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This post nails the macro picture. Here's the micro version for every consultant billing by the hour.
AI doesn't just threaten your rates — it inverts your business model.
Hourly billing makes you hate your clients. It makes them hate you, too.
Think I'm exaggerating? Read these quotes from my clients' clients...
"𝘐 𝘴𝘢𝘸 𝘺𝘰𝘶 𝘪𝘯 𝘵𝘩𝘦 𝘰𝘧𝘧𝘪𝘤𝘦 𝘬𝘪𝘵𝘤𝘩𝘦𝘯 𝘮𝘢𝘬𝘪𝘯𝘨 𝘤𝘰𝘧𝘧𝘦𝘦 𝘢𝘵 10:17 𝘺𝘦𝘴𝘵𝘦𝘳𝘥𝘢𝘺. 𝘋𝘪𝘥 𝘺𝘰𝘶 𝘣𝘪𝘭𝘭 𝘶𝘴 𝘧𝘰𝘳 𝘵𝘩𝘢𝘵 𝘵𝘪𝘮𝘦?"
"𝘞𝘩𝘺 𝘥𝘪𝘥 𝘵𝘩𝘪𝘴 𝘵𝘢𝘬𝘦 𝘵𝘩𝘳𝘦𝘦 𝘩𝘰𝘶𝘳𝘴? 𝘔𝘺 𝘪𝘯𝘵𝘦𝘳𝘯 𝘤𝘰𝘶𝘭𝘥 𝘥𝘰 𝘪𝘵 𝘪𝘯 𝘵𝘸𝘰."
But here's my hands-down favorite...
My client: "𝘞𝘩𝘺 𝘥𝘪𝘥𝘯’𝘵 𝘺𝘰𝘶 𝘵𝘦𝘭𝘭 𝘮𝘦 [𝘤𝘳𝘶𝘤𝘪𝘢𝘭 𝘪𝘯𝘧𝘰] 𝘦𝘢𝘳𝘭𝘪𝘦𝘳? 𝘞𝘦 𝘤𝘰𝘶𝘭𝘥 𝘩𝘢𝘷𝘦 𝘥𝘦𝘭𝘪𝘷𝘦𝘳𝘦𝘥 𝘵𝘩𝘪𝘴 𝙩𝙬𝙤 𝙬𝙚𝙚𝙠𝙨 𝙖𝙜𝙤 𝘪𝘧 𝘐 𝘩𝘢𝘥 𝘬𝘯𝘰𝘸𝘯."
Her client: "𝘞𝘦 𝘸𝘢𝘯𝘵𝘦𝘥 𝘵𝘰 𝘴𝘢𝘷𝘦 𝘢𝘭𝘭 𝘰𝘶𝘳 𝘲𝘶𝘦𝘴𝘵𝘪𝘰𝘯𝘴 𝘧𝘰𝘳 𝘢 𝘴𝘪𝘯𝘨𝘭𝘦 𝘤𝘩𝘦𝘤𝘬-𝘪𝘯 𝘴𝘰 𝘺𝘰𝘶 𝘸𝘰𝘶𝘭𝘥𝘯’𝘵 𝘣𝘪𝘭𝘭 𝘶𝘴 𝘴𝘦𝘱𝘢𝘳𝘢𝘵𝘦𝘭𝘺 𝘧𝘰𝘳 𝘦𝘢𝘤𝘩 𝘰𝘯𝘦."
That client paid for two weeks — 80 𝘩𝘰𝘶𝘳𝘴! — of unnecessary time just to save 30 minutes of phone calls.
Who won in that situation? Neither side.
Tell me your (least) favorite hourly billing horror story!
"Shouldn't I charge what I'm worth?" NO.
Even when you're the face of your business.
Your business sells services. Your buyers decide how much those are worth, not how much you are worth.
No one else can decide your worth. But you can't decide how much your services are worth. Only buyers can.
Stop charging what you think you're worth. Set your price according to what your buyers will pay.
If you don't like how much buyers value your services, improve your services. (Or find better buyers.)
