Whether you try to capture 100%, 70%, 50%, 30%, 10%, or 0% of this difference is entirely up to you. I don’t see anything that says friends can’t get a better deal, but neither do I see anything wrong with trying to capture SOME of it.

Yes. I probably changed the direction a bit. Good catch. Perhaps I was making an imprecise mental shortcut that benefiting the friend’s employer may tend to increase when the firm is larger (whereas the benefits may more likely accrue to the individual when the firm is smaller). Where the benefit accrues is a bit of a subjective measure and harder to price discriminate cleanly on. Probably why I was thinking fees based on size of client firm (e.g., revenues, profits) could possibly help manage the slippery slope …

On whether there is a difference whether one is benefiting the friend or the friend’s employer … the pressure to discount should definitely decrease where the benefits accrue to the employer.

I wasn’t seeing Question #3 as a matter of size so much as one of whether you are truly benefiting a friend or the friend’s employer.

Ford Harding

Three questions:

1> Is there a risk that a client, even if a friend, might devalue our services if we don’t charge adequately for them?

2> If the consultant owns his own firm, isn’t one of the benefits being able to give a special rate to a client from time to time?

3> Does the decision to discount change if the friend owns his own company instead of working for someone else?

Ford Harding

Pricing is not about the marginal cost plus a “reasonable” profit but about the results the buyers are seeking, and my value of my contribution to achieve it.

What does the buyer want to achieve by using my help and support?

What is the gap of the current situation and the expected new situation?

I say “expected” because as an outsider I can’t control the results. I offer value and buyers have to integrate that value into their businesses to see new results.

Buyers make investments according to their expectations of the results. Some buyers intend to build pig pens and some intend to build castles, and they require different investments.

Investments are about the expected outcomes buyers are seeking not the invested costs and labour the consultant puts in.

I believe when we ask people to invest their own money in their own successes, we quickly learn how serious they actually are.

The message as to whether or not they believe in their own abilities to achieve their goals and dreams becomes crystal clear whether or not they cough up the dough.

My thinking may be simplistic but as a farmer I’ve learnt that I have to plant and no one can guarantee plentiful harvest.