Should you set your prices by what your competitors charge?

At the start, yes. Looking at what comparable firms charge gives you a number you can actually go to market with, and going to market matters more than optimising your first invoice. The problem is that most firms never revisit it. The benchmark becomes permanent, and the going rate only drifts in one direction.

Why is copying the going rate a reasonable place to start?

Because when you're new, you don't have much else to price against.

You don't yet have the authority to charge more, and you may not have access to an audience that could pay more even if you did. Both of those are earned, and they take time. Somebody starting a bookkeeping practice this month cannot credibly quote what a twenty-year firm quotes, and pretending otherwise just means quoting a lot and closing nothing.

That's true even if you do have real authority. If nobody knows you exist, how are they going to find you and hire you? Reputation you built somewhere else doesn't automatically travel. You still have to become visible in the new context, and while you're doing that, the going rate is a perfectly serviceable starting number.

There's a more aggressive version of this that I like, which is to start at nothing. Alex Hormozi's advice for a standing start is to give the thing away for free and build proof from it. What I find clever is the way he frames the ask: rather than offering it directly to somebody you know, you tell them you're offering it free and ask who they know who could use it. You've made that person look generous, and there's a decent chance they end up wanting it themselves. If you're deliberate about who you ask, that's a strong opening move for a firm nobody has heard of.

So no, I don't think looking at the market is a sin. It's a perfectly sane way to get moving.

When does the benchmark stop being useful?

When it stops being a starting point and becomes the way you set price forever.

That's the actual trap, and it catches thoughtful people. The number gets set once, in year one, under year-one conditions, and then it just carries. Meanwhile you got better, your clients got bigger, your costs moved, and nobody went back to the number. Five years on, you're still priced against a room you left a long time ago.

It gets worse because everyone in that room is doing the same thing. When every firm prices off every other firm, no fee is anchored to what the work is worth to a client. Each fee is anchored to a slightly stale average of other fees. Add one firm under pressure who cuts to win a job, and the average takes a small step down, and next quarter everybody benchmarks against the new number in good faith. Simon-Kucher, who have spent decades on nothing but pricing, put it plainly: matching competitors doesn't maximise profit in the short or long term, because it detaches your price from what the customer actually values.

One thing I want to say clearly, because the pricing advice industry usually skips it. Being inexpensive is a legitimate strategy. There's nothing wrong with being the cheap option, as long as you understand what it requires, which is a very large share of the market to make the arithmetic work. Most professional services firms have no path to that and are cheap by accident rather than by design. That's the version that hurts.

What actually tells you that you can charge more?

Watch who hires you, who doesn't, and when people complain.

Those three signals will tell you most of what you need if you pay attention over a few quarters rather than reacting to one lost proposal. If nobody ever flinches at your fee, you're almost certainly under. If the clients you want keep going elsewhere, look at what they understood about you before you look at the number.

A friend of mine who owns an HVAC company gave me the simplest test I know for this, and I've repeated it a hundred times since. He said: if you raised your prices five percent this year, would anybody complain? Nobody would complain. What about ten? Well, maybe. What about fifteen? You keep playing that out in your head until you hit the number where you think people genuinely wouldn't hire you, then you back off and raise by something reasonable. It takes about ninety seconds and it's better than most fee surveys.

The other move is to add rather than replace. Put a premium offer alongside what you already sell and see whether anyone bites. You don't withdraw the lower-priced option, so you're risking nothing, and you learn something real about what your market will carry. People have to get good at reading their own audience, and that's how you read it without gambling the business.

Prices should be adjusted regularly. Not dramatically, not annually as a ritual, but often enough that the number reflects the firm you are now.

Why does a clearer offer let you charge more?

Because a buyer can't pay a premium for something they can't name.

I worked with a consulting firm, EXOS Advisors, whose core offering had a generic name. It was something like a business blueprint or a business roadmap, the kind of phrase that could belong to any firm anywhere and told a prospective client nothing at all. Positioning rarely turns on a name. In this case it did.

