Pricing Strategies for Consultants

Stop inviting clients to shop your offer around. Big branding client. Discovery call. They're excited. Then I show them 3 options. Not one. Three. "Why would you give us choices?" they ask. "Doesn't that complicate things?" Actually, it simplifies everything. Here's what 30 years of running two 7-figure businesses taught me about options: • Option 1: DIY (10% price) Digital course. Templates. Self-paced. For those who aren't ready to invest yet. Infinitely scalable. Zero touch from you. They get value. You get a customer. • Option 2: DWY - Done With You (x price) Finite deliverables. Some customization. You do the work together. Sweet spot for most buyers. • Option 3: DFY - Done For You (10x price) White glove. Bespoke. Custom everything. Training, coaching, custom software if needed. You handle it all. They write the check. The magic isn't in the options. It's in what happens next. When you present one option, they think: "Should I buy this or not?" Binary decision. Easy to say no. When you present three options, they think: "Which one should I buy?" The conversation shifts from IF to WHICH. Psychology 101: People hate missing out more than they love getting a deal. Give them one option? They'll shop around. Give them three? They'll shop your menu. Your 10% option captures future buyers. Your 10x option makes your middle option look reasonable. Your middle option? That's where 80% of sales happen. Price anchoring and why it works. But here's what most people miss: Each option must solve the same problem. Just at different levels of involvement. Not different services. Different depths of the same service. What three options could you offer today? Have you tried options in your offer? What happened? Drop a comment below and share your story. Small Business Builders #pricingstrategy #salesstrategy #businessgrowth

Pricing and packaging is, IMO, the most underutilized, highest leverage tactic available to founders to make an impact on sales. At Gigya, we started with $10K ACVs and 5 years later were at $250K ACVs, largely due to improvements in pricing and packaging. Unfortunately, there is not much out there on the right way to approach pricing / packaging. Further, AI-based software, especially AI agents & teammates, are disrupting the old models. Specifically, the usual 'per seat' SaaS pricing model is no longer quite relevant when the software is doing alot of the work humans used to do. To help, I've outlined 5 core pricing & packaging pillars for (AI) startups: 1. Platform Pricing (flat or tiered) 2. Seat-Based Pricing (familiar, but can punish success if AI replaces seats) 3. Consumption-Based (pay-as-you-go, works well with AI compute) 4. Add on Pricing (A la carte features, with big upsell potential) 5. Outcome-Based (ultimate alignment, but hard to measure + forecast) Key takeaway: Think about how your product delivers ROI - then tie your model to that. It's probably going to be using a combination of these pricing strategies. Keep in mind what approaches are most likely to maximize value capture upfront (average contract value) and over time (net dollar retention). As a rule of thumb, aim for net dollar retention in the 120-140% to be best in class. Would love to hear your take - what's working (or not) in pricing, especially in this new AI software world?

Most founders are terrified of their own worth. The traditional business advice says: "Start low and build up." But after working with hundreds of entrepreneurs, I've learned something counterintuitive: Undercharging by 300% isn't just bad for your wallet, it's bad for your clients. Last year, I watched a brilliant consultant struggle with this exact problem. She was charging what felt "safe" instead of what she was worth. When she finally made the shift to premium pricing, something beautiful happened, and it changed how I think about creating fair value exchanges. Here's what I learned about honoring your worth while believing in mutual success: 1. Commitment Over Comfort When people invest appropriately, they're committed to their transformation. Fair pricing attracts founders ready to do the work, not just observers. I've seen consultants charge too little and watch clients disengage, then price fairly and see those same clients implement everything with dedication. 2. Partnership Filter System Fair pricing attracts the right founding partners for mutual growth. You're not just serving clients, you're choosing who you grow with. This creates beautiful partnerships where both parties are invested in extraordinary outcomes. 3. Excellence Creation Mechanism Appropriate pricing gives you resources to create exceptional experiences and deliver transformation at the highest level. When compensated fairly, you can focus entirely on results instead of worrying about covering costs. 4. Positioning Clarity Tool Your pricing positions the value of the outcome, not just the service. Fair pricing communicates the level of transformation you're committed to delivering and signals your belief in what's possible. 5. Abundance Building Practice Every time you price fairly, you're practicing abundance thinking. You're believing there's enough success for everyone and modeling the mindset your clients need for their own growth. 6. Sustainable Impact Engine Fair pricing creates the foundation needed to truly serve at your highest level. This sustainability allows you to show up fully and build long-term relationships based on mutual respect and shared success. This isn't just about charging more, it's about creating systemized, beautiful partnerships where transformation becomes inevitable. When you price your work fairly, you're not being greedy. You're being generous with your belief in what's possible for the founders you serve. The question isn't "Will people pay?" The question is: "Do you believe enough in the transformation you deliver to price it fairly?" The future belongs to those confident enough to value their impact appropriately. It starts with one conversation where you honor both your worth and theirs. __ Enjoy this? ♻️ Repost it to your network and follow Matt Gray for more. Want help applying this in your business? Send me 'Blueprint' and let's chat. Only for founders ready to scale.

