Why Do Only a Few Consulting Companies Prefer Value-Based Pricing?

Different consultants price their services differently. Here is how most of them base their pricing on the following common structures:

  • 31.37% of consultants charge per project 
  • 23.38% of them bill hourly
  • 17.30% go for value-based fees
  • 15.40% prefer to be on monthly retainers
  • 12.55% of consultants charge on a day-to-day basis
value-based pricing structure

Most consulting companies do not use value-based pricing when pricing their services. 

This is due to the same reasons why most marketing agencies don’t offer performance-based marketing services.

Listed below are some of the reasons why consulting companies would prefer other pricing structures for their services.

  1. The initial risk falls with the vendor, and this is hard to scale (i.e. riskier while starting out)
  2. It may take a few months before work ramps up enough to compensate the labor
  3. Managing staff is harder with value-based pricing. There’s the incentive to work more and reach revenue goals sooner, however, managing a portfolio of clients makes this harder than assigning fixed resources or billing hours
  4. It’s hard to set pricing right. The right % fees worth charging and what accounts for the consultant’s work. This is a slippery slope since a business manages multiple people, departments, and initiatives and not everything is easily attributed to a consultant
  5. The business should follow the consultant’s recommendations. This may not happen (thus compensation isn’t paid) or it may take a few months due to other priorities – or results take months to show up
  6. Established clients feel more comfortable allocating budgets for consulting (and even including them in the annual planning) as compared to distributing percentages at scale
  7. Larger companies deal with shareholders and investors, and the value-based pricing may cause some disruptions in valuation

I’ve written a comprehensive guide on the different consulting fees and structures: How Much Does a Business Consultant Cost: Consulting Fees and Pricing Structure.

How Do You Mitigate the Lack of Personal Presence When Working Remotely?

The best advice that I could give to remote workers:

Be passionate about the company culture and the high-end goals of the business.

If you are truly passionate, the loss of personal presence would not be a major problem for you or your team.

Here are several tips for remote workers who want to be more involved with their team environment despite not being on-site:

  • Be proactive and communicate clearly on a regular basis
  • Use a friendly tone and be open to “water cooler”-type of conversations and general chit-chat with your colleagues
  • Try to discuss the bigger picture with your team and managers
  • Send regular feedback, suggestions, ideas for improving the process, team environment, the applications that you use, or the general workflow
  • Participate often in general chats or channels where people hang out at during lunch breaks or when wrapping up for the day
  • Follow your company accounts and your local team members on social media channels (without being creepy or invading personal space)
  • Genuinely share non-confidential accomplishments or contributions while mentioning your company
  • Help out with finding talent and sharing press releases or content from your company’s blog
  • Connect with some local colleagues who are open to having side discussions with other peers and are happy to talk about what’s going on at the office with you

A major problem for many companies working with remote peers is the lack of real connection with the brand or the business. Being truly inspired and openly expressing satisfaction with the company model is noted by the marketing and branding teams and showcases commitment to the business in the long run.

If your company does ship swag to remote folks, make sure that you appreciate that and take the occasional photo with your branded tee or a mug. Otherwise, consider getting some branded yourself, take a screenshot of your wallpaper with the company logo or mascot, or directly ask the marketing and community folks what would benefit the company branding.

If the company is growing and you appear to be an active part of the team, you may very well help with onboarding someone from your local community or even open a local branch of your company with other folks in the same area!

Do Business Names Starting With The Letter “A” Have Any Advantage?

Does it still matter what letter do business names start with? Back in the day, the yellow pages were a strategic source for generating prospects for a business.

However, this was a common hack 30–40 years ago and most businesses no longer rely on this traffic source.

Nowadays, you’ll likely find leads via:

  1. Social media (Twitter, LinkedIn, Facebook, Instagram, Pinterest)
  2. SEO (Google, Bing)
  3. Events and Tradeshows
  4. Email marketing
  5. Referrals
  6. Meetups and smaller industry events
  7. Lead targeting and generation tools
  8. Online communities, groups, forums
  9. Blogging and guest blogging
  10. Webinars
  11. Quora or Reddit

None of those channels relies heavily on the alphabetical order of business names to put precedence on a business over another one.

