What’s an Escalation Clause?

What’s an Escalation Clause?

“An escalation clause assumes that when the value you bring your client increases, your rates also increase.”

A viewer writes, “Have you ever priced your engagements with an escalation clause that allows you to raise the price as the business grows, with your assistance, of course?”
I love this question! An escalation clause is a sophisticated pricing strategy, so this is an advanced episode. I break down what an escalation clause is (and is not), why you want to use one, and how you present an escalation to clients. I also cover some frequently asked questions (so stay ‘til the end, for sure).

If you’ve listened to Profitable Joyful Consulting before, you know I teach consultants to do value-based pricing, meaning we don’t charge by the hour or by the project, but based on the value you bring your client. Similarly, an escalation clause assumes that when the value you bring increases, your rates also increase. It’s an advanced strategy that requires you to have a track record of success, an incredible reputation, and the ability to be selective with your clients and to be able to communicate confidence in getting results.

Are you ready to increase your revenue through an escalation clause?

Key Takeaways:

  • 00:37 Value-Based Pricing
  • 02:53 Success-Based Fees
  • 03:47 Benefits of an Escalation Clause
  • 05:34 Practical Tips
  • 06:44 Facing Client Resistance
  • 07:41 When to Add an Escalation Clause
  • 00:37 Value-Based Pricing