I don’t like pricing projects. Many factors torment me—imposter syndrome, the fact that I don’t have the imaginary ‘shield’ of a large brand behind me, and most vividly, we usually don’t know (both parties) what we’re getting into.
In that context, many advisory firms default to time and materials pricing. Not so fast.
Procuring Services: A Metaphor Using Food
In this newsletter, we’ll explore how you can secure better deals from providers, focusing on the desired outcomes. We’ll use a common metaphor—food and its various procurement methods—to illustrate different service engagement models and the corresponding pricing expectations. Here are the four critical scenarios:
Catering or Private Chef Project
Scenario: You need urgent, on-site support (e.g., investigative, crisis management, training, or keynote speaking).
Pricing Expectation: The supplier’s charges should be at the top of their usual range. This is because they should be at the top of their game (to fulfil such tasks). Additionally, the provider dedicates their entire time to your project, often at the expense of other work, including non-chargeable functions like administration, management, and marketing.
Questions to Consider:
- What is the project’s scope, and how urgent is it?
- What are the specific deliverables (focus on outcome, not input) and timelines?
- Do they have testimonials and demonstrable experience (referees, not fancy brochures)?
- How will success be measured?
- How will the provider’s availability be managed, and what are the contingencies for unexpected issues?
- Are there any additional costs for urgent or on-site work?
Restaurant Project
Scenario: Normal advisory work, including framework agreements where you select options based on the complexity of the work required (e.g., low, medium, or high risk).
Pricing Expectation: The provider should charge mid-range fees. There are economies of scale, especially in framework agreements, which lower the costs of sale and improve delivery (e.g., templates).
Questions to Consider:
- What service options are available, and how do they align with your needs?
- Can the service be customised (e.g., specific adjustments like “chillies on the side”)?
- What are the established products and services that both parties agree upon?
- How are costs determined, and what factors influence pricing?
Cookery Classes
Scenario: You’re doing the work with guidance, often around implementation, usually with pre-defined ‘ingredients’. This might be on a mentoring or access retainer basis.
Pricing Expectation: Although fewer deliverables exist, be cautious about expecting this to be ‘cheap’. You’re paying for expertise, outcomes, and simplification of complex tasks. If you were taking a loved one to see a medical specialist, you’d probably not go on price alone…
Questions to Consider:
- What is the scope of the mentoring or guidance provided?
- How accessible is the advisor, and what are the terms of availability?
- What specific skills or expertise will you gain from this engagement (focus on knowledge transfer outcomes)?
- Are there any hidden costs associated with the guidance or mentoring (e.g., I’ve had people we pay on retainer for marketing support request that I watch X or Y pre-recorded video on a given topic - that is a time-suck and cost to me, and more in line with the following service level 👇)?
Buying Ready-made Sauces or Meals
Scenario: Purchasing books, subscription resources, assessment tools, and pre-recorded guidance.
Pricing Expectation: This should be exponentially cheaper. For example, access to a piece of content in a library of resources (we have around ~200 resources, productised) might cost less than an hour of my time for expert witness work.
Questions to Consider:
- What is the quality and relevance of the resources provided?
- Are there any reviews or testimonials from previous users?
- How comprehensive are the materials, and do they cover the necessary topics?
- How does customisation work?
- Is there an option for an “office hours” access/retainer to help implement and adapt the resources?
- Are there any additional costs for updates or supplementary materials?
By understanding these different models and asking the right questions, you can better negotiate deals that fit your budget and meet your specific needs and expectations. Bringing it all back to project/retainer fees versus time and materials - I have a trusted advisor who did most of the work on our brand positioning, marketing, and pricing. His background includes building online games, where psychology plays a huge part. He explained the argument against hourly pricing (in most contexts when acquiring expertise and/or advice) as follows:
“Selling by counting hours punishes efficiency and is a conflict of interest. The longer the work takes, the better for you. The same goes for charging based on output, where the more items you produce, the more you get paid. That incentivises overproduction, as the output counts even if it’s not helpful to the client.
No one is happy to pay for more therapy sessions, dentist appointments, or hours spent listening to a speech than they have to. When hiring experts, it’s not the amount of work that counts; it’s the results.“
If you’re working on the advisory side, look him up here: He helps you better provide value (i.e., the deliverable the client needs) rather than unthinkingly following an RFP and logging time.
If you’re a service buyer, which model causes you the most pain, and why? I am happy to help (no obligation call booking here), as I am now in the weird position of being the chief negotiator on buying decisions and trying to sell our services.
You can’t please everybody, so don’t try
A few weeks back, I was asked to be part of The Association of Certified Fraud Examiners’s “Job Task Force.” The ACFE had conducted a massive survey of its 90k+ members to understand what they needed, specifically around professional development and for the Certified Fraud Examiner qualification (pretty demanding, as I recall).
In many areas, the feedback was dissonant. There was too much of X and too little of Y, and then the next person would argue the inverse.
Some of the calls (for this task force, with ~15 of us) lasted four hours. As we progressed, it became clear that inputs are always secondary to outcomes.
If you’re involved in educating, training, and communicating expectations around risk, compliance, and sustainability, you will never make everyone happy (about the content, instructional methods, delivery, etc.). So don’t try. Focus instead on what you want them to be able to do with the newfound (or refreshed) knowledge and skills. Work backwards from there. Measure that. For instance, using questions that start with “I know how to…”