Something amazing happens every time I recommend Value-Based Fees by Alan Weiss (https://www.amazon.com/Value-Based-Fees-Charge-Youre-Worth/dp/0470275847). Consistently, a year or so later, one or two people write back and say something like:
Hey, I bought that expensive book on Value-Based Pricing from Weiss after you recommended it. I wanted to let you know VBF made me an extra $10k/20k/50k last year. A good book, but a little dry.
I bought Value-Based Fees (2nd edition) in 2014 while living in Portland, Oregon. I have fond memories of cracking open, reading, and highlighting my copy of VBF sitting in the now-closed Three Friends Coffee House.
Value-Based Fees is probably one of the highest-impact books I’ve read from a dollar perspective. Over the last eight years, I’d conservatively say the concepts, strategies, language, and general je ne sais quoi of Value-Based Fees has put ~$100k-250k+ in my pocket. Not bad for a $50 investment in 2014.
Here’s the core idea of the book. It’s been incredibly impactful for me:
You should price your services based on the value they deliver rather than the time it takes to perform the service. It shouldn’t matter how much time you spend on the project.
That doesn’t mean chugging a beer and submitting a YOLO proposal with an aggressive value-based price. (”Their business does a million dollars a year, so I’ll charge them $500,000!!1 📈”)
Value-Based Pricing means investing time in:
- Investigating your client’s business and industry.
- Dialoguing with them about the problem they’re experiencing.
- Understanding the potential impact of the change they’re looking to realize.
As you learn about the needs of your client and the change they’re looking to see, you learn a lot about how your specialized expertise can help and the value of the outcome they’re looking for. As you put those pieces together, you’re better able to price based on value (instead of time).
Value-Based Pricing isn’t a one-and-done ‘buy the book, check the box, unlock the new skill.’ Learning the concepts of Value-Based Pricing is sort of like marinating something before grilling it. You want to give yourself the time you need to soak in the flavor:
- Read the book.
- Start to internalize the principles and ideas.
- Practice the concepts in your business and with your leads and clients.
- Iterate on the concepts as you find out what works and what doesn’t work.
I think Value-Based Fees will make you more money, but you’ll need to take the time to put in the work. That’s why in my Levels of Consulting roadmap (https://kaidavis.com/levels/), I put Value-Based Pricing at Level 400. Value-Based Pricing is an advanced concept to work towards, and the reward is 100% there if you invest the time.
Alan Weiss released a new version of Value-Based Fees in 2022. (I haven’t read it yet, but it has solid reviews.)
- Here’s the 2022 version of Value-Based Fees on Amazon: https://www.amazon.com/Value-Based-Fees-Charge-Youre-Worth/dp/0470275847/
- Here’s the 2023 version of Value-Based Fees: https://www.amazon.com/Value-Based-Fees-Charge-Youre-Worth-dp-1119776929/dp/1119776929/
Neither of those links are affiliate links. (If you enjoyed this letter and book recommendation, you can buy me a tea or coffee: https://www.buymeacoffee.com/kaidavis.)
I strongly recommend Value-Based Fees. It’s a very impactful book that will take some time to read, think through, and internalize. If you buy a copy, set a reminder for Dec 2023 to write me a note to let me know the impact it had on your business.