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Psychology of Money and Expertise

A consultant who helps client make changes in their work and lives* is struggling to setting a price of her expertise. She likes to work strategically — and solve her clients’ problems as efficiently as possible.

Unfortunately, she is so efficient, that her clients perceive her services as a waste of time because “I must not need your help if you can solve my problem so easily in such a short amount of time”! Yet if it takes too long, then “I don’t have enough money in my budget for your services” — catch-22 of “damned if you’re too good, damned if you’re not good enough” at what you do!

Image by Svilen MilevI work in the knowledge field (also consulting but more like management consulting and leadership development) and see the exact same problems. I also tend to cut through crap, avoid page fillers in reports, and just give people the most important points they need to know since, you know, they all say how busy they are.

But I have realized that some people perceive value based on VOLUME.

Those who are experts will suffer from their expertise because of the perception paradox. Thus they WANT to get the 300 pages of worthless crap for $5000 (some industry reports cost this much esp. when it comes from “professional consultants”), because it makes them feel like they paid good money for it, versus the 10 pages that describe the heart of the problem and the pertinent actions to take, because suddenly – “hey, you are charging me $500 a page?” — er, no, I am charging you $500 for each mistake you don’t have to make that is going to cost you $50,000 to fix.

Thus for consultants in private practice, I suggest a hybrid of expertise and perception needs: you have to draw out the sessions so that you build a lot of “extra work” around the actual work, in order for the clients to FEEL like they’ve gotten their money’s worth and BELIEVE in the fairness of the exchange.

If you are a wizard and you can solve their decades-long emotional issues in 60 minutes, chunk this up into 6 sessions where 10 minutes is part of the actual work and 50 minutes is all the “nice to do but not critical work”.

Is this deceptive? I used to think so — until I learned the hard way, that part of working with any customer is meeting them where their perceptions are.

There will be customers who say, “cut through the crap and give me the 1 session for this price, I know enough to know what expertise look like”. For these customers I work with them in my preferred way of working: efficient and effective.

There will be customers who say, “no, I need you to hold my hand, I want the 6 session deal.” Both customers are RIGHT because they are the persons buying. People want to feel good and justified in their investment, you are giving the same important service, only you are also working with a perception problem around the value of that service.

If you’re a consultant struggling with setting fees, you can try your own experiment. Charge the same amount for 2 options, only label the 6-session option “for regular people” and the other 1-session option “for CEOs who have no time”. They’re priced the same, only now you’re working with each person’s perception of the value of their own time.

Updated: May 20, 2013 — 9:38 am

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