How to Charge Higher Prices (When You Sell A Service)

Answers two viewer questions — a lawyer asking how to charge luxury prices, and "Carol" asking whether a boutique consulting firm can beat the commodity perception and be seen as an advisor. Short answer: you can, "but probably not in the way you might imagine."

The real difficulty — services are credence goods

Buying an object gives reassurance through inspection: pick up the bag, look at the stitching, feel the weight. Even knowing nothing about leather, "they come away feeling they've examined something."

Nobody can do that with advice — and it goes further: > Six months later, when the deal went through or the client feels better, "they still have no way of knowing whether that was you being exceptional, or whether it was always going to turn out that way and any competent person would have got them there."

Credence good = something whose quality the buyer cannot verify even after they've had it. Named fields: law, consulting, coaching, training, therapy, wealth management, photography.

Consequence: your price becomes the evidence

People don't live with that uncertainty — they resolve it by finding something observable as a stand-in. "The loudest thing available is your price." This is price-quality inference.

> Governing rule: the less able somebody is to assess a thing on its merits, the more weight they put on what it costs.

The dentist illustration: toothache, three quotes — £85, £160, £320. You don't pick the £85 ("what the hell is wrong with them?"). In real pain most go to the £300 one. "We just don't trust cheap."

> This reframes the problem entirely: it isn't how you justify a high price — "the fee is doing the work of persuading them all by itself." It's what you do around the fee that supports or destroys it.

⚠️ Reconcile with Zn_nEXBqO4s: inference is strongest on inexperienced buyers, weakest on those who know the category. Both hold — the fee carries weight because the good is unverifiable, and that weight falls as expertise rises.

What destroys it: the cost breakdown

Splitting the fee into prep days, delivery days, travel, materials. Done because it "looks thorough," "feels honest," or procurement asked once years ago.

What it actually does: turns your fee into a sum of parts — each one something the client can question, remove, or hold against a line in someone else's proposal.

> "That's where commoditization actually comes from." Clients aren't sitting there believing all consultants are identical — "that's not the way the human brain works." They're working with the breakdown you handed them.

The hourly rate is not the culprit. "The most expensive firms in the world bill by the hour at rates that would make your eyes water," and nobody feels they're buying a commodity. "It's the showing of your workings that does the damage."

What goes in instead: stages

Define the work as pieces — diagnostic / build / handover or the industry equivalent. Each is a fixed number, attached to a defined piece of work, with a stated end. All stages in the same document (no client signs off stage one and trusts you to reveal stage two later).

Uncertainty — the two-year case, the client who changes their mind — is handled by precision about what each stage covers and what falls outside it, not by hedging the price.

> You are not selling time. "This is the most important thing." The document says what the client is getting and what's being lifted off them — never how many days it costs you. The moment they read "3 days preparation," they wonder if it could be two. You've handed them the lever.

Never discount — move the scope

> "Never, ever discount." In luxury, "you're destroying your credibility."

A discount tells them: (1) the first number was plucked out of thin air, (2) every future number is an opening position, (3) "you're never going to recover from that."

Instead, take something out:

• B2B: "Your own team can do the data gathering — that makes this stage more aligned with your budget."
• Sessions: "We could do six sessions instead of ten, and re-evaluate after the sixth."

They pay less because they're buying less. Result: "they're discussing what they're buying rather than what you're worth — and your rate is still standing when the conversation ends."

When they name someone cheaper

Don't feign ignorance — "of course you know what your competition charges. And they know you know." It "makes you look evasive."

Agree, then attach the difference to something specific and checkable: > "Yes, we are more expensive, absolutely."

• "We specialize in luxury companies." (He doesn't say they don't out loud — "the inference is there.")
• "You'll be working with me directly, rather than a junior you've never met." — with substance: at large firms "you talk to a senior partner while signing the contract, but once it's signed you're immediately handed to someone more junior."

> ⚠️ Whatever you say has to be fact. If all you can point to is quality, service, or attention to detail — "then the client is right: you are interchangeable, and you should be charging what everybody else charges in the mid-market."

Be different in a nameable way

The sentence test: finish "They come to me when ______." Pass condition: what follows is something a client would recognise as their own situation, in their own words rather than yours.

Fail: "strategic advisory services for growth-focused businesses" — or "whatever other string of buzzwords AI has given you." > "No amount of clever pricing is going to rescue that, because a price only becomes plausible once the thing it's attached to is specific."

The consequence people don't like: saying no

A luxury trainer must turn away non-luxury clients. "Is that difficult? Hell yes" — "a traumatic experience," especially when new. The temptation in a quiet month is to make an exception.

> Anybody can put a specialism on a website — "that costs absolutely nothing to write." What makes it believable is a client being told to their face that what they want isn't what you're best at. "Most of the time, that's the only refusal a client will ever actually witness."

Script: "I can't help you with that. I don't think we'd be the best partner for you. Here's who you ought to be calling instead."

> It costs real money on the day — "and that's precisely why it carries weight. That's costly signaling: something too expensive for a worse operator to imitate."

Cross-references

• Category theory → Zn_nEXBqO4s · Never discount → EAtk6nFq0As, SLPtisXaquk
• Costly signals online → qNYUmVgEFHk · Cheap talk → nIU5e4EwY3A · Credence + waiting → q8PUBnlMsrM