stereotyped offshore country negotiates rates with clients in the U.S. or Europe? Though I bring more value from the local consultants at times in terms of skill and experience. My location alone is cited as a justification for a fifty percent difference. How would you think I should go about this? [00:48:36]

[00:48:37] Melisa Liberman: Yeah, this is a great question, and it definitely happens. And so you've got to take that into account with your approach. And again, you know one of the best ways to do that is to help elevate the conversation like we've been talking about. If you're able to demonstrate to your client the depth of your knowledge, the depth of experience that you have, and help them to see that you're able to help them. Avoid making this costly mistakes. If they were to choose another consultant, and approaching your sales process in that way, they're going to be seeing you as a trusted advisor. They're going to be seeing you as someone who they're willing to pay, you know X amount to accomplish you know a certain outcome for versus trying to turn you into a commodity where, you know, in their minds, because this is the way we've operated for probably the last twenty years when when started offshoring and outsourcing, and all of those kinds of things. In their mind, they're thinking I'm going to get a better deal by working with you, and you want to be able to shift that conversation so that they can see that you're you're as qualified, if not more qualified than the other people. They may have met in other geographies. [00:49:57]

[00:50:00] Emily Stringer: Absolutely. I think that's a great approach that's fantastic advice. So we had a couple of folks chime in about renegotiations where you know there's room in the budget, but the client will agree to the higher rate. So Melissa, in cases like that, what do you recommend folks do? Would you say they keep negotiating? Or do you walk away? [00:50:23]

[00:50:24] Melisa Liberman: Well again? It depends on the scenario, but I think you have to be willing to. You have to know for your own business what your bottom number is and not compromise with yourself on that. Have confidence that you're able to go land business that does meet or exceed that bottom number. So you've got to make some decisions for yourself as a business owner what that looks like, first and foremost. Then secondly, as you're thinking, and those numbers might change based on the conditions, I was talking with someone earlier today, who in the last couple of weeks their spouse's finances have shifted, and so now their business, their spouse was kind of bringing a lot more money to the table, and so there was less immediacy needed on on their business side, and now those conditions have changed a little bit, and so the the bottom number for that person is lower than it was, you know, a couple of weeks ago, so that that can shift a lot. But you want to make that up as a purposeful decision versus in the moment kind of figuring out a lot of us sync in our heads. They all make it. I can figure out how to make it work. We're good at that. That's what we do as consultants, but that's not what you want. You want to be able to have some of those boundaries and guidelines for yourself, going into those kinds of conversations. [00:51:45]

[00:51:46] Emily Stringer: Absolutely. I completely agree with that. You know what you're feeling in your floor are for a standard professional services client, might be different than what it is for a nonprofit where you love their mission for a startup, where you see room for growth or investment, so everybody has to decide for your situation. What's the floor? What's the ceiling of work to do? [00:52:08]

[00:52:09] Melisa Liberman: And then very specifically to that scenario you just gave me, Emily, that you know the client has the budget, and they're not budging on you. I think you've got to take a step back and say, how have I approach this? How have I just articulated, why, the rate is increasing? How have I articulated the value that they've already been getting, and will continue to get, or potentially even more value than they have been getting? What does that particular client or decision-maker care about? And then crafting your business case around that your talk track around that. And it may be you get to a place where you say, I understand where you're coming from, and for the next two months I'm willing to continue working in this capacity, but at the beginning of the year we need to figure out the path for me to that would look like this pricing based on the conversations we've been having. [00:53:03]

[00:53:04] Emily Stringer: Certainly. So we had someone chime in and ask, what are some great resources for finding retainer work the kind you mentioned earlier, short term, right? It doesn't interfere with your main project work. I've got some recommendations there, Melissa, right If you're looking for something like that. There are a couple of places you can go head on over to MBO's marketplace, set up a profile, go bid on some work. Great place to find project based work. Same with PWC, it's talent exchange, and there are a plethora of other options out there. If you are looking for open kind of open source work, so we certainly recommend that check it out. And hopefully, you have some luck finding a project for you. [00:53:51]

[00:53:53] Melisa Liberman: In addition to that, I would also recommend that you become ingrained in one or two organizations where your ideal clients are spending time and becoming a trusted advisor, and from a networking perspective within those organizations developing relationships, creating a name for yourself, and really using some old school networking tactics in order to create a roster of those retainer clients. I see it happen time and time again where we try to over complicate things, when there's literally market, you know, marketplaces like MBO out there. Work is already is needed, and so you can bid on them like you were saying, or even more old school is just networking and leveraging your past relationships, and a lot of times we get in our head about what not wanting to come across as needy or not wanting to bother someone or not really knowing how to talk with our existing network about what we do, and why it might benefit them or someone they may refer to us. So really creating yourself a business process around how to create a pipeline of new business for yourself from a variety of different inputs and methods as well as different types of work, like retainer work versus project work would be an example. Yeah. [00:55:17]