25% of B2B companies expect to use outcome-based pricing by 2028. That's a 5x increase from today's 5%, according to Kyle Poyar's latest research.   This will be a painful, but ultimately healthy transition.   Buyers never wanted software in the first place. They wanted solutions. As AI handles more work end-to-end, pricing migrates from inputs (seats, tokens, usage) to outcomes (cases closed, revenue recovered, risk reduced). Less "how much did you use?" More "did it actually work?"   Thought experiment: if code becomes a commodity and features ship instantly, value shifts from building features to guaranteeing execution. You’re not selling software—you’re selling outcome insurance.   Objections are real—attribution is messy, procurement habits are sticky, and buyers hate surprises. But these are solvable with instrumentation, shared definitions of success, and clear guardrails (Manny Medina). Over time, buyers will demand outcome-based pricing because it reduces their risk. Where outcome-based pricing already fits well: AI-enabled services. Services own end-to-end execution, so attribution is clean and incentives align. Mechanical Orchard is a great example—using AI to move mainframe workloads to the cloud, taking ownership of the entire journey. When you own the “last mile,” charging for success becomes straightforward.   AI customer support vendors have also been pioneers of this model. More vendor types are on the horizon.   If you’re a founder, here’s a simple path to test outcomes pricing: • Pick one mission-critical outcome your product directly influences. • Define a verifiable metric, baseline, and observation window with the buyer. • Cap downside (floor) and share upside (tiers/bonus) to build trust. • Instrument attribution now—event logs, holdouts, and third-party validation beat hand-waving later.   Start with one outcome. One customer. One measurable result you can guarantee. We're still early in this shift, but the direction is clear.   For those already experimenting with outcome-based pricing, what's been your biggest surprise? And for those that haven't yet, what's holding you back?

Pricing team's work should never end. In an ideal world where pricing is upfront the cycle goes: Price--> Design--> Build (can someone point out who built this framework) While this is correct, it's not necessarily complete because it assumes your price in pre build phase is correct and needs no change all the way to launch. We know that is farthest from the truth. In the real world we need a lot more iteration in price: Step 1: Price: Goes without saying this stage you quantify value and price. This is where you figure out the WTP as well. Step 2: Design: With that price info, the product team builds a product that hits product and profitability targets. Step 3: Reprice 1: Now that we know the design constraints that impact the profitability, this stage gives you the opportunity to reprice the product based on the design. Step 4: Build: Now with that new price info and product roadmap the product goes through the build stage. Step 5: Reprice 2: Now significant time may have passed between initial price and build stage. The market for the product, the economy etc may have changed. This stage can assist in making last changes before product goes out. Good time to also establish guardrails for price performance. Step 6: Launch: Goes without saying the product is out in the real world. Great way to capture feedback. Also a stage where performance is measured against the price guardrails. Step 7: Reprice 3: Based on sales feedback, you start charting next steps. Selling too slow, you may need discount or reprice. Selling too fast, it may be overdelivering on price vs value. Pricing metric may need change. Fx may have changed. This is the price adjustment stage, should be annual or semi annual. You can incorporate these steps into new product introduction framework or annual or semi annual pricing strategy process, either ways it will help establish good pricing principles in the org. Some may say its overkill to think about pricing at each step, but pricing's role is to keep iterating the price, he model, and the metric.... I know of many products that once designed were never repriced years into its life.. Surely things must have changed all those years... Do you think its overkill and a waste of time ? -------------------------- I write about pricing, discounting, revenue management and careers.

