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value_based_fees-2nd-editionMuch of the wisdom in Value Based Fees by Alan Weiss can be understood by thinking really hard about why the book cost $33.49 for the Kindle edition, when most books of its kind max out at about $20. The book was good and I paid attention. It was an expensive book, after all.

“… My large margins coming from books I sell for $75 to $150. Value based pricing can apply to books (as you’ve probably understood when paying for one of those large, gaudy ‘coffee table’ editions.)”

The basic idea behind Value Based Fees is, uh, basing fees on value to the customer, not on time or deliverables. It’s written for consultants in particular, but I think the concepts are useful to most fields where your mind is borrowed for a project, rather than your hands.

The book argues that for the consultant (and other people providing creativity as their primary means of income), there’s actually something a bit unethical about charging clients hourly. Because of the ambiguous, and sometimes broad, nature of the work it is in the interest and power of the business to extend the project as long as possible, while in the interest (but not necessarily the power) of the client for the project to wrap up as quickly as possible. It pits the interests of the business against the client, where the interests should be able to align.

“Most of us think in terms of what we do, not in terms of how the client will prosper. It’s absurd to base fees on things that are important to us instead of on what’s important to the client.”

While the first third of the book is mostly ideological, the second third begins to deal with how to implement a value based fee structure into a consulting practice. But again, a lot of the advice seems transferable to other kinds of business.

The last leg of the book covers some very practical things, such as How to Prevent and Rebut Fee Objections. One particularly interesting section was Seventy Ways to Raise Fees and/or Increase Profits Immediately, which was filled with snippets of practical advice for making the switch to value based fees.

In conclusion

Value Based Fees had a lot of detailed insights into how pricing services based on their value to the customer could be a more mutually beneficial arrangement for the business and the client.  It is also an interesting look at consulting in general, should you find yourself needing to work with one. I think proprietors of service based business with a creative bent, will probably find a lot of gems in here. It’s worth the $33.49.