Consulting for Equity: How to Double Your Consulting Fee

How much more successful would you be if you had lunch once a week with insanely successful entrepreneurs who share their biggest secrets on how they think and achieve success? Grab your seat at the table because this is business lunch with Roland Frazier and Ryan Deiss. Hey, business lunch listeners, would you like to get paid your normal rates but also an additional amount in equity? Well, today's episode is a little bit different because it was taken from a coaching call Roland did with the consulting for Equity Mastermind. It's a group he started to help consultants get equity and ownership with the companies that they're working with while also getting paid their normal rates. And in this short clip, Roland walks someone through how they can get their normal consulting fee of $75,000, but also ask for an additional $125,000 in equity? Let's listen in.

If your six month consult is $75,000, is that what you're saying? And time wise, during that six months, less than a day a week for six months. And so if I pull out my calculator And I say six months times an average of four weeks per month would be 24 days of your time. So here's my math. So if we say typically you would spend one day a week for $75,000 over a six month period, we're talking roughly 24. So I'm going to call it 25, 25 days. So if I said $75,000 divided by 25 days, you're about $3,000 a day on your consult on average. Right. Does that make sense? Okay, so then if you're, if your consult, which I think should be maybe a little bit more was say in the neighborhood of between 10 and $30,000, that'd be a good initial range, I think, to think about. And then that's your, that's your discovery day. Now can you deliver, let's say, let's start and say we're in between, it's $20,000, $20,000 a consult day. Probably in that world that's not that big a deal. And I know that they pay lots of months of money to consultants. So let's say it's 20k for that 20k. Can you deliver $200,000 of value in the plan that you give them to execute? That's, that's the math I kind of want to go through as we're all thinking about what are the 10x benefits that they can get. And so for you, I think it would be to quantify on average, what is the increase in customer retention that you're able to generate for them. What does that result in? In new customers? How does that impact profits? If you can get to those kinds of numbers or some percentage, then you can give them transformative information that will say, on average, my clients achieve these benefits as a result of me doing this. And over time, they've aggregated $400 million. And on average, the average client sees a benefit of one million or more. Right. Because they'll feel that they can get that benefit if they do the things they need to do. Now, it's very likely that they'll need.

To have you come in and help.

Them make those things happen. But what we're doing here is showing them the strategy of what we're going to do is we're going to increase customer retention by doing these 17 things, and we're going to do these 14 things to reduce churn, and then we're going to do these seven things to get additional customers away from other people. And that's going to result in a benefit of X. Right. And the X could even be a million dollars. Right. It's like to me, the more you show them that the plan looks like, the more they're going to want you to make it happen for them. That's the benefit that you're creating for them when you're in that Discovery Day. Okay, so then you're saying, so the average benefit is a million dollars. And let's say that you're working with a company that's. And let's say that the benefit is a million dollars in profit. It might or might not be. Just. Just bear with me. So if the benefit is a million dollars in profit and it's a $20 million profit company, then arguing for 5% would be to take the full benefit. So you might be looking for something less than that so that there's, there's profit in it for them as well. But, you know, and a lot of those are not private. Right? A lot of them are public companies as well. The cool thing there is, you know, that they can give away shares and it costs them no money. So you can say you can pay me and I might charge more. Like if it was a, if it was a million dollar benefit, I might be charging 200,000 instead of 75.

But.

So, you know, normally this would be $200,000. But I'd love to offer you the ability because I believe that I will be able to increase the value of the company. So I'll offer you a hybrid deal where you can pay me $100,000 or 75, which you always, which you got anyway, right? You can pay me 75 now and 125,000 in stock right now. That's cool because you're not asking for a percentage from a public company because those shares have independent value, because there's a market that says what they're worth. Give me 125k worth of stock and 75 cash instead of 200 cash. That's a pretty cool deal. It's not going to impact their P and L because that extra 125 is a balance sheet occurrence, not a income statement occurrence. And you're getting your 75 that you would have got anyway. Plus you get some stock and maybe it goes up, maybe it goes down, maybe it goes to zero. But it's a tremendous upside if it goes up $5, you know, that's significant. Right? And so I've talked about it briefly before, but it might give you an idea of ways to expand what you're doing because not everybody that you're going to, that you're going to meet as a client will need everything that you could do for them. So the more that we can turn our leads into, into clients, the more profitable we will be in a dpl, a dollars per lead kind of performance on our efforts to generate customers. So one thing that I would like for you to be thinking about is can I offer all these types of consulting? Because whereas you may have a business where you help companies improve their retention and reduce their churn, maybe they don't all engage you initially for the $200,000 thing. Maybe they are like, I love what you had to say. Would you be willing to come on our advisory board? Or they say we can't really afford right now, or it's not in the budget until next year. And the year, this year just started and we've spent this year's budget already. So talk to us in 2023 or 5 or 7 or whenever. You know, the next time that we through this process is, well, you don't want to have to wait for that. So why not say, well, there are other things that we could do. I could certainly come on in a lower, in a less intensive way where I can advise you as opposed to coming in and doing this work for you. And so I would be happy to be an advisor for your company. Is that something that might work? Right? Or rather than paying me the 200k for operational consulting, I'm willing to put my money where my mouth is and get paid more for it. How about if I come in and it costs you nothing except the Discovery Day and the actual out of pocket costs, but for me it costs you nothing. I'm coming in on performance and when I get you each X, let's say it's a million in additional. Each time I get you another hundred thousand in performance, you give me my fee, right? You give me 10% of my fee if it was 100,000 in performance towards $1 million total benefit. Each time I deliver that, you pay me my fee. But because I'm on 100% performance, pay me 150% of my fee or 200% of my fee, right? So. But I'm putting my money where my mouth is. Cost you literally free. So you're telling me like if they say, well I would never pay that much more, you say okay. So you're telling me that if I come in and I say with no investment on your part, I can give you a million dollars and when I give you the million dollars, you're going to give me an extra 150,000, you would say no to that? I mean it's kind of hard, right? And some of them might say yes, I would say no because I don't like it. But the smart business person would say, well heck yeah, I have absolutely nothing to lose and I'm going to be 100% to gain. And then the transactional consulting would be are there things that are finite in their delivery that are kind of one time occurrence specific that you could do for people and that would be like a transaction and that on that transaction you're going to get some compensation that is a percentage of the transaction benefit to the customer that you're going to charge for. So I'm going to help you exit. And when you exit, that's not something you normally do. When you exit, I going to charge 5% or 10% to help you make that happen. And when you do, you're going to get this giant payday and it will be free to you because I'll add plenty of value and I'm going to get 5% for doing that, right? That's my $30 million exit I'm doing right now. So that's something that I want you to think about so that you have more services to offer in more situation.

Hey business lunch listeners, I hope you enjoyed the show. If you want to learn more, you can go to consulting for Equity IO and you can get access to some free trainings that Roland did that will help you get started. Thanks for joining us. At the table today. We'll see you next time. Hey, quick question. Do you know someone who's looking to grow as a leader? Maybe their team is growing a little faster than they expected. Or. Or maybe their new role requires them to work a little bit more through people. If the answer is yes, I want to recommend a new podcast by the scalable media network called Ready to Lead. It's hosted by Richard Lindner, one of Roland and Ryan's business partners, and Jeff Mask, who's one of the top executive coaches in the world. They cover tactical strategies on how to improve as a leader and also their biggest failures they've had throughout their career. You can find the show@readytolead.com or search for it wherever you listen to podcasts. Foreign.

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