Think overdelivering will keep your clients happy? Think again. Here’s how to avoid burnout as a consultant. When you shift from a full-time role to consulting, it’s easy to fall into an old trap: treating every opportunity like a full-time job. Overdelivering. Overextending. And ultimately, burning out. On a recent Business Building call with clients, I shared with them... "The most nefarious thing is the story we tell ourselves, but we’re also setting expectations by overextending." The story? That if we don’t give everything, we won’t land (or keep) the client. But here’s the reality: Overextending doesn’t just exhaust you, it sets the wrong expectations. Clients come to rely on extra hours, unlimited availability, or added scope... without understanding the real value of your work. The result? You undervalue yourself, misalign expectations, and risk sacrificing long-term success. Failing to set boundaries as a consultant creates: • Burnout: You feel drained, losing the passion that made you start consulting in the first place.    • Scope Creep: Projects spiral beyond the original agreement without compensation.    • Misaligned Value: Clients undervalue your expertise because they see your time as endless.    The Fix: Set Clear Boundaries To protect your time and deliver impact without overextending, implement these strategies: 𝗗𝗲𝗳𝗶𝗻𝗲 𝗬𝗼𝘂𝗿 𝗦𝗰𝗼𝗽𝗲 𝗘𝗮𝗿𝗹𝘆 Clearly outline deliverables, timelines, and expectations in every proposal. 𝗖𝗼𝗺𝗺𝘂𝗻𝗶𝗰𝗮𝘁𝗲 𝗔𝘃𝗮𝗶𝗹𝗮𝗯𝗶𝗹𝗶𝘁𝘆 Set working hours and response times upfront. Example: “I’m available for calls between 9 AM and 2 PM on weekdays.” 𝗦𝘁𝗮𝘆 𝗙𝗶𝗿𝗺 𝗼𝗻 𝗔𝗴𝗿𝗲𝗲𝗺𝗲𝗻𝘁𝘀 If additional work arises, renegotiate the contract. Example: “That’s outside the scope of our initial agreement—let’s discuss an add-on package.” 𝗥𝗲𝗳𝗿𝗮𝗺𝗲 𝗢𝘃𝗲𝗿𝗱𝗲𝗹𝗶𝘃𝗲𝗿𝗶𝗻𝗴 Focus on delivering outcomes, not overcommitting your time. Your impact comes from results, not the number of hours you spend. 𝗖𝗵𝗲𝗰𝗸 𝗬𝗼𝘂𝗿 𝗦𝘁𝗼𝗿𝘆 Ask yourself: “Am I overextending because I’m afraid of losing the client? What evidence supports that fear?” Boundaries don’t just protect you, they elevate your client relationships by reinforcing your value and professionalism.

Want to increase profits without chasing more sales? Here’s the truth: Most small businesses don’t need more customers. They need to make the most of the ones they already have. That’s where profit lives. When I look at a client’s numbers, I’m not just checking if revenue is going up. I’m looking at how much money is sticking after the work is done. And the fastest way to increase that? ✅ Upsell: Are you offering higher-value options or packages that make life easier for your client and increase your revenue? ✅ Cross-sell: What else do your clients need that you already provide (or could offer with minimal extra effort)? ✅ Review your pricing: Is your current price still right for the value you’re delivering? Has it changed since you started? ✅ Retention: Are you spending all your time chasing new leads, or investing in the clients who already trust you? Too many small business owners focus only on top-line growth. But more sales doesn’t always mean more profit, especially if you’re undercharging, overdelivering, and burning out. Focus on increasing value per client, not just volume. Because the clients who already trust you? They’re your biggest opportunity for growth. Want to work smarter, not harder? Start there.

