Value-based pricing is a strategy that aligns your advisory fees with the value you create for your clients. It can help you differentiate your services, communicate your value proposition, and increase your profitability. In this article, you will learn what value-based pricing is, how it works, and what benefits it can bring to your advisory business.
Value-based pricing is a method of setting your advisory fees based on the perceived value of your services to your clients, rather than on your costs, competitors, or market rates. It means that you charge according to the outcomes you deliver, the problems you solve, and the benefits you generate for your clients.
La fijación de precios basada en el valor es crucial en servicios de asesoramiento. Este modelo no se centra en costos, sino en la percepción de valor para el cliente. Evalúa la importancia y beneficios percibidos del servicio, permitiendo tarifas acordes al impacto. Al alinear el precio con el valor generado, los asesores pueden reflejar su experiencia y resultados. Esto no solo optimiza los ingresos, sino que también fortalece relaciones duraderas al demostrar un compromiso real con el éxito del cliente. La fijación de precios basada en el valor no solo es estratégica sino esencial para un servicio de asesoramiento efectivo.
This concept aligns well with Consumer Duty requirements for financial services firms, albeit there the requirement is for the fees to be ‘reasonable’ when compared to the benefits. Value-based pricing, as noted below, requires a detailed knowledge of both the firm’s proposition and the clients’ needs and goals. It also requires that sales staff are well trained to explain the basis of the charges as they are likely more varied and potentially higher than more conventional charging structures.
Pitch 10 guys and if 6 or more are willing to buy - your advisory model is truly value based as they find it worth paying: without a second thought!!!
Value-based pricing requires you to understand your clients' needs, goals, and challenges, and to quantify the value of your solutions. You need to conduct a thorough value assessment, where you identify the key value drivers, metrics, and indicators that relate to your services. You also need to establish a clear value proposition, where you articulate how your services create value for your clients and what makes you different from other advisors. Then, you need to communicate your value proposition effectively and confidently, and to negotiate your fees based on the value you provide.
Los precios basados en el valor revolucionan los servicios de asesoramiento al vincular tarifas directamente con los beneficios percibidos. En lugar de centrarse en costos o competencia, este enfoque evalúa la importancia del servicio para el cliente. Se inicia con la comprensión profunda de sus necesidades y luego se establece un precio que refleje el valor entregado. Este modelo fomenta relaciones sólidas al alinear el éxito del cliente con el del asesor. Al proporcionar resultados tangibles, los servicios se valoran objetivamente, garantizando una compensación justa y cultivando lealtad a largo plazo en el mundo del asesoramiento empresarial.
Value-based pricing can offer several advantages for your advisory business, such as attracting and retaining clients who recognize the worth of your services. Your revenue and profit margins may also increase, as you can charge higher fees for higher value services. Additionally, value-based pricing can enhance your reputation and credibility, as you can demonstrate your expertise and results. It can also increase client satisfaction and loyalty, as you can deliver more value and exceed their expectations. Moreover, value-based pricing can motivate you and your team to improve your performance and quality, as you can align your incentives with your clients' outcomes.
Los precios basados en el valor ofrecen beneficios sustanciales para los servicios de asesoramiento. Este modelo no solo permite tarifas justas alineadas con el impacto real del asesoramiento, sino que también fortalece la relación cliente-asesor. Al vincular directamente el costo con los beneficios y resultados esperados, se crea una transparencia que genera confianza. Además, este enfoque incentiva a los asesores a proporcionar resultados excepcionales, ya que su compensación está vinculada al valor entregado. En resumen, los precios basados en el valor no solo optimizan la rentabilidad, sino que construyen relaciones sólidas y duraderas en el mundo del asesoramiento empresarial.
Using this approach to setting fees can be very rewarding albeit more disciplined and complex than more conventional pricing structures. It lends itself well to advisory and transactional work where outcomes can be agreed or set at the beginning of the relationship and assessed on an ongoing basis. It is important that all the parties are very clear about the outcomes and the price that attaches to a specific outcome. As mentioned elsewhere, firms using this charging method must recognise that some work will be less well rewarded than anticipated (ie where it is less successful) if they are to develop credibility and a fair reputation with their clients.
Value-based pricing can be challenging to implement, as it can be difficult to measure and quantify the value of your services, especially if they are intangible, complex, or long-term. Communicating and justifying your fees may be a challenge, especially if your clients are used to cost-based or market-based pricing models. Additionally, basing your fees on uncertain or variable outcomes can be risky, particularly if your clients' expectations are unrealistic or change over time. Moreover, delivering and maintaining high value can be demanding if your clients' needs evolve or if you face competition or disruption.
Aunque la fijación de precios basada en el valor es valiosa para servicios de asesoramiento, presenta desafíos. Determinar el valor percibido puede ser subjetivo y variar entre clientes. Además, la comunicación efectiva del valor es esencial, ya que algunos clientes pueden no comprender completamente los beneficios. La evaluación precisa del impacto de los servicios y la adaptación a la dinámica del mercado también son retos. A pesar de estos desafíos, superarlos implica construir relaciones sólidas, proporcionar resultados tangibles y adaptarse continuamente para ofrecer un valor que justifique las tarifas, creando así una estrategia de fijación de precios basada en el valor exitosa.
This method of pricing may be more challenging but it is very similar to the concept of ‘success’ or performance fees. If it is to operate fairly then a firm using it has to recognise that sometimes they will not receive the highest fees they agreed with a client, for example when the results of their advice or work are less satisfactory. This is not just ‘good practice’. Many professions approach client transactions in this way with lower fees being charged if a ‘deal’ is not successful. The key is to ensure that the critical performance indicators are clearly agreed in writing with minimum and maximum fees accurately described.
To successfully implement value-based pricing, you need to adopt best practices such as conducting a thorough research of your clients' situation, goals, and pain points, and establishing a clear scope and deliverables for your services. It is also important to communicate your value proposition clearly and negotiate fees based on the value you create. Additionally, it is essential to monitor and track your performance, provide regular feedback and reports to your clients, seek feedback from them, and use testimonials to showcase your value. Doing so will help you grow your advisory business, create lasting value for your clients, differentiate your services, and increase profitability.
Superar los desafíos de la fijación de precios basada en el valor en servicios de asesoramiento requiere enfoque estratégico. Comunicar claramente el valor percibido, demostrando resultados tangibles, es esencial. Personalizar la oferta según las necesidades específicas de cada cliente y ajustar la estrategia en función de la dinámica del mercado ayuda a mantener la relevancia. La transparencia en la evaluación del valor y la flexibilidad en la adaptación a las expectativas cambiantes del cliente son clave. Al comprometerse con la mejora continua y la comunicación efectiva, se superan los desafíos, consolidando así el éxito del modelo de precios basado en el valor.