How Did I Decide What to Charge My First Client?

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Hey — Govardhana MK👋

Along with practical growth tips, we share live business use cases to help you launch and grow an internet business from $0.

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If we are meeting for the first time, I am Govardhana MK, founder of:

NeuVeu - a Digital and Cloud consulting firm making $650K ARR with 21 global clients

TechOps Examples - The #1 DevOps and Cloud technical newsletter making $100K ARR with 45K+ subscribers

Growth Feels is my latest intitiave, where I share my learnings, strategies, and live business use cases to help you build a successful internet business from $0.

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How Did I Decide What to Charge My First Client?

It’s hard to grab the attention of a client. When you did, that is only 50% of the deal closure progress.

If you have missed our last edition on How Did I Sign My First Paying Client? , I suggest to read it to gain the organic understanding before touching base on ‘what to charge?’

This is how any typical deal flow:

But most of the clients would touch base on your consulting rates in the discovery calls itself, so anticipate that and get prepared for it.

And it all boils down to getting the right answer for one question.

ONLY BIG QUESTION: Why would the client come to you when there are proven agencies and service provider giants like IBM, Accenture?

In my case, my first client was an event management SAAS startup in New York, and these were my hypothesis for that big question.

Despite proven choices, they reached out for a deal. That shows the trust and capability acceptance, which they are convinced of:

So the make or break point here is the cost.

If I can showcase my pricing point is less than a full-time employee salary and the associated costs, the deal is highly likely to turn up positive.

Most importantly, it creates an anchor effort.

Here is what I did:

1. Went to Angel List (now Wellfound)

2. Discovered the old job posting of the client for a similar role and experience in their location. (You can search for a listing of a similar-sized company in the same category when you don’t find your client.)

3. Recorded the average salary range.

4. Converted to per hour expense and added the hiring costs, insurance, maintenance, etc. It came down to $160/hr.

I put forth this and quoted $80/hr back in Feb 2023 (during my notice period).

By the way, most of the service companies like TCS, HCL charge an average of $40/hr from India.

This is 2X of average market rate. But it worked.

And I started my consulting journey.

I moved to value-based delivery for a few clients post that, especially cloud savings kind (25% of cloud bills saved for 6 months).

For someone starting their consulting journey, keep note of these takeaways:

• Use anchoring effect

• Balance the value with cost

It’s a win-win.

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— Govardhana MK (@govardhana_mk)

See you on Sunday with 3 live business use cases. Take care!

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