We need to talk about value.
The business model for professional services firms is under pressure. For decades, the business model was: add more people, bill more hours, generate more revenue.
But, technology has been playing catch-up with people. At a rapid pace.
Today, technology beats people at an increasing number of tasks. Producing outcomes at a higher speed, with more accuracy, and – after an initial investment – at lower costs.
This is a direct threat to the people-hours-revenue business model. As more people at a firm no longer automatically results in more hours that can be billed for more revenue.
Professional services firms will have to reconsider their own business model.
Instead of adding more people, they’ll need to add more value. instead of billing more hours, they’ll need to increase delivery speed. Instead of generating more revenue, they’ll need to optimize gross margins and thus profit.
Perceived value
But, it all starts with value. Or actually, the perceived value of a product or service.
Let’s have a closer look.
Perceived value = the worth
a client believes
a product or service has
compared to its alternatives.
So, perceived value doesn’t have to equal the actual value of a product or service.
Perceived value is not a 1:1 representation of the hours that went into developing a service. Nor does it necessarily represent the monetary value that was created for the client – e.g. savings of €10K a week.
Instead, perceived value is determined by what a client believes your product or service is worth. It’s determined by their emotions and expectations.
Optimize perceived value
Now, if you go back to the definition, there are 3 levers you can pull in order to optimize the worth of your product or service for a client.
- You can change your product or service. “We need a new or improved service,” may be the first thing that comes to mind.
It’s an obvious one. The world and our economy have changed. Clients face new challenges and demand new solutions.
And while a completely new solution may sometimes be required. At other times, a different way of delivering value and managing expectations may be sufficient to increase perceived value. - You can change clients. “Are you selling to the right organizations?” is the question that needs to be answered here.
As a professional services firm, you really need to understand what your ideal clients look like.
Which organizations care most about the value you’re offering? And which ones award you with challenging and meaningful assignments that actually pay the bills – not only today, but also tomorrow? - You can change the alternatives. Or at least, position yourself in such a way that you’re compared to the right alternatives. “What should be our position and in which market?”
It makes sense for Crosby to position themselves as ‘The AI / Agentic Law Firm’.
By doing so, clients compare them (and their prices) to other law firms. While in reality Crosby is more a technology company that happens to employ a couple of lawyers.
How are you planning on creating perceived value?
Hope this helps!
Thank you for reading MBD Spark #86 (formerly The Nudge & MBD Boost), sent on July 8, 2025.
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