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Our thoughts on the latest developments impacting your business.

To Charge or Not to Charge?

20th century social thinker & philanthropist
Vintage engraving of John Ruskin (8 February 1819 – 20 January 1900)

We live and work in an age where competition for market space has never been greater, so whether you’re selling coffee or cars it’s inevitable that most businesses feel compelled to provide schemes such as, ‘try before you buy’, ‘buy now pay later’ and ‘interest free’ offers. These schemes may be particularly relevant if you are trying to leverage your product amongst a wider group of consumers (such as those mentioned), but I’ve begun to notice that these initiatives are becoming more prevalent in the area of consulting too, and not just amongst the new entrants desperate for a piece of the sector.

I accept that any business regardless of size may want to do adopt a range of initiatives in order to secure income. But what does surprise me is how many consultants have resorted to offering multiple days support at zero cost. Could this be an indicator that the amount of competition which now exists in my marketplace is particularly intense, or is it more the case that these consulting firm’s imagination has simply become stifled due to the volume of competition?

It won’t matter to the paying client that the impact of these ‘free’ days reduces their true daily cost, because on the surface this may look like a win for both parties, but is it? Companies who choose to recruit consultants on such a basis need to ask two fundamental questions. Firstly, should we appoint a consultant to help our executive board who has needed to resort to discounted or free days to secure our work, and secondly, if your work is of a complex nature, how likely are you to be able to assess the value this process when a complete resolution of the issues could take months or even years to be seen and appreciated?

With a little imagination, small consultancies (like mine) are free to choose from any number of pricing models and lengths of contract to make their service attractive, but I don’t believe that free days should be one of them.

John Ruskin the 19th century social thinker and philanthropist came up with, ‘The Common Law of Business Balance’.

“There is hardly anything in the world that someone cannot make a little worse and sell a little cheaper, and the people who consider price alone are that person’s lawful prey. It’s unwise to pay too much, but it’s worse to pay too little. When you pay too much, you lose a little money — that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot — it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better.”

Surely words that remain as relevant today as they were when first penned.

So, having read John Ruskin’s quote it’s hard to accept that offering ‘freesulting’ is akin to publishing a recipe (as one consultancy firm suggested). They say that, ‘Just because you can follow the recipe doesn’t mean that you will turn out to be a good cook’. So, I would question why anyone would take free advice and choose to act on it, when the consequences for your company could be quite damaging.

Consulting, especially in areas that make a significant difference to how a business functions at its very heart, creates long-term value for shareholders, employees and customers. It can often be the difference between thriving, surviving or failure and therefore requires a systematic and co-ordinated approach until new processes are embedded at the firm’s core. It’s for this reason alone that I will always favour the route where clients make informed decisions about our appointment based on the extensive work we’ve delivered, the accolades and awards we’ve secured and the longevity of our ever-evolving business before then positioning our price and delivery model accordingly. Surely when considered in such terms, why would you gamble with a business that’s most likely been so important to you for so long?

If you would like to explore this further, please feel free to get in touch with us by sending an email to me, Nigel Davis.

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