One of the hardest things to do in front of a company is to set prices. Whatever you are selling, fixing prices (or investing) is extremely difficult, no wonder we have endless discussions and opinions on this topic.
Regarding consulting, things become even more difficult when deciding how much to charge, even if it is a percentage, due to the intangibility characteristic of the service. According to Merriam-Webster, something tangible is:
- a) Something capable of being perceived especially by the sense of touch: Touchable
b) Substantially real: Material - Something capable of being accurately identified or perceived by the mind, example: Her sadness was tangible.
- Something capable of being approximated to some value.
On the other hand, something intangible is:
- An asset (such as charity) that is intangible.
- Something that has abstract quality or attributes.
In short, something intangible according to the dictionary is something abstract, not corporeal. This means that consulting adds value, intelligence, strategy (and even financial results), but everything that is tangible in a consulting service is a by-product, and therein lies the great difficulty in defining the price of these services.
I have priced things wrongly and correctly and with that I have learned many things for a long time, for these 7 years that I serve not only as a consultant, but as a consulting owner. I do my best to be fair – which means I tend to price things at a level where any company can invest, regardless of size. And what’s more, I’m going to publicize one of my pricing strategies now, which is a price specially designed to fit indie developers’ pockets. My thinking, after analyzing this effort, usually runs to the following question: how much would that company pay, monthly or for the duration of the contract, for ONE of the professionals needed to do what needs to be done?
Well… It makes sense, doesn’t it? You hire a team of experts, who definitely know what they’re doing and, in exchange for not opening a new position, with all the costs and risks involved.
But get this – I’ve been using this strategy for quite some time recently and what have I heard about it? That my cost was crazy (yes, the guy actually told me I was crazy) – and that he owned a marketing agency (???). I stand here wondering how much he pays his team in salary… Anyway. Another anecdotal sample comes from another indie developer who, rather than discussing pricing, started discussing how unique our Business Intelligence techniques were. Seriously? This is the same as taking a different brand of chocolate that you are used to and being surprised to the point of starting a discussion with someone about how this new brand is also capable of producing chocolate. But what the heck!?
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My view of these experiences is that, due to intangibility, people imagine that consulting should be free. That decades of accumulated knowledge, tools and experience are worthless. I wonder what they would think if they asked that question to themselves. Is your knowledge of no value? Of course! So why wouldn’t mine have?
I’m grateful that we were also able to find fair deals with most of our prospects (although I still get annoyed with these people I just mentioned above). I would say any pricing is difficult, but putting a value on collective knowledge and effort is much harder than anything else I’ve done.
