How do you all handle ROI discussions when you work on contingency? Client found $180K in overbilling, my fee is 30% ($54K), so their net recovery is $126K. They're questioning the "value" since they're only getting 70% back. I keep explaining they're getting $126K they wouldn't have had otherwise, but they seem fixated on the fee amount.
Communicating ROI When Fees Are Percentage-Based
Karen, I frame it as "What was your cost to discover this $180K?" Their answer is always zero or minimal. Then I explain they're getting a 126% return on their investment of zero. The alternative was getting 0% return on that money sitting with the utility. Sometimes helps to compare it to what they'd pay a law firm hourly to recover the same amount.
I always present it as "found money." Use phrases like "discovered $180K in hidden costs" rather than "recovered $126K net." Focus on what was uncovered, not what they're paying. Also helps to break down your value-add: analysis time, utility negotiations, ongoing monitoring, etc.
Had this exact conversation last month. I started including a "time investment comparison" in my reports. Showed them it would take their staff 40+ hours to do what I did, plus they don't have the expertise to catch certain errors. Even at $50/hour internal cost, that's $2K in staff time for potentially missing the big findings.
Some clients respond better to the "insurance model" explanation. They pay insurance premiums every year and hope to never use it - getting 100% of their money back. With our service, they're guaranteed to only pay if they receive value, and they get the majority of that value back immediately.
I include future value in my presentations. That $180K error might have continued for years if not caught. So really, the total value could be $180K historical + $60K annually going forward. Makes the one-time 30% fee look pretty reasonable against multi-year savings.
Another angle - compare to other professional services. They wouldn't question paying a realtor 6% to sell a house, or a financial advisor 1% annually to manage investments. We're providing specialized expertise they don't have in-house, finding money that was completely invisible to them.
These are all great approaches. I think I was getting defensive instead of reinforcing the value proposition. Going to restructure my next presentation around the "found money" concept and include some of these comparisons. Thanks everyone!
One more thing Karen - document everything you did in the process. I include a "work performed" section showing site visits, records analyzed, utility contacts made, tariff research, etc. Helps justify the fee when they see the actual effort involved.