Karen Klein asked a tough question of me at Social Media Club Seattle last week. Karen is the CEO of SilverPlanet.com, a website focused on helping boomers and elders with aging products and services, particularly home facilities. She expressed an interest (past or present) in hiring a consultant to help with her company’s social media marketing. But, like many small business owners, non-profit organizations or recession conscious companies might agree, Karen seemed to say that consultants are often too expensive.

Her question was a good one:

Would you consider incentive-based pricing, so I could afford you?

(For the record, I’m paraphrasing. She offered some other context. I just simplified it for the sake of argument.)

Not really knowing how to answer and having never thought of the possibility before, I said that I would consider it because if I don’t perform, I should be held accountable for that. But I also said the problem arises that you’re getting my time and counsel, which is worth something whether the projects and programs we develop work or not. I also can’t pay my bills on the possibility your social media marketing programs work.

But the question is an interesting one to consider, social media notwithstanding.

Chris Brogan’s now infamous pricing post got people talking about what a national social media consultant charges for his time and services. Peter Shankman, another elite PR and social media expert even posted this flippant (but perfectly valid point) tweet recently:

Peter Shankman's $400 lunch tweet

I can certainly attest that being someone who has built his reputation on sharing knowledge through blogs, tweets, conference talks and even responding to the occasional email asks, there are lots of people who mistakenly think you’ll just counsel them for free all the time.

My typical approach is that I provide general opinions and observations on my blog, Twitter stream, Facebook Page and even direct communications (in-person, email, phone call, etc.) free of charge. If you ask my opinion, I can’t help but give it. But when you ask me to consider your specific business challenges, the meter is running. So I can sympathize with Shankman’s tweet, even if Kami Huyse thinks its egotistical.

But even that general, free advice comes with a catch: I don’t have enough hours in the day to only do that. My time is valuable and a 30-minute lunch or a 15-minute phone call do answer your question is probably 30- or 15-minutes I’m unable to bill. No disrespect and I don’t want to be rude, but by asking for my nice guy helpfulness, you’re costing me money. No, money isn’t all that drives me. But I have kids to feed, friends. That’s just life.

And please know: I recognize daily how blessed I am to be able to make a living doing what I’m doing. To take something I did as a hobby for years on my own time and turn it into a viable job is like winning the lottery in a lot of ways. If you can’t sympathize with someone who is constantly asked for free advice, “10 minutes to pick your brain” and friendly lunches that are all about what their business should be doing on Facebook, I’m sorry. It’s the perspective I have. Every time someone approaches me with their somewhat-of-an-imposition ask for free advice, I’m not earning money that puts food on the table for the three people who matter most to me. No offense, but I choose them.

The premise of Brogan, Shankman and other consultant’s business model is that you’re paying for their time. The price of that time varies by consultant based on their experience, availability, ego (yeah … that plays into it, too) and opportunity. I typically charge $200-250 per hour for my time. It’s far less than some consultants I would consider at a similar level of experience and ability. But I’ve also had PR and marketing folks hear my rate and laugh, saying no one should ever pay that for my efforts.

My hours are typically booked at least 60-90 days out, so I’m not sure others agree with them.

And no, I don’t charge people to go to lunch with me like others may. Perhaps I’m leaving money on the table. But I just think that’s a dick move. If you think they’re trying to milk you for advice, just say “no” and offer them an hour of consulting at your standard rate.

Being asked to price my services on performance alone is terribly problematic. While I agree that if I don’t deliver, you deserve some form of discount, restitution or break, it’s not only the social media marketing program I’m giving you. It’s my time, energy and expertise. And we are working together on it. I don’t just wrap it up and hand it to you.

Social media marketing also doesn’t exist in a vacuum. How are we to know the promotion to drive Facebook fans didn’t work because your media company placed the ads in the wrong venue or your oil well ‘sploded the day before the launch? (Hypothetically. I have not worked with BP.)

You don’t buy traditional media on performance alone, either. An ad in the New York Times costs a ton of money whether it compels people to buy your stuff or not. Sure, Pay-Per-Click advertising is a step closer to a more efficient system, but all you’re paying for is the click. The performance should be judged on the lead or purchase capture.

Yes, I sympathize with Karen and businesses in similar circumstances when it comes to paying consultants. Small businesses get the raw end of the deal when hiring social media help. For what they can afford, they typically get inexperience or a limited perspective. And yes, I think social media marketing consultants are generally overpriced … at least the good ones. But capitalism teaches us interesting things, like when the market is ripe, you charge more.

I want to see the world from the incentive-based perspective. It’s the only true measure of a vendor’s worth in many ways. But even with a ton of capital and even more balls, I’m not just charging for productivity or success. I’m charging for my time, experience and wisdom.

And isn’t that worth something?

Am I an egotistical prick or fair-minded capitalist? Would you resent it if I said “no” to your lunch invite? If you’re the person who has emailed five times, called 10 and DM’d me on Twitter everyday for a month would you clue in and realize I’m not going to give you constructive feedback on your strategic plan, “when I have a moment?”

I’m here for the whoopin’. The comments are yours.

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About Jason Falls

Jason Falls

Jason Falls is the founder and chief instigator for Social Media Explorer's blog. He is a leading thinker, speaker and strategist in the world of digital marketing and is co-author of two books, No Bullshit Social Media: The All-Business, No-Hype Guide To Social Media Marketing and The Rebel's Guide To Email Marketing. By day, he leads digital strategy for CafePress, one of the world's largest online retailers. His opinions are his, not necessarily theirs. Follow him on Twitter (@JasonFalls).

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Comments on Social Media Explorer are open to anyone. However, I will remove any comment that is disrespectful and not in the spirit of intelligent discourse. You are welcome to leave links to content relevant to the conversation, but I reserve the right to remove it if I don't see the relevancy. Be nice, have fun. Fair?

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  • http://twitter.com/JHGoodwin John H Goodwin

    It is not about price, but value. Any consulting relationship should be focusing upon that as the context for the cost. As consultants, we make the judgment whether or not the client is capable of benefiting from what we uniquely bring to their challenges. Are we the right person for the client? Metrics for consulting are difficult unless they are tied to overall performance, such as earning a portion of the fee in equity (which can be good but can have its complexities). If you and client can agree on the question 'what is success?' in advance of the assignment, which includes a clear definition of scope (what is in, what, out?) and what is required of client (in terms of doing their part on a timely basis, support, intelligence about the organisation), then perhaps. If not, don't touch it.

  • http://www.quickdial.in quick Dial

    Another option is trying to add a monthly retainer on to what you're charging. But if you already have a deal in place, it might be hard to break out of that.

  • Anonymous

    I can probably ask him about a pain I’ve had in my mouth. He may offer a piece of general advice, but he is not going to examine my mouth and provide a professional diagnosis. If I am serious about getting it fixed, I know that I’ll have to go in to his office and pay for it. That’s just life.

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