The Secret To Fixed Prices. Preparation.

Are you trying to implement fixed pricing in your consulting practice – but struggling?

If so, I’m willing to guess that  you’re not yet prepared. My most valuable preparation has been the creation of templates and agreements that I am able to use again and again with prospective and current clients.

For example below is a template for use with fixed price ERP software upgrades. It is missing lots of legalese – so I make no promises that this will keep you out of legal hot water – or achieve any results whatsoever. Use it at your own risk.

And most importantly – this is a constantly evolving document. By the time you read it I’ve probably already changed the template.  I thought I’d share in case anyone else was in the process of creating a similar proposal template. It may serve as a helpful starting point.

I’m using this for fixed fee MAS 90 upgrades — but the concept is similar for any type of engagement you’re quoting.

The Key (For Me) With Pricing Success? Preparation.

I’ve found through much experience (meaning mistakes) that the key to implementing fixed pricing has been preparation. If you don’t have a handy proposal template or a phone support agreement to provide a customer then it’s easy (very very easy) to fall back onto “do it the same way we’ve always done it”.

In the past this has meant  I walked out of a client meeting mumbling “ok well I guess hourly is ok. In 30 minute increments? Um, ok”

So long as you are prepared and have a plan – you CAN avoid these types of situations where the prospect/customer backs you into a corner — meaning they usually negotiate what you’ve proposed as fixed fee into a “not to exceed” by use of “oh, how many hours will that take and what’s your rate?”….

Here’s the trap I used to fall into – before I became better prepared:

Me: The project price will be $ 10

Client/Prospect: So how many hours will that be

Me: Oh about 20 probably – but it’s fixed so you won’t have to worry

Client/Prospect: Great. What’s your rate?

Me: We don’t bill that way anymore but when we did it was $ 1 / hr

Client/Prospect: Ok then I’ll take it. Which in client/prospect language means to THEM — ” you can either bill me the $10 or $1/hr – whichever is less” —  (only they won’t say it until the bill comes and they compute the time they THINK you spent and if it’s less (rate x hour) — guess which fee they want demand?

TIP: I learned at the Ed Kless boot camp that in order to get out of discussing rates (which often leads to the client backing you into a not-to-exceed price) —

a. We don’t track hours
b. We don’t therefore have an hourly rate
c. Our billing system doesn’t track hours
d. We therefore don’t have that info – but we do have a price

Does it work all the time? Hell no.

Does it work most of the time? Yup!

Once I’ve created templates or policies – implementing them has become VERY easy. I did this with phone support and now I’m working at doing it with fixed price engagements.

Attached is my rev 1.1a copy of a standard MAS 90 fixed price upgrade proposal. I make no promises or guarantees that it will do anything except provide entertaining reading — and maybe food for thought.

It’s something that I continue to add things to as I find loopholes or unclear areas (my latest aha was around the area of replacing Extended Solutions with core MAS functionality — especially where the client has no idea what part of the ES they were using).

Whether you’re dedicated to billing hourly or moving toward billing a fixed fee — I don’t much care to debate.

My takeaway over the last several years has been that the more PREPARED you are in advance then the easier it will be to implement whatever strategy / policy you decide upon for billing.

Here’s what I work from for a fixed price MAS90 upgrade. I’ve learned that these really need to be templated or they take FOREVER to create from scratch and your proposal sits on the desk for a week or two before you hack something together to send a client.

It’s not perfect – but it may be useful for you as a starting point or just to ridicule….

PS – When you look at the proposal template and notice a couple things. We exclude all unforeseen circumstances (referred to as hidden damage). Since almost no client wants to pay for an extensive pre-upgrade test — and I’ve found that most clients want ONE upgrade price and not a promise that “after we look (for a fee) we’ll give you another price”  — I’ve settled on excluding hidden damages from our quotes. If we didn’t do this we’d probably be pricing 50 to 75% higher once we factored in every contingency area that COULD cause trouble.

Download link:

Fixed Price MAS90 Upgrade Proposal