Sage is extending their Firm of the Future Symposium sessions with a newly scheduled event happening in August 2011 in San Francisco, CA. I attended one of the first sessions in Atlanta as part of the ITA Conference in Atlanta.
The session that I attended was sold out – with 32 firms announced as a attending. The essential message of the Symposium:
Billing by the hour is counterproductive. The use of ranges of hours (or estimates) when quoting jobs sets up and adversarial (and some would say unethical) relationship where the client is thinking that they’ll pay the lower end of the estimated range and the consultant knows that the bill will be in the higher end — PLUS 10% (or more).
A key takeaway from the Symposium for me has been the use of options. Rather than competitively bidding on projects with smaller budgets we’ve learned to provide options to prospects. These options range from the prospect doing most of the work (least costly) to we do all the work (most costly).
Using options also removes most of the incentive for a prospect to ask for a discount. Instead of a lower price they can be offered a lower value option. It’s the prospects choice.
The concepts in this course are solid, make lots of sense – and for some reason seem difficult for most consulting firms to accept and fully implement. Which is exactly why you should go.
Most consulting firms don’t make the up front effort to fully implement these concepts and instead put their efforts into “why they can’t implement them”.
Here’s more of my experiences from attending the early May 2011 session – as well as a success story that happened immediately upon returning from the Symposium.
I attended Sage’s Firm of the Future Symposium in Atlanta about a week ago. Ed Kless, Ron Baker