How to sell professional services
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If you are new to selling professional services, either as a standalone offering (like consulting) or alongside a subscription offering (like SaaS), this post should be helpful for you.
For background, prior to joining Ethena full time earlier this month, I spent the past two years as a consultant, helping exec teams unlock growth through improving focus, process and training.
When I started out, I had a lot of experience unlocking growth as a member of an exec team but zero experience selling professional services to exec teams. 2 years and 30 projects later, here’s what I learned:
There are two ways to sell professional services:
Sell your time.
Sell deliverables.
Each approach has its benefits and downsides:
The benefits of selling your time
It’s easy to get started. Just pick a domain you have expertise in, figure out a mutually acceptable hourly rate, look around for work and scope out projects.
If you pick a rapidly growing sector (like tech), where the demand for full-time talent exceeds the supply of available workers, there will always be high demand for consultants.
You can also work on a broad range of projects, especially once you are in with a client, which in turn leads to building long term customer relationships and less need to hustle for the next client.
The downsides of selling your time
The main downside of selling your time is that clients will immediately focus on your rate and hours.
You can’t just take your old salary and convert it into an hourly rate because as a consultant you have a bunch of extra costs. You have to factor in paying for your social security and medicare taxes, your healthcare, your business licenses, time off to rest, downtime between project, all of which lead to have to charge a substantial premium.
The problem is most clients don’t think about your extra costs, they just look at the yearly salary they were willing to pay a full time person and divide that by 2,000 to get an hourly rate.
This creates price sensitivity, which leads to clients pushing back on your rate and/or capping your hours, while not capping their expectation for you to be responsive at all times.
The benefits of selling deliverables
The main benefit of selling deliverables is that it shifts your buyer’s attention to what actually matters; the impact of your work on their business.
For example, if a plumber charges $350 to fix a leaking pipe and completes the job in 30 minutes, does the homeowner care more about paying a $700/hour rate or about preventing $7,000 of water damage? If the job was sold as “$350 to prevent $7,000 of water damage”, the answer is pretty clear.
The second key benefit of deliverables is that you can standardize them, optimize the time it takes you to complete them and maximize your effective hourly rate. I cannot overstate how important this is; through optimizing my deliverables to focus on impact, I was able to get my effective hourly rate to $1,000.
The downsides of selling deliverables
In order to sell deliverables, you need a framework into which you can fit potential projects, in order to get your customer thinking about the impact on their business instead of the cost of your time.
For example, in my case I had a framework for a customer journey, broken down into stages. This led my customers to consider how they were doing at each stage and the impact of improving their performance.
You also need a set of deliverables that address the impact. In my case, this was an initial assessment, an ideal customer profile, a sales process, a customer journey and an implementation program.
The main downside of this is that you need to stick to a niche where your frameworks are credible and relevant, which inherently limits the companies and types of work you can pitch. But honestly, is this really a downside or just a good business practice?
How to sell deliverables
Here’s how to bring it all together and generate business:
Pick your niche. Like any business, the smaller the better. I ended up focusing on private SaaS companies that were far along enough to have a sales team but not too big that they only wanted to work with a big consulting firm.
Prepare your frameworks. I ended up building 3 of them: one for “traditional” SaaS (more sales driven), one for “product-led growth” SaaS (more marketing driven) and one for aligning teams around a strategy and goals (based on my experience as a COO).
Prepare and price your deliverables. These usually fall into 3 buckets:
An assessment or diagnostic, which quantifies the problems in the context of your framework, and demonstrates the impact of solving them;
A set of designs, which provide detailed instructions on how to solve the problem — in my case these were things like an ideal customer profile, a prospecting process, a sales process, a customer journey.
An implementation program, designed to land the designs and start realizing the impact. Given this inevitably requires getting people to change existing behaviors, doing the assessment is essential in order to explain why the change needs to happen.
Diagnose your client’s needs. I ended up using the SPICED framework for this because it keeps the customer’s desired impact as the ultimate goal and encourages them to think differently. I typically spent 30 minutes or so asking prepared questions about problems and then used the customer journey framework to put these problems in context and transition into the impact of solving them.
Propose a statement of work. This was a follow up call where I recapped what I’d heard, revisited the customer journey, presented a proposed statement of work with deliverables aligned to the desired impact, showed a timeline for completion and set expectations around the time commitment needed from the customer.
Trade scope for budget. If you price your deliverables correctly, your buyer will usually say “oh, that’s more than I had in mind”. The standard way to overcome this is to as “what budget did you have in mind” and then guide the decision towards starting with the assessment. Do not just drop your price!
Execute. The foundation is doing high quality work, however from a client management standpoint its important to meet regularly with your exec sponsor to update them on your progress vs the timeline, give all key people a 1:1 pre-read of the final deliverable and use the final read-out to create momentum into the next deliverable.
Good luck selling your professional services and let me know how you get on!
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