Even when sponsoring an event, the order tends to be organized by “sponsor package” first and a random combination such as “first come first served”.

How Do You Negotiate A Raise For $2?

how do you negotiate a raise

How do you negotiate a raise? Let’s review the different factors that determine the probability of a possible raise.

Percentage Increase

How much is $2 of your hourly rate?

  • If you’re earning $20/hour, that’s 10%.
  • But, if you’re charging $10/hour, that’s 20%.
  • If you’re charging $4/hour… Well, you get the point.

The average reported annual raise percentages are 4.5% to 5%. It’s possible to get a 10% raise in certain cases while it’s not as common for most positions.

Specific roles – along with entry-level jobs or junior positions that started with lower salaries – can potentially yield a higher raise – but it’s a complex arrangement and depends on the organization or the market.

Last Promotion

When was your last promotion?

  • If you’ve received a raise within the past 6 months, it would be challenging to ask for another raise right away.
  • If you’ve started as an intern or a junior expert who excels at their work, you may give it a shot.

Also, consider your job responsibilities. If recently, you have been assigned a number of different activities at work, this may be a good reason to ask for a raise.

Performance Accomplishments

You can’t really assess your own performance, but it’s likely that you can report some extended efficiency in terms of your work arrangements within the past 6 months.

The more productive you are, the more likely it is to get an approval for a raise.

Creative jobs that require analytical thinking and reward based on performance are likely to adjust salaries accordingly. If you’re able to deliver twice what you used to do 9–12 months ago, a 10% – 15% raise is not unheard of.

Type of Organization

How do you negotiate when you work for a large enterprise vs a small organization?

Larger enterprise corporations usually have a salary matrix for different roles across the board. They work with a specific salary range for each position and juggling around that is quite challenging.

You can still negotiate a higher salary but HR and management may refuse. If they really want to retain you, they may think of a different role associated with a higher range.

Smaller organizations are generally more flexible. Their budgets are lower, but efficiency is crucial. So it solely depends on your results, commitment, accomplishments.

Business Responsibilities

Have your day-to-day responsibilities evolved or shifted over the past 6–9 months?

Salary jumps are usually tied to promotions – being assigned to a different role that requires additional commitment. If that’s ahead of you, consider a conversation while discussing those new responsibilities.

Otherwise, compile a list of the additional tasks you’re assigned to on a weekly basis and the success stories that were dependent on you. This would help to negotiate a raise accordingly.

Market Value

That’s certainly a crucial aspect of your possible salary jump.

Is your salary high, low, or about average as compared to job opportunities in other companies in the area?

Technically speaking, the question is whether you can get the $2 raise (or more) in another organization.

If that’s the case, you can comfortably ask for the raise. After all, a declined offer may result in a resignation later and joining another organization.

Depending on how close you are with your direct managers or the HR, you can discuss that problem with them. Let them know that you have other offers that would cover the $2 jump while you don’t want to leave the company. It’s still a gamble, but if you’re undervalued based on the market cap, you’re in a position to negotiate.

Return on Investment

All of those combined revolve around ROI (Return on Investment).

Consider how much your time is worth.

  • Can you get a $2 raise in most companies around you?
  • Are there remote organizations that would pay more and give additional benefits for your work style?
  • Can you start a venture on your own which would yield the salary plus the raise?
  • Can you provide consulting that’s highly paid and cover the difference after hours?
  • How dependent is your organization on your skillset? How easily replaceable are you?
  • Can you squeeze a lot of extra productivity out of a possible raise? Are you willing to contribute something extra – traveling to events if needed, work after hours or anything else?

The more invaluable you are to an organization (or a great fit for other teams), the easier the negotiation. Otherwise, you may want to invest more in your professional development until you’re willing to have that conversation in a confident manner.

Resource List for Digital Agency Owners

Resource List for Digital Agency Owners“Digital agency” is quite broad as it may entail a broad set of services. Creative, web development, advertisement, SEO are also digital in a way.

We generally follow a diverse number of sources as we need help in different areas – from marketing and sales through HR and product management, to technology, branding, and design.

Here is the resource list of main blogs we follow on marketing, sales, business growth:

There are two communities that I follow regularly as well – The Smartest Inbound Marketing Community Online | Inbound.org and GrowthHackers – Premier Growth Community – GrowthHackers

I’m also subscribed to a few relevant podcasts:

Is Freelancing The Future Of Jobs?

