Tag Archives: Value based fee

Find your competative edge

If the perceived value of two products are the same, price will conquer. Imaging you are looking to buy a melon in the grocery store. You find two melons that look exactly the same but one of them cost 4$ and second one cost 5$. You investigate them a bit further and notice that the first melon is from Brazil and the other from Argentina. If you perceive them to have equal value to you, you will buy the cheaper melon. On the other hand you could choose e.g. Swedish pork over Danish pork even if the Swedish pork is 20% more expensive if you perceive its value e.g. the taste and quality is superior. This is where marketing comes into play. Read more »

Value based fees – fantasy or future?

Let’s say that you can provide a service to a customer that will save him $1.000.000  per year. What price would be reasonable for this kind of service? $50.000, $250.000 or maybe $500.000? What if your investment for providing this service only cost you about $5000 or let’s say 2 weeks of work. 2 weeks work translates to an hourly rate between $625 – $6250. This is a situation a consultant can come across quite frequently with a traditional hourly based business model. You could think that a price of $6250 per hour is way too high but should we not solve our customers problems as fast as possible? Read more »