[00:55:18] Emily Stringer: Absolutely is one of my former colleagues loves to say, your network is your net worth. And I think that is incredibly true. [00:55:26]

[00:55:26] Melisa Liberman: For yeah, yeah, absolutely. So go figure out what you want to do as a retainer, and then back into that by who you know who would benefit the most and create a networking plan around it. [00:55:36]

[00:55:37] Emily Stringer: Definitely. So I think we have time for one, maybe two more questions, Melissa. So I will throw this one your way first. What is your opinion of having different rates for different situations, i.e. a higher rate if a client takes longer to pay a higher rate for a project with less hours, a lower rate for a project that's full time. What is your position on that? [00:56:03]

[00:56:04] Melisa Liberman: You're a business owner? You get to decide everything, and you know you get to decide what you want your business model to be. Sometimes it's simpler to just to have one or two types of services that you offer retainers, or project based work. Sometimes it makes perfect sense to have very, you know, rates based on the scenarios that you just described Emily. I always like to look at it from two different perspectives. Why do I want to have it? What is the driver for me making these different rates? Is it because of some fear? Is it because of a lack of confidence? Or is it because I'm really clear on why this? The value of this is different than the value of that, and what it means for my clients, and what it means for me as a business owner to deliver. So really getting clear on what the reason is and making sure that you like the reason it's not off of fear. For example, lack of confidence that is a really important as you're moving forward through this, and then the other way that I like to look at is always thinking about it from the end state, what is my goal? From a utilization perspective? What is my goal? From the nature and the mix of the type of work that I want to be doing and thinking about how you want to be spending my day, my week, and my month delivering the types of work I want to be delivering and creating that ideal for myself, so that then pricing out and modeling that out to make sure that the that what I just created matches to my revenue goals, and using that as a way to double check, you know the different types of prices that you just listed out, Emily. [00:57:58]

[00:57:59] Emily Stringer: Yes, it does great. So last one, and I'll let you talk a little bit about this. Someone asked, what are the major tools out there besides the bill rate calculator to present your case? Market rate analysis, justifications, you know, how to write a business case. Maybe you can talk to us a little bit about that. [00:58:19]

[00:58:20] Melisa Liberman: Yeah, definitely. Think about it from the business case perspective. So, what does it makes? Again, figuring out best, asking as many questions and having the data points based on the experience that you have as to what the ultimate outcome is for a client. We hear this in different ways, especially in the marketing world, that we're here to sell benefits and outcomes, not features. Someone's not buying an hour of your time. For example. They're buying what you produce in that, and the benefit of the hour of that time. So really forcing yourself to get into a different vantage point than you might be used to. To think about what is the value of this, and that will help to inform the business case, that then you can create to discuss with the clients. It's really important. I think the other one that I touched on earlier, too, is you've got the actual, you know, kind of build up of what what the new rate would be, and the justification as to why that makes sense from a value perspective. You've also got to be thinking about it from the people perspective. How do you influence the client? Is it about you going to the the decision maker right away? How is that usually kind of the path within that client to success? Or does it make sense to go socialize this with other people in the organization, So that and i'm not talking about going and talking about. You know how much you're making or those kinds of things, but it's much more about. You know what is happening in the climate within that client? Where are they at with the budgeting season? Where does that make sense to get justification with the CFO? For example, like those types of questions to help create some additional influence for you as you're moving forward with the contract discussions. [1:00:09]

[00:57:59] Emily Stringer: Awesome. Thank you, Melissa. I think that's great advice. So on that note. Our hour together has gone by all too quickly, and we are at two o'clock Eastern. So, Melissa, thank you so much for your time for your advice. I think this is incredibly valuable for so many of our consultants. Thank you to our audience for your participation for asking the hard questions, the burning questions that everybody wants to answer to related to rate. If we did not get to your question in the presentation. We will get to you by email over the course of the next week, and we will email out a copy of this presentation in the next week also, so you will have it available if you would like to review some of the data and information we share here. So thank you all, and we hope to see you online again very soon. [1:00:57]

[1:00:58] Melisa Liberman: Thanks, Emily. Bye. [1:01:01]