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Kevin C. Whelan

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February 28, 2021

Should you be a stickler for scope on fixed-fee engagements?

I’m a huge believer in offering fixed-fee, value-aligned services.

That means offering a fixed scope of work for a set price that is aligned with the value it creates for my clients.

Fixed-free pricing can get some people. Especially if they’re still thinking in terms of effective hourly rates.

The nature of most consulting gigs is that stuff comes up. Things change. Sometimes, you need to do more than you thought you would.

And if you price your fixed-fee engagements too low, you have no wiggle room for scope changes when they inevitably occur.

One of the reasons I have such good retention rate in my advisory services is that I’m willing to go above and beyond when required.

Like Apple, I rarely if ever pull out the “no” card unless it’s absolutely required, or when the scope changes for a consistent enough period of time.

The reason I can do that is because I price my services with some buffer. If things are a little trickier than usual, my fees can handle it without it becoming “unprofitable” for me.

Sure, that means my effective hourly rate decreases slightly for the projects that need a little extra attention from me. But I don’t care about that.

I care more about creating and sustaining client satisfaction, which results in longer, happier relationships, and therefore more profitable engagements.

Business is an emotional game. Saying no to clients or generally being a stickler for scope might win you the battle in the short term, but it damages the foundation of the relationship, which hurts you in the long run.

That’s why I always price my services with a bit of buffer while still ensuring the value is aligned with the upside for the client.

Value alignment and price buffer that makes for mutually successful engagements more times than not.

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