We ran a narrative messaging workshop with them. The shape of those days is always the same: we spend the morning working through the nine questions that get us to the core message, I'll usually put together a rough draft over lunch, and in the afternoon we look at it together and ask where a lack of clarity is costing the company real money. You genuinely never know in the morning what the afternoon is going to bring, and that's the part I like most about the work. Sometimes you go straight at the thing that feels most pressing. Sometimes you ask a few questions and find something considerably bigger underneath.

What surfaced for them was a unifying name. The offer became the Executive Operating System. The funny part, and I'll admit this cheerfully, is that I had assumed all along that EXOS stood for exactly that. It doesn't. EXOS refers to the exosphere, the idea being advisers who take the high-level view and see the whole picture. Lovely brand thinking, and the offer name now sits inside it so tightly that they read as one thing.

That naming work changed what the firm could charge, because clients could finally hold the thing in their hands. Same advisers, same expertise. A buyer who can name what they're buying can compare it on something other than an hourly rate.

Can you know who you're not for at the beginning?

No, and I think a lot of positioning advice is dishonest about this.

Deciding who you refuse is genuinely hard when you're starting out, and I don't think that's a failure. You don't have enough data. You haven't met enough clients to know which ones drain you and which ones make the work good. Anyone who tells a brand-new firm to pick a narrow niche on day one and never deviate is asking for a guess dressed up as strategy.

What you do instead is test, iterate, pay attention and look for patterns. Which engagements were profitable. Which ones you'd take again tomorrow. Which clients referred people like themselves. Over a couple of years those patterns get loud, and then you can say who you're for with some authority, and the positioning work has something real to stand on.

That's also when the fee conversation gets easier, because you finally have something to price against other than the room.

Putting it to work

Three things, in order.

Run the five-ten-fifteen game this week. If you raised prices five percent, who complains? Ten? Fifteen? Find the number where you honestly believe people would walk, back off from it, and raise by something reasonable. Write the number down before you talk yourself out of it.

Then add a premium option to what you already sell, without removing anything. Something with more access, more scope, or a faster turnaround. Put it in front of the next five prospects and watch what happens. You've risked nothing and you'll learn more than a fee survey would tell you.

Third, and this is the slow one: pull your last two years of engagements and sort them by profitability and by whether you'd take the work again. Don't decide anything yet. Just look for the pattern. That list is what eventually tells you who you're for, and it's a lot more reliable than picking a niche because a book told you to.

Sources

Frequently asked

How often should we revisit our prices?

More often than most firms do. An annual look is a reasonable floor, and any time your capacity, costs or client profile shifts noticeably is a good trigger. The failure mode is setting a number once and letting it ride for five years, which is how firms end up priced for a business they no longer run.

Is it wrong to be the cheapest option in our market?

Not wrong, but it comes with a requirement. A low-price position works when you hold a large share of the market and the volume carries the margin. Most professional services firms don't have that and end up cheap by accident. If you're going to be the affordable option, do it deliberately and build the volume to support it.

What if raising prices costs us clients?

Some of it will, and that's information rather than a disaster. The question is which clients leave. If you lose the ones who were unprofitable and difficult, you've improved the business. If you lose the ones you wanted, look at what they understood about your value before you assume the number was the problem.

Should we tell existing clients when prices go up?

Yes, directly and in advance, with enough notice that nobody is surprised by an invoice. Long-standing clients generally accept an increase far better than firms expect, particularly when it's framed around what has changed in the work. The awkwardness of the conversation is almost always worse in your head than in theirs.

Does clearer positioning really change what we can charge?

It changes what a buyer can compare you against, which is the same thing in practice. When your offer has a name and a shape they can hold, the comparison stops being your hourly rate against someone else's. That's a slower fix than a price change and it lasts a lot longer.

Ready to look at the architecture honestly?

If your fee conversation still ends up at what everyone else charges, the number isn't what's stuck. Book the conversation. We'll tell you what we actually see about how your firm reads to a buyer, and whether the four frameworks are the right work for where you are.

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