@peterakkies and I had a lot of fun recording this wide-ranging podcast, covering everything from the pitfalls of management consulting to pricing strategies to how I capture random thoughts in the shower!
We'd love to hear your thoughts ... and, of course, like, comment, and subscribe! :-)
Is working in management consulting as glamorous as it seems?
How can you improve your public speaking skills?
How can you use different pricing strategies to scale up your business?
I chatted with @ScaleWhisperer about this and more.
Listen: https://t.co/zRWFlScint
So many wrong questions about the Huberman story in @nymag.
The right question: What PR **god** did Huberman pay to lure NY Mag into running the story, 'How Huberman's methods enabled a 48-year-old to juggle six women at once'?
That's catnip for his target audience.
A subscription model could make sense for your business.
But you have to align what you're charging for with what customers value.
A heating and air conditioning provider would instantly drive away customers if it started charging for "air by the hour." But what if that company guaranteed its customers' comfort — summer or winter, day or night, whatever the reason?
"If your heater breaks, we'll fix it in four hours ... or put you in a hotel for the night at our expense." That's an assurance people will pay for.
"But Judson," you say, "we're a law firm. No one ever freezes to death because of our work."
Fair enough. But you can serve my legal needs for a fixed monthly fee. I don't want to argue about that five-minute phone call or whether it took you 16 minutes instead of 15 to review some document. Just handle my contracts and routine legal needs so I can focus on the parts of my business that make money.
That's a subscription I'll pay for. What's in it for you? The opportunity to bill me that same fixed fee in the months when I don't call you, don't email you, don't need you to touch a single document for me.
What ongoing value could you deliver to your customers for a recurring fee?
Don't be like this restaurant.
Offer one thing, and deliver it with excellence.
If you live in a touristy city like mine, you know at least one restaurant serving Chinese, Mexican, and Italian food from the same kitchen.
Do you trust this place to be excellent at any of these cuisines? No.
You might eat there because it's cheap or convenient. But you'd never pay a premium for it.
The same applies to your service business. You'll make more money as best-in-class within a niche than as middle-of-the-pack — 𝘰𝘳 𝘸𝘰𝘳𝘴𝘦 — to a wider audience.
If you hate doing something clients want, don't do it.
Or make it so lucrative that you won't hate it.
Why do what you hate as a solopreneur, especially if it isn't core to your value proposition?
Next time you negotiate a work scope, make sure you specifically exclude those tasks that drain your mental and/or emotional batteries.
Or include them in your most expensive offer.
Or offer them as a one-time add-on for a ridiculous upcharge.
But if you must do it, get paid for it. Life is too short!
Don't participate in RFPs. They're a sucker's game.
Here are five reasons not to play:
1. RFPs cut your margins: The customer designs the job specs so you can explain how cheaply you will deliver them. Do you aspire to be the Wal-Mart of your niche? I hope not. So, why are you playing the "everyday low prices" game?
2. RFPs water down your positioning: Responding to an RFP means shoving yourself into a box with half-rate competitors who compete on price. Aren't you better than that?
3. They’re rigged: As one IT expert put it, "If you hear about an RFP through formal channels, you’ve already lost." Most RFPs are sent so the decision maker can tell their management they competitively bid out the work. In reality, buyers feed advance info, hints, and suggestions to their preferred vendor.
4. The client makes all the rules: An entrepreneur's job is to create what the market doesn't know it needs. Nobody ever thought they needed a thousand songs in their pants pocket, but Steve Jobs didn't react to customer requests. He led customers to something better. By responding to an RFP, you let the customer dictate how you do your job. This is NOT what great companies do.
5. Tendering clients have no loyalty: Even if you win, the company's RFP rules will not go away. So, they'll host another beauty contest in a year or two, no matter how satisfied they are with your work. Even if you become the insider, do you really want to play the RFP game again for the same client?
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👋 I'm Judson, The Scale Whisperer. I help expertise-based businesses unshackle their revenue from hours worked.
If you found this useful:
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The first element of a qualifying conversation is "need": the client's desired future state and how you can help them achieve it.
Do they have an *immediate* need with which you can help? A few months from now isn't immediate.