We have several full-time employees hired through Upwork who spent the first couple of months believing they are full-time freelancers.

Is This Freelance At All?

The question is: If you’re engaged in a full-time capacity, with a regular pay, somewhat standard business hours, working closely as a part of the team, equally tackling the same work problems… Is this freelance at all?

Freelance is loosely defined. There are contract jobs, fixed fee project assignments, part-time consulting gigs, full-time roles, and everything in-between.

The more the desired flexibility, the smaller the pool of available jobs.

A part-time freelance job with flexible hours is feasible for a limited scope and often not a mission-critical project. The lack of regularity or predictability can be a problem for most organizations — especially when it comes to traditional jobs already available within the company.

Jobs Turning Into Freelance

Support The Company’s Mission

But it’s absolutely reasonable for services that support the company’s mission without the need of bringing in a complete team of full-time hires.

  • Large SEO companies tend to hire SEO experts. But creative agencies, as well as local businesses, often prefer a freelancer.
  • All tech companies hire full-time software engineers. But a regular business looking for a mobile app or a simple internal system can outsource that to a freelance developer.
  • Creative studios hire full-time designers — this is the core of their business. But straightforward contracts for branding, simple web design for an internal platform, images for articles or social media statuses can be delegated to freelance designers.
  • Publishing companies hire full-time writers. Regular businesses in need of website content or sales pages hire freelancers and agencies.

Whenever a service is the core offer presented by a company, a full-time hire usually makes sense. If this is a side activity within a limited amount of time (or solving a specific problem), freelancing is often a preferred approach.

Theoretically speaking, most jobs can shift to freelance when you target customers who need your services without aiming to build an entire department in-house.

Is Web Development In a Marketing Team/Company Any Different?

Is the marketing department the core of a marketing agency, a random type of business, or a tech company?

Most companies vary a lot – but I’ll try to outline my experience in each case.

Marketing Agencies

I’ve worked with hundreds of marketing agencies over the years. The smaller ones (< 20 people) generally profile in various forms of marketing and employ 2–3 tech folks dealing with everything on the tech side.

This could range from configuring platforms through helping with tech support at the office to building WordPress websites (or anything else on top of an existing company framework/CMS).

That’s not necessarily bad – but the volume of actual development may vary.

Some marketing companies invest heavily in development despite not being a tech company. A full-stack dev role in a marketing department may be closely related to website development combined with integrating different platforms like HubSpot, Marketo, Pardot and seamlessly connecting their features into an existing platform. It could be a good starting point.

Regular Businesses

A regular, non-tech or marketing business, may have less to offer in terms of guidance, direction, mentorship. It still depends on the core focus of the business and the size of the tech team.

I’ve worked in a similar organization once and it was related to jumping between activities all the time. From site administration to fixing minor bugs in existing sites to programming new components for a random project.

I’d ask for clarification regarding the existing team and the day-to-day activities.

Tech Companies

Tech companies still nurture their marketing departments.

The marketing team could be completely separated from the rest of the company. In that case you may be assigned to a marketing director or a marketing project manager who needs support with their campaigns.

For instance, we do provide marketing services for clients and for our own company. One of our developers is dedicated to the marketing department while a couple marketers are supporting our business goals. It’s a handy mix and developers may jump between projects at different phases of their career.

In that case, it could be a transition (a learning curve) before jumping to a dedicated development role. Or it simply can be a role that is indeed supporting marketing needs – which can still include different site building and integration activities, including front-end development for landing pages or email templates and the like.

Why Most Marketing Retainer Contracts Don’t Last Longer Than 3 Years?

There is no single correct answer that applies to all businesses out there.

  1. Some companies go bankrupt.
  2. Businesses adjust their budgets on a regular basis – so employing the same agency may no longer be applicable.
  3. Clients may hire an agency that isn’t suitable for their type of work (or the size of the business).
  4. Companies evolve on both ends – clients and agencies. A customer may grow and require a different type of expertise that the vendor doesn’t offer. Or the agency may morph into a vendor profiling into a specific field.
  5. Competition is fierce – and a competitor may pitch a client a seemingly better offer.
  6. Clients may look for specific services that the agency doesn’t specialize in, and end up working with several agencies at once.
  7. A business may move their marketing workforce in-house by building an internal marketing department.
  8. Businesses get acquired and assimilated by larger brands with effective marketing teams.
  9. The agency may underperform – or simply deliver a different type of solution than the client asked for in the first place.
  10. There may be a mismatch between expectations and reality – mismanaged on both ends.

