When we started building out the agency portion of Training Business Pros, we had no Idea what we were in for. The first few months were pretty rocky…
The learning curve was massive. We had to learn about equipment, human resources, technology, project management, and sales.
Previously the depth of my sales training was stand on stage for a few hours, make an a brain dead offer, send a hoard of people to the back of the room and walk away happy.
The one-on-many model is one I know very well, but that didn’t exactly translate perfectly to the one on one consultation model.
When you’re trying to sell a $30,000-$100,000 project, you really need to be detail focused, cross your t’s dot your i’s kinda deal. The client is asking you all these questions you have to answer before you can put a proposal on their desk and say, “Sign here.”
Learning the sales template for one-on-one was a its own challenge, but a more significant challenge soon cropped up as more and more clients began walking through our doors looking for service work.
Think for a moment about all the hours in your business that you’ve spent selling and consulting. If your selling higher ticket items, you could spend well be over 5 hours PER CLIENT of consultation time trying to get them to sign the dotted line.
For some of our largest clients we pull our whole team into pre-sale meetings for several hours, but you have to take into account that for however many hours you spend in a meeting, you must multiply that by the amount of team members to get your total LOST HR HOURS that could have been spent elsewhere on guaranteed income. I don’t know about you, but I like to think my time is valuable, and my team’s time is valuable.
In our case, most client consultation time is about 5 hours with 2-4 team members, totaling up 10-20 hours before anything is SIGNED! My team’s hourly rate is $247-$997 per hour… that’s a lot of lost revenue.
But you’re trying to make a sale, surely closing will cover that cost no? In service work, only about 33% of revenue is actually profit, but that’s for the end product only, consultation time not included! Once you include that time you’re looking at about a 20%-25% profit margin….
Well that’s just not cool…
The solution. If your sales process is longer than 5 hours, and you are “consulting” to close the deal, you need to charge.
You may be thinking, “WHOA THERE…. That’s just off putting to my potential customers!” But hear me out. There are a few reasons you’ll want to consider this seriously.
#1. You recoup lost revenue.
Time is money, and if your spending time consulting for free and a deal that may not even close, there goes all that time and therefore, all that money.
#2. It adds credibility.
I like to think I’m a pretty generous guy with my time and finances. But if I start to give of myself over and over and over again to people who’ve never paid me a dime what message does that send? It says that my time is NOT valuable and that you can have my advice and business intelligence without paying for it. Nuh-uh, that’s not how it works around here. You want my business intelligence, pull out your checkbook.
#3 They can always go elsewhere for cheaper.
We are certainly not the cheapest agency on the block. Our clients’ spend averages around $47,000. So what’s to stop someone from coming and consulting with us for however many hours, get all the business intelligence of what we would do moving forward, take that, and go somewhere cheaper? not a whole lot. If they start investing with you early, they’ll become dedicated customers will move forward with you all the way because of that
#4 You can consider it a deposit.
If you can afford it, just forward it as a deposit to the final project. Again increasing your customer loyalty and dedication to moving your project forward.
Now, whenever we do consultation/sales meetings, it’s all billable hours. If a potential client is put off by that, fine! Is that the type of client you want to work with, or would you like the type that values your time and will compensate you for it? I know which one I’d like to work with.
What experience do you have with charging for pre-sales consultation, or consultation time in general, I’d love to hear about it in the comments below!