Why I Tell Clients to Fire 30% of Their Customers The most profitable sales strategy I've implemented with clients? Strategic customer elimination This sounds completely counterintuitive, but here's why it works: 1. The bottom 30% of customers typically: - Generate only 10-15% of revenue - Consume 40-60% of support resources - Reduce team morale through unreasonable demands - Prevent you from serving ideal customers effectively - Have the lowest renewal/repurchase rates - Refer fewer and lower-quality prospects 2. When you systematically remove these customers: - Sales team capacity increases by 30-50% - Average deal size grows by 25-40% - Customer service metrics improve dramatically - Net promoter scores rise by 15-20 points - Team retention improves as frustration decreases - Your brand positioning clarifies naturally I recently guided a professional services firm through this process: - We identified their bottom 30% based on profitability and resource consumption - We created a 6-month transition plan with referrals to better-fit providers - We redirected the freed capacity to ideal prospect acquisition Results: - Revenue increased while serving fewer total clients - Profit margins expanded - Employee satisfaction scores rose - Average client lifetime value increased The most successful businesses don't try to serve everyone They serve specific customers exceptionally well Counterintuitively, the fastest path to sales growth often starts with strategic customer reduction Which customers are preventing you from serving your best customers better? P.S. Do you want to increase your sales? Send me a message

What do airline pricing strategies and F1 have in common? During my time at Uber and now as a consultant, I’ve witnessed the transformative power of dynamic pricing strategies inspired by tech giants like Amazon and Uber across many industries. The journey to mastering pricing in a highly competitive landscape is akin to Formula 1 racing: it's all about iterative improvement, adaptability, and relentless optimization. There are three levers to work with: 1. Price Elasticity Understanding how customers react to pricing changes has allowed us to forecast demand more accurately and adjust our strategies in real-time, much like how Amazon and Uber stay responsive to market shifts. 2. Forecasting and Optimization Implementing models to predict future demand and optimize pricing across various routes and times has been crucial. It's not just about setting the right price for today but finding the optimal price curve for the entire booking horizon. 3. Rigorous Evaluation The commitment to continually test and validate our strategies against actual outcomes ensures we're not just following trends but leading through innovation. By leveraging the data-centric and customer-focused pricing strategies of Amazon and Uber, we've enhanced our clients’ competitive edge and delivered unparalleled value. Our partners’ journey underscores the power of leveraging cutting-edge data science to navigate pricing complexities, ensuring sustainable success in an ever-changing market landscape. Read more in my latest blog post: https://lnkd.in/eNrbi9-X #innovation  #revenuemanagement #pricing

Assuming your firm still follows the practice of billing for time, you can run the calculations that will chart the eventual demise of your revenue model. If you’re like most firms, Generative Artificial Intelligence currently shaves somewhere between 20 and 30 percent off the time it takes to deliver work to your clients. What do you think that figure will be next year, or five years from now? Consider what kind of revenue stream will you have when time-tracking humans are doing only 5 or 10 percent of the work. Even the most hard-core defenders of hourly billing can see this compensation model is wholly unsustainable in the world of the AI-optimized agency. There is simply no way to monetize the value of AI within the framework of hourly billing. The solution to this dilemma requires agency professionals to remove the blinders that have them trapped in the illusion that they are selling time, efforts and activities to their clients. That’s not what clients buy; they buy solutions to their business problems. So the way to capture the value you create for your clients is to stop charging for the cost of your services and start charging for the value of your solutions. Every firm of every size can make this change much easier than they think. Instead of a chart of hourly rates, develop a chart of deliverables — a “pricing guide” that indicates the price (market value) of every deliverable your agency produces, and base your pricing on the work or solution delivered instead of the hours worked. In context of an output/outcome driven compensation model, it should be of no consequence to your clients that AI-powered tools are helping you create and produce your work. Again, they’re buying the outputs, not the inputs. So as AI helps you deliver your work faster and better, both parties benefit. Your clients get better quality work faster and the agency incurs lower costs — a win/win. Even if clients insist on slightly lower pricing (because they assume AI lowers the costs of your human capital), agencies can provide lower prices and still make a healthy margin on their work. In fact, agencies should be able to earn a much higher profit, even if they agree to lower prices, because AI is such a powerful force multiplier. It’s not inevitable that agency revenues will decline, because as AI continues to enable faster work, clients are assigning higher volumes of work to their agency partners. The result can be the best of both worlds: higher revenues from a higher volume of work, and stronger margins because AI is such an efficient virtual knowledge worker.