Those are just a handful of reasons why businesses may decide to terminate a marketing retainer.

If you dig deeper into any business relationship, you will easily find other factors that come into play.

  • Employees come and go – and the same process may be implemented differently with other folks working on the agency’s side.
  • Some marketing managers may join a competitor and try to steal their former clients.
  • Product managers often job-hop – and a new decision maker may come up with a better offer for the business.

Sometimes, a crisp communication may help increase the retention rate of a vendor. But there are lots of side factors that may influence the decision of a business in terms of offloading their marketing work to their existing vendor.

What Are The Main Blockers for Part-Time or 100% Remote Employees?

There are different forms of remote teams, such as:

  • On-site teams that allow telecommuting 1–2 days a week.
  • On-site teams where a few folks tend to work remotely often.
  • Distributed teams with offices in different areas (where the majority of the folks work).
  • Remote teams with a centralized office and a number of people working from home/elsewhere.
  • A company with no office – everyone works remotely, period.

The configuration also depends on the type of solution. Service businesses work differently from product teams. Small projects with quick turnaround are different from long-term projects (taking years). Organizations working with consultants and freelancers also structure the process in various ways.

With teams where the majority of the workforce is remote, communication is one of the main problems. Keeping everyone in the loop without sacrificing time or missing details are crucial.

Engagement is a problematic point as well. Given the small number of organizations offering remote work, plenty of employees apply for those jobs simply because they want to juggle family activities or work from home. Often times, there’s little to no investment in the organization or the brand.

This also reveals other problems when it comes to competition. Companies formed in metropolitan areas struggle with keeping talent as there are thousands of tech companies (or other forms of competitors) in the same area. Still, employees may consider other factors – office, team, brand, company perks, team building events and more that may keep someone engaged for a longer period of time. With remote, the brand element is weakened and people are often inclined to switch back to freelancing or just job-hopping.

Productivity may be lower in some cases when working in a remote team. Pushing hard to deploy a project or launch a new version of a product is simply more efficient at the office. Local peers get excited and work hard in order to get the work done. The communication overhead, time zone and cultural differences may slow things down – at times.

While there are other factors, those are often a problem for companies considering remote work or evaluating their experiments before their next round of job postings.

Why Leadership Is More Important For a Technical Software Lead Job?

That’s a somewhat common requirement for larger technical organizations, some startups, and businesses employing 40–150 people.

There are different reasons why it may be a good idea.

Resource optimization

From a purely practical standpoint, the 50–50 option means that you hire a single employee for two “different” positions. When running a small company (or a startup), that’s often the only way you can become competitive or grow further.

It also means less people involved in meetings, faster turnaround, and even a greater chance to close a deal or deliver a solution with less back and forth or miscommunication.

Qualified management

Technical managers leading technical teams are often a better pick. Leading a tech team as a non-programmer may be challenging. Discussing project challenges with a client is complex. Assessing risks and areas that would require more time and resources isn’t trivial.

Generally, it’s a great combo that’s quite valuable.

A team leading role

The management half may be invested in a senior role for a team leader. The team leader may still spend the majority of the time programming but also work closely with the team.

Assigning requirements, conducting code reviews, motivating the team require communication and soft skills that are taught at management classes and university specialties. A great engineer is not always the best team leader for a project. A less experienced programmer may be an outstanding team leader given the right attitude and with the optimal processes in place.

Career progression

Developers can pick a different career path as they gain experience. Some may evolve in software architects or technical consultants. They may switch to another technology, or dive deep into DevOps.

Some may branch out to different areas – such as marketing or management. Making a smooth transition to an entirely unfamiliar role is often not feasible and won’t work. A role that combines technical skills with ongoing training and support in management may be a good way to open a new role and let your talent spend a year or two before they decide whether they enjoy the hybrid role, want to revert to tech, or fully transition to management.