By Bert Zethof

With the economic recession, the consulting field has become much more crowded and price competitive.

People laid off from salaried positions are turning to consulting to pick up an income. Recent retirees wishing to supplement their pensions are doing the same.

At the same time, client organizations are postponing or cancelling projects to conserve cash flow. So there are more consultants chasing fewer projects.

Consultants have become even more mobile than before the recession. In North America, I find that consultants are travelling far from home to find work. Some are willing to work for much lower than the normally accepted fee rates, even considering the extra travel costs.

The question is: How to compete in this environment?

The answer will be different for every one. However, although a client's cash availability goes through cycles, when they are able to proceed, they look at value for money. A consultant can increase value for money by increasing the service or by decreasing the fee rate.

Focusing on service is a rational choice. Focusing on fee cuts may backfire. Cheap rates may win the work and pay some bills, but depending on the business model may not be commercially sustainable.

Cheap rates lessen the ability to provide client service at a high standard and thus jeopardize client satisfaction and relationships over the long term. And the valued consultant is in business for the long term.