If the answer is "no," congratulations. You've avoided a wasted sales effort. Your prospect is a long way from opening her wallet.
But "no" is still an answer you can work with. You've identified that this prospect is early in the buying cycle. She’s still buying; she’s just off in the distance.
Don’t ignore her, but don’t give her as much time or attention as someone ready to buy now. Simply refer her to the educational content you've made available online.
Don't waste your limited time trying to "pull" someone through the buying journey when they aren't ready to buy. Let them come to you instead!
Guarantee everything you sell.
You'll sell more and be able to charge more.
Five keys to a profitable guarantee:
1) Only guarantee falsifiable outcomes.
2) If the outcome requires client participation, so should your guarantee.
3) If you can't guarantee the outcome, guarantee satisfaction.
4) Make your guarantee easy to invoke.
5) Make the guarantee obviously painful to you.
• Only guarantee falsifiable outcomes: If the outcome your service delivers is falsifiable, meaning it can be proven false (or true), it's safe to guarantee.
• If the outcome requires client participation, so should your guarantee. I recommend using an IF-IF-THEN-ELSE structure:
*IF the client meets your qualifications, and
*IF the client makes a good-faith effort to participate (which you can define),
*THEN the promised outcome will happen within a specified time, or
*ELSE you will deliver the compensation promised by the guarantee.
• If you can't guarantee the outcome, guarantee satisfaction: As I told a recent prospect, "If you don't feel you've earned back your investment after 12 months, simply tell me, and I'll refund 100% of whatever you've paid..." It's possible that a few clients could abuse this. But those are usually the same clients who are difficult to sell (e.g., they want to haggle every aspect of the offer), so you should be able to screen them out in your qualifying process.
• Make your guarantee easy to invoke: Did you notice "simply tell me" in the example above? I wasn't kidding. My prospect could have emailed me a year later, and I would have refunded her money.
• Make the guarantee obviously painful to you: Here's the rest of that guarantee: "I'll refund 100% of whatever you've paid — 𝙥𝙡𝙪𝙨 $𝟮𝟱𝟬 𝙛𝙤𝙧 𝙮𝙤𝙪𝙧 𝙩𝙧𝙤𝙪𝙗𝙡𝙚𝙨." We call that a "money-back-PLUS" guarantee. If you can't refund their money (e.g., because you've incurred expenses specific to that client), offer to redo some or all of the work or continue working with them until they achieve the outcome.
Some gurus say that if at least 20% of your clients aren't invoking your guarantee, your guarantee isn't strong enough. That's dead wrong. If that many clients aren't achieving the promised outcome, you're promising too much.
Reduce the magnitude of the guarantee until your failure rate reaches the low single digits. Now you can increase the ELSE value of your guarantee. Customers will see how boldly you stand behind your offering, making it a no-brainer to buy from you.
Do you guarantee your work? If not, why not? Tell me in the comments!
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👋 I'm Judson, The Scale Whisperer. I help expertise-based businesses unshackle their revenue from hours worked.
If you found this useful:
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Black Friday makes us think about discounts.
You can use discounting to your advantage as a seller, too.
Offering a small discount for fast payment will get many large accounts to waive their usual terms.
Business loan interest rates run ~6-12% nowadays — or up to 40% if you're financing with credit cards.
Wouldn't it be better to get paid quickly rather than wait the 60-120 days most companies take to pay their invoices ... or negotiate deferred payment plans and chase them for collection later?
Next time you negotiate with a large buyer, offer them a 1-2% discount for full payment within ten days of invoice.
Many corporate and government procurement offices have an "accept all discounts" rule requiring them to accept price reductions that don't affect the quality of the goods or services delivered.
If you sell to individuals, you might have to knock off 5-10% to get significant uptake.
Feeling especially bold? Ask for 100% payment before work begins. This won't fly in most B2B sales, but you can use it as a "throwaway" concession instead of reducing your price during negotiations.
Even if only some of your buyers accept, this will improve your cash flow and reduce collection risk. Give it a try on your next deal!
