How at Risk Pricing Works

Show Notes

Ulrich Riedel and Will Bachman discuss Ulrich's unique pricing model for independent consultants. Rather than being paid upfront or daily rates, Ulrich gets paid a percentage of the value he creates for the client at the end of the project. To make this type of pricing model possible, Ulrich needs to make sure certain conditions are met, such as creating value for the client, measuring the value,  and convincing the client of the value. He also needs to make sure that the client will be willing or able to share in the risk associated with the project. Ulrich has learned how to do this through experience, and was willing to share his knowledge with Will and the viewers of Unleashed.

What to Consider with an At-risk Pricing Model

Ulrich Riedel explains that there are four main themes to consider when using an at-risk pricing model. First, the offer needs to have unique value to the client. Second, the individual must be willing to accept risk. Third, the client must be open to the at-risk pricing model. Fourth, the approach to project generation must be tailored to the at-risk pricing model. He suggests that the network may not be enough for project generation because many close relations may not be able to accept at-risk pricing. A solution to finding suitable clients, may be to develop cold  lead generation through LinkedIn might be helpful. He also suggests partnering with people who have contacts to potential clients and projects, and what he found most helpful is to establish oneself as an expert to increase trust. 

Pricing the Project

Ulrich specializes in large, complex projects that are worth more than $100 million that involve many functions, hierarchies, global reach, different countries and cultures, change management with hesitancies  and conflicting priorities, and the list goes on. He analyzes the entirety of the project, helps implement it, and generates an added value of 8-15%.

Ulrich discusses a project they are working on with a client to shape the future. His role is to provide insight and advice on the strategy and execution of the project. He recently worked with a small company with a few $100 million turnover to help them optimize three main projects.  He is also responsible for talking to many people in different hierarchies to collect data and figure out where value is hidden and how to create an intervention and implementation plan which could generate much more value. 

Prospect Generation

Ulrich studies the mentality of the client and the company and  talks to people in all hierarchies to gather in depth information from all levels, including employees at the water cooler or the factory floor during the night shift. Once he has an implementation plan in place, he sits down with the client to discuss two main variables: volume and cost. Ulrich also talks about how he determines his fees, and the search time for finding projects, and how long projects typically take. 

Timestamps:

• 03:54 Exploring At-Risk Pricing Models: Strategies for Generating Projects and Establishing Trust 
• 06:05 Exploring Value-Based Pricing for Large Complex Projects
•  06:25 Consulting on Building a New Business Model with a Hybrid Technology 
• 11:46  Value Creation and Compensation for Consultancy Services 
• 14:39 Exploring the Long Sales Cycle and Prospect Generation 

Links:

https://www.drulrichriedelconsulting.ch/

CONTACT INFO:

https://www.linkedin.com/in/DrUlrichRiedel/

Unleashed is produced by Umbrex, which has a mission of connecting independent management consultants with one another, creating opportunities for members to meet, build relationships, and share lessons learned. Learn more at www.umbrex.com.