Are you seeing more competition for each engagement?
Is it harder for you to get a decent price for your services?
Are the Purchasing Dept involved in getting you to drop your price?
Are longtime clients putting out RFPs for “your” work?
Maybe it’s time to recognise that your services have reached the Maturity stage or commodity stage of their Cycle. It will get more and more difficult to make money on that particular work.
You’ll begin to see lower-cost competitors, off-shoring, or begin to lose to in-house teams as the mystery goes out of your services. The symptoms above are reliable indicators that it’s time to begin reducing your dependence on that work and find new problems to solve
One of the big factors that causes price pressure in mature categories is decreased risk. The first time a company tackles a problem the perceived risk is high. They want to get it done right, and quickly, so they’re less sensitive to cost and place greater value on external expertise as a way to reduce risk.
After something has been done a number of times, the risk of getting it done right goes way down, so the perceived value of the service declines,and the client no longer feel the need to pay expensive external consultants.
When risk and business impact declines, so does your access to key people. While the top people pay attention to unfamiliar matters with potentially high stakes, once the risk goes down, they delegate downward and move on to emerging issues that have greater risk and impact. They’ll still like and respect you, but it you’re associated with issues that are no longer relevant to them, neither are you. This is why when your problem matures, you need to be associated with a different business problem within the same industry.
To avoid suddenly realizing that you’re in a tough spot such as described in the opening paragraph, become an industry expert, knowledgeable about your clients. Challenges and opportunities, and keep yourself well informed so you can recognize the early signs that the problem that drives demand for your service is maturing and declining in significance. If you know what’s going on in the industry, you’ll know which problems to shift your association toward.
Always invest in emerging issues, preferably in robust, growing industries.