Pricing Work

Price for value, protect your margin, win the work.

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Pricing Philosophy

Value-Based, Not Cost-Based

Don't price based on your costs. Price based on their value.

Questions to assess value:

• What's the cost of their current problem?
• What's the value of solving it?
• What would they pay to make this pain go away?
• What are alternatives costing them?

The equation:

Your price should be < Value delivered
Your price should be > Your cost + target margin

The Value Zone

Client's maximum willingness to pay
         ↓
    ┌─────────────────────┐
    │    VALUE ZONE       │  ← Price here
    │   (Win-win range)   │
    └─────────────────────┘
         ↑
Your minimum acceptable price

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Pricing Models

Time & Materials (T&M)

When to use:

• Scope is unclear or evolving
• Discovery/advisory work
• Ongoing support
• Client wants flexibility

Structure:

• Hourly or daily rates by role
• Estimated range (not fixed price)
• Monthly billing

Margins: 40-50% target

Example:

Role           Rate      Est. Hours    Range
Partner        $400/hr   20-30         $8K-12K
Principal      $300/hr   40-60         $12K-18K
Senior         $225/hr   80-120        $18K-27K
Consultant     $175/hr   120-180       $21K-32K
                                       ─────────
Total estimate:                        $59K-89K

Fixed Price

When to use:

• Scope is clear and bounded
• Deliverable-based work
• Client needs budget certainty
• Competitive situation

Structure:

• Total price for defined scope
• Payment tied to milestones
• Change orders for scope changes

Margins: 35-45% target (higher risk = higher margin)

Build-up:

Estimated effort:     400 hours
Blended rate:         $200/hr
Base cost:            $80,000
Risk buffer (15%):    $12,000
Target margin (40%):  $61,333
                      ────────
Fixed price:          $153,333 → $150,000

Retainer

When to use:

• Ongoing advisory relationship
• Fractional executive roles
• Continuous improvement work
• Strategic partnership

Structure:

• Monthly fee for defined capacity
• Typically 10-40 hours/month
• Unused hours don't roll over
• Scope defined broadly

Margins: 45-55% target (predictability premium)

Example:

10 hours/month of Partner advisory
Rate: $400/hr retail
Retainer rate: $350/hr (12% discount for commitment)
Monthly retainer: $3,500
Annual value: $42,000

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Rate Cards

Standard Rates

Role	Hourly	Daily
Partner	$400-500	$3,200-4,000
Principal	$300-400	$2,400-3,200
Senior Consultant	$200-275	$1,600-2,200
Consultant	$150-200	$1,200-1,600
Analyst	$100-150	$800-1,200

Rate Adjustments

Premium (10-25% above standard):

• Specialized expertise
• Tight timeline
• High-complexity work
• Strategic importance

Discount (10-20% below standard):

• Long-term commitment
• High volume
• Strategic relationship
• Reference potential

Never discount more than 20% without Partner approval.

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Building an Estimate

Step 1: Scope the Work

Break down into:

• Phases
• Deliverables
• Activities

Step 2: Estimate Effort

For each activity:

• Who does it (role)
• How long (hours)
• What assumptions

Estimation tips:

• Use ranges, not single points
• Add 20% buffer for unknowns
• Compare to similar past projects
• Have multiple people estimate

Step 3: Calculate Cost

Hours by role × rate = cost
Sum all costs = total cost

Step 4: Add Risk Buffer

Clarity	Buffer
Very clear scope	10%
Mostly clear	15%
Some unknowns	20%
Significant unknowns	25-30%

Step 5: Apply Margin

Total cost ÷ (1 - target margin) = price

Example:
$80,000 cost ÷ (1 - 0.40) = $133,333

Step 6: Reality Check

• Does this price feel right for the value?
• How does it compare to competitors?
• What's client's likely budget?
• Would you pay this price?

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Margin Guidelines

Target Margins

Engagement Type	Target	Minimum
T&M	40-50%	35%
Fixed Price	35-45%	30%
Retainer	45-55%	40%

Margin Erosion Factors

Watch for these margin killers:

• Scope creep without change orders
• Underestimated effort
• Rework and quality issues
• Team inefficiency
• Excessive overhead

Never Below 30%

Requires Partner approval:

• Strategic account investment
• Reference project
• Exceptional circumstances

Document the rationale and exit plan.

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Negotiation

What's Negotiable

Element	Flexibility
Price	10-15% for value trade
Scope	Adjust to fit budget
Timeline	Some flexibility
Payment terms	Net 30-45
Team composition	Within capability

What's Not Negotiable

• Rate integrity (don't slash rates)
• Quality standards
• Margin below 30%
• Scope without corresponding price

Trading, Not Giving

Never give without getting:

Client wants lower price:

• "We can reduce scope to fit that budget"
• "We can extend the timeline and reduce intensity"
• "We can use more junior resources for these tasks"

Client wants more scope:

• "Happy to add that. Let me price the change order"
• "We can include that if we remove [other item]"

The Walk-Away

Know your minimum before negotiating:

• Minimum acceptable margin
• Minimum acceptable scope
• Deal-breaker terms

Be willing to walk away. Desperation kills margin.

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Competitive Pricing

When You're Cheaper

Don't lead with price. Emphasize:

• Speed and agility
• Senior attention
• Quality and reliability
• Cultural fit

When You're More Expensive

Justify the premium:

• Demonstrate unique value
• Show relevant experience
• Quantify risk reduction
• Highlight total cost of ownership

When to Match

Consider matching if:

• Strategic account
• Reference potential
• Long-term relationship
• Clear path to margin recovery

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Approval Authority

Deal Size	Approval Required
Under $50K	Manager
$50K-$250K	Principal
$250K-$1M	Partner
Over $1M	Partner Group

Discount	Approval Required
Up to 10%	Project lead
10-20%	Partner
Over 20%	Partner Group

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Resources

• Winning Work - Full sales process
• Proposal Template - Proposal structure
• SOW Template - Contract template
• Financial Standards - Detailed guidelines