I would help this person to discover how to quantify delivered client value, how to charge and get paid for it.
Engagements are like diamonds with many facets of client value. But you get paid only for those facets that you reveal to your clients. Clients can't perceive unrevealed value, so these unrevealed value components don't get paid for, although they get delivered.
So what gets paid and what gets lost in the shuffle?
According to various surveys I've read over the years, most knowledge-based companies, including IT companies, fail to capture and quantify some 70% of the value they deliver to their clients.
So, as conscientious professionals, they deliver the proverbial Ferrari but get paid only for a Ford Focus, leaving the rest of the money on the table.
Clients who have requested this kind of help usually triple their fees within 12 months, but I've seen even more significant improvement too. And as we know from the McKinsey study, a mere 1% fee increase can result in as much as 11.7% increase in net profits.
The problem is that many IT companies say they practise value-pricing, but when I ask them how they come up with their fees and prices, they say, they add up their material and labour costs, mark them up a by some kind of random profitability percentage and that's it.
Is it then surprising that most IT projects are under heavy price pressure, and most IT companies end up cutting their prices in order to win the engagement? Based on a RainToday research study, "Fees and Pricing Benchmark Report Consulting 2008", on average, some 2/3 of knowledge-based companies discount their prices in order to win projects.
And while they win projects per se, they financially lose on all those discounted projects.
This is why the art of pricing is so important.
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