How do you use discounts in your business? How do your buyers respond? Tell me more in the comments!
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👋 I'm Judson, The Scale Whisperer. I help expertise-based businesses unshackle their revenue from hours worked.
If you found this useful:
👍 Like this post
➕ Follow me for more ways to grow your business
📨 Message me about your situation and needs
You market yourself as an expert.
So why do you sell like an employee begging for a pay raise?
I spoke with the CEO of a company selling innovative AI-powered compliance solutions.
His company's offerings have no real competition, and customers are delighted.
But when he meets with executives who might buy his product, they treat him like just another tier-two widget supplier. When he starts asking intelligent questions to clarify their needs and how his solutions might fit, they cut him off.
"I don't want your pitch," they say. "Just give me a price list and payment terms."
But this CEO is trying to do what's best for his customers. Would you trust a doctor who dropped a diagnosis — and a bill — on you without asking any questions about your symptoms?
"Look," I said, "you're a CEO, and your buyer is a CEO. Stand tall, and treat this person like your equal. You're not a student asking the professor for a better grade."
Does this sound like you? Do you feel like a supplicant when you're selling? Only you can fix it.
Change your approach to sales meetings, and they will treat you differently.
Don't go into presentation mode when you meet with a potential client. You're not there to convince them to buy from you. When you start behaving like that, you give away all the power in the business relationship.
You're there to have a peer-to-peer conversation where *both* of you are vetting each other. Does it make sense for us to do business together? Maybe, maybe not.
If your prospect wants to skip right to price and terms, push back. Say something like, "Look, maybe it doesn't make sense for us to work together. Your focus on financials leaves me concerned that your decision is all about price. I should tell you now that we're not likely to be the cheapest — but I'm confident we'll give you the best value for money."
How do you deal with pushy prospects who want to derail the conversation? I'd love to know!
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👋 I'm Judson, The Scale Whisperer. I help experienced self-employed professionals unshackle their income from their hours.
If you found this useful:
👍 Like this post
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A client proposal should be 1-2 pages.
If you need PowerPoint, you're doing it wrong.
"But, Judson," you say, "how will the client know about our expertise and experience?"
That's what your content is for. That's what a qualifying conversation is for.
(By the way, you should qualify the client in that conversation, not just let them qualify you. More on that another time.)
If your content is effective and you've managed the qualifying conversation well, the prospect should need only your price and proposed services to make a yes/no decision.
If you've tried to talk the client out of working with you, you should know how important this project is to them. (If you missed my previous post about this, drop a comment below and I'll post a link.)
You should also know how much value it will create for them, whether in increased revenue or reduced cost. Based on that information, you should be able to price yourself well below their breakeven point -- and still make a healthy profit.
So, what goes in your proposal?
1. Short cover letter (optional via email)
2. Project overview (current state + desired outcome)
3. Project options (proposed scope / statement of work for each option)
4. Risks & assumptions (what could go wrong, proposed start date, what the client must provide other than money)
5. Why work with me? (a few bullet points about what differentiates you)
6. Pricing & payment terms
7. Expiration date for the quote
[record scratching sound]
"An expiration date?! Why would I let the client do nothing and lose this opportunity?"
Simple: you're adding urgency to their review process.
If you haven't heard anything 1-2 days before expiration, email them a friendly reminder and say, "FYI - my proposal expires tomorrow. What questions can I answer to help you with your decision?"
If they want more time, you don't have to re-quote everything; just give them a week or two more. (Not six months more. Then they're just wasting your time. Politely suggest they follow up when they're ready to commit.)
And that's it! Seriously.
Are your proposals short or long? If they're long, I'd love to hear why. Tell me in the comments!
_____
👋 I'm Judson, The Scale Whisperer. I help experienced self-employed professionals unshackle their income from their hours.
If you found this useful:
👍 Like this post
➕ DM me for more ways to grow your business
📨 Message me about your situation and needs
"Sell the hole, not the drill" is often dismissed as an MBA cliché.
But customers value benefits, not features.
So why do you market your offering in terms of what you do? Customers only care how what you do affects THEM. In other words, their desired outcomes.