One of the biggest problems most Fractional CFOs face is pricing.

In fact, I estimate that the most significant pushback I receive in any given month is around my firm's pricing.

After all, our prices can range from $70,000 per year all the way to $120,000 per year (or more).

But here's where things get interesting:
The VAST MAJORITY pushback I get about my firm's pricing doesn't come from prospects or our clients - it comes from other Fractional CFOs! 

In fact, I can't recall a single sales call in the last five years when a prospect said, "I love what you're offering, but you're overpriced. The value simply isn't there." 

This is supported by an average sales closing rate of around 70%.  

Despite this fact, I regularly get comments from other Fractional CFOs like...
• No one is going to pay that.
• Ugh. What's your value proposition?
• How can you POSSIBLY justify that price?
• Where do you even find clients that will pay that much?

Here's a sample comment I recently got on LinkedIn when I posted about charging what you're worth:

This represents a broad issue that many (most?) Fractional CFOs face: they don't understand their own value.  

Let's ground this conversation around actual comp data on what a full-time W-2 CFO makes in the open market.  

For my research, I went to salary.com and pulled data based on Dallas, TX.  

I found that the median salary for a Chief Financial Officer in Dallas is $438,627. The median salary for the overall United States was even higher, but we'll go with the Dallas numbers for this conversation.

But, as we all know, this is just the salary portion of the equation. We've also got to factor in bonuses, benefits, and payroll taxes as well. That brings the median total labor burden to $734,633!

And let's be honest, the vast majority of employers are going to use a head hunter to find a CFO type of role. Those fees range anywhere from 15%-25%+ of base salary. So we can easily tack on another $87,000 to the first-year price tag - bringing the total out-of-pocket expense to over $800,000. 

And remember, that's for the MEDIAN cost of a full-time CFO.

But let's slow down for a moment. 

I know there are still some nay-sayers who will push back on that number. So, let's just look at the cost of a CFO in the lowest 10% compensation band. Their salaries clock in at $234,132. Add in perks and taxes, and even the lowest 10% still exceeds $320,000 in total labor burden! 

The value proposition of a $100,000 per year, 1099 Fractional CFO starts to look considerably more attractive when you consider the alternative. 

This does come with some caveats!

Regardless of what you charge for your Fractional CFO services, a couple of things must be true for this to work:

1. Your clients have to be able to afford you. Even if you're worth $100k as a Fractional CFO, a company making $500,000 a year can't afford you. If you want to charge higher prices, you must learn how to get bigger clients.
2. Your clients need to need a Fractional CFO. Truth: not all businesses need a CFO or even a Fractional CFO. I've seen 8-figure businesses that don't need any form of financial leadership.
3. You have to deliver value. Congrats. You landed the $50,000 or even $100k per year client. Now you've got to bring the value. Remember that DOING MORE doesn't necessarily = delivering more value.  
   
   

Closing Thoughts

I'm willing to bet that your experience will be similar to mine:
The biggest constraint on your pricing won't be the market. It will be your mindset.

There's a lot of people out there that will tell you what you can or can't charge.

Don't listen to them. 

Heck, don't even listen to me!

Listen to the market. The market's voice is the only one that matters anyway.

Your Coach,
Michael