The Cost of Free: Why Consultants Should Think Twice About Discounting Consulting Services

Whether you're independent, working in a boutique consultancy, or part of a consulting powerhouse, chances are you've felt the temptation to offer services at a deeply discounted rate or even for free. There are various reasons why you might consider this: perhaps it seems like the missing piece in a larger puzzle, or it's a chance to gain specific experience. However, regardless of the motivation, providing discounted or pro bono services can result in long-term negative consequences for both you and the practice you represent.

The Value of Expertise

Consultants' rates reflect the skills, experience, and knowledge they've acquired across clients and industries. These experiences not only accelerate the resolution process for clients but also compound the value consultants provide. Personally, I've always valued maintaining a diverse portfolio of clients rather than relying solely on a single long-term client. Exposure to different cultures, personalities, and problems collectively leads to better outcomes for all involved. This variety helps consultants avoid complacency and the tendency to become too aligned with a single client, a phenomenon often referred to as "going native."

As discussed in my book "Small Firm, Big Impact," establishing a pricing model based on the team's skills, experience, and knowledge is crucial for market positioning. This principle holds true for independent consultants as well. Once the rate card is set, it's vital to stick to it and resist the temptation to offer discounts just to secure a "yes."

Consider professions such as medicine and law. Have you ever encountered a doctor or attorney offering a discount to win your business? It's unlikely. They are confident in their worth, and so should you be. It's also important to recognize that once you discount your services, you're effectively resetting your rate and perceived value, and there's no easy way back from that.

Furthermore, consider how clients perceive you and the value you provide. A premium offering commands a premium rate, but the perception of value is equally crucial.

How do you present yourself in consulting engagements? Do you look like you just rolled out of bed or like you're ready for the gym? In-field consultants can command rates of nearly $10,000 USD per day, and in my experience, presenting yourself as someone worthy of that investment is as important as the services you offer. First impressions instill confidence in the investment to be made, so ensure you make a strong one.

Beyond appearance, maintaining rate discipline can also shape clients' first impressions. If a consultant appears desperate for work by offering significant discounts or free services, it can shift the perception from that of a Trusted Advisor to just another "resource."

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