Getting Your Price Right

Before meeting with a client, I research the following:

• Their revenues and their competitor's revenues, to get a sense how my client compares and what they can afford.
• Their profits. Often this is a guessing game based on the price(s) they charge for their products and services, my assumptions of what typical margins in their industry look like, and their revenues.
• Their need for my solutions. The greater their need for my solutions, the greater their ability to hire me.

Based on the above, I come prepared with both project assumptions (my solutions to their expected needs) and my fees, both per project and by retainer. Most of us understand (I hope) how to price projects. Essentially, we estimate our project costs plus our markup of 10% to 20% percent for managing those costs (creative, printing, mailing, online services such as PR Web, telemarketing, advertising buys, etc.) and our consulting fees (hourly rate times maximum estimated hours).

Most who ask get project pricing. But my clients usually want to put me on retainer? Why?

1. It saves them money.
2. Doing so delivers better value.
3. Clients on retainer like the idea that I am there for them whenever they call.
4. Putting me on retainer is like hiring another employee without the cost of benefits and office expenses. Clients like that.

The question most often asked is how do I build the monthly fee. Here is my process:

1. I start with a range that I am willing to accept. (In my case, that range is from $1000/month - $5000/month plus costs and expenses. The beginning price guarantees a minimum of 15 hours/month; the latter guarantees a minimum of 40 hours/month.)
2. Negotiations within that range usually take one to three months, as the client and I determine the best solutions for them, their maximum budget (usually ranges between $50,000 and $150,000 per year for my client's marketing), and the best way(s) to get them where they want to go for what they want to spend.

The question then asked is how did I determine that range. Frankly, it is based on putting people first, starting with me. Iif I am not happy, there is little chance my client will be. And my first and last goal is always to make to make the client happy. Here are the factors that went into my retainer range.

1. My stress levels. (The more I charge, the more stress and sleepless nights I experience.)
2. My wants and needs levels. (How much annual income best suits my family and me.)
3. How many clients can I have on retainer at a time and still create great customer experiences? At that number of clients, can I still take on project work? (If yes, good; if no, I need to reduce the number of those on retainer, meaning my range is wrong.)
4. Using a 70% utilization factor (I charge for 70% of my time, as most of us spend about 30% of our client time not directly addressing client solutions (interruptions, other client's work, brainstorming, research to learn something we don't know, breaks, and so on). I don't charge for that time.
5. My client's usual wants and needs (i.e., marketing/communications plans, measurable goals, web site content revisions, sales letters, thought papers, newsletters, social media, social networking, presentations, training, press releases, direct mail, graphic and interactive design, case studies, testimonials, reassurance, meetings, etc.),

In brief, that's it. Of course, much goes into this that isn't discussed here (mostly based on emotions, trust and credibility). But generally, that is how I established my retainer range, and it more often than not fits my ideal client's budgets and risk-aversion. Questions? Insights? Thoughts?