A consultant I know lost a £50,000 project because the client said the price was too high. A month later, the same client hired someone else for £65,000.
The first proposal listed what the consultant would do: monthly reports, weekly check-ins, analysis and recommendations. The second never listed activities. It described a £2 million revenue opportunity the client was missing and how the work would capture part of it within 18 months. The client paid more because the second proposal was about the result the client wanted.
This guide explains why clients come to see a service as a cost, and gives a four-step model for positioning your services as an investment, with worked examples and a table for rewriting your own service descriptions.
Why clients see your service as a cost
Businesses split their spending into two groups: costs they want to reduce and investments they expect a return from. When a proposal describes hours, reports and meetings, the client files it under costs. Costs get compared line by line with cheaper suppliers, and they are the first thing cut when budgets tighten.
This happens in many service businesses. An IT provider describes 24/7 monitoring and quarterly reviews. A marketing agency describes social media management and content. An accountant describes monthly bookkeeping. Each is accurate, and each invites the client to find the same list somewhere cheaper.
An IT services company I worked with was bidding against an MSP that charged less for what looked, to the client, like the same service. The same client was hiring, expanding and investing in growth, so budget was not the issue. The IT company rewrote its proposal around the client’s growth plans and showed how its support would make them happen. It kept its price and won the contract.
A management consultant I worked with had long-standing clients who kept asking for discounts, even though his results were good. His proposals read as a list of activities: planning sessions, stakeholder interviews, process mapping. When we rewrote them around the efficiency gains and annual savings his work produced, the discount requests stopped.
What clients are buying
Clients pay for the change your work makes to their business. The table shows how the same services read when they are described by their outcome.
| Described as a deliverable | Described as an outcome |
|---|---|
| 24/7 monitoring and quarterly reviews | Staff who can work without IT interruptions, and a board that knows the business is protected |
| Social media management, SEO and content | A steady flow of qualified enquiries and a lower cost per new customer |
| Monthly bookkeeping and quarterly reports | Accurate figures to make decisions on, and no surprises at year end |
| Strategy workshops and process mapping | A plan the team can follow, and measurable time saved on core processes |
Outcome descriptions only work when they are specific to the client. The next step is to put numbers on them. This is also the basis of value-based pricing, where the price is set from the value of the outcome.
The four-step Investment Positioning Model
The examples below use an IT support contract for a 60-person business at £5,000 a month. The figures are illustrative; in a real proposal, use the client’s own numbers.
Step 1: Put a number on the problem
Start with what the problem costs the client today. If outages stop 60 people working and an hour of lost work costs the business around £40 per person, each hour of downtime costs about £2,400. At six hours a month, that is roughly £14,400 a month.
Include the risks the client is exposed to. The cost of a data breach, for example, can run to tens of thousands of pounds for a smaller business and to hundreds of thousands or more for a larger one. Use the client’s own history where you can, and name your source when you quote an outside figure.
Step 2: Specify the outcome
Say what will change, in terms the client can measure. “We will optimise your systems” gives them nothing to hold you to. “We will reduce unplanned downtime from around six hours a month to under one” does.
Step 3: Show the return
Set the fee against the outcome. Five fewer hours of downtime a month saves about £12,000. Against a fee of £5,000, the client is around £7,000 a month better off. Presented this way, the client is weighing a return against an outlay.
Step 4: Show the risk you remove
Explain what happens without the service. Unmaintained equipment may need replacing early, and an unpatched system is more exposed to attack. Put a figure on the likely cost where you can. The service then protects the client’s existing investment as well as adding to it.
Example: a digital marketing agency
A digital marketing agency I worked with charged £2,500 a month for what it called comprehensive digital marketing services. Existing clients regularly asked for discounts when budgets tightened.
For the next new client, we described the service by its results: the cost of acquiring a customer, revenue attributed to the campaigns, and customer lifetime value. Over the engagement, the client’s acquisition cost fell from £350 to £80 per customer, and the campaigns were bringing in £25,000 or more a month in additional revenue. At that point the £2,500 fee was a small share of what the client gained, and price stopped coming up in renewal conversations.
What to do this week
- List your three main services. For each, write down the problem it solves and estimate what that problem costs a typical client.
- Rewrite each service description to lead with the outcome, using the table above as a guide.
- In your next proposal, set your fee against the client’s likely return, using the four steps.
- Compare your price with the value of the outcome. If the gap is large, read why many service businesses undercharge and how to raise prices without losing clients.
When a client asks why your service costs what it does, this guide to explaining value-based pricing gives you a structure and scripts for the conversation.
Next step
If you want to know how your positioning and pricing compare with the value you deliver, the Value Transformation Assessment gives you a picture in around five minutes.
If you run an MSP, the MSP Pricing Scorecard takes three minutes and gives you a score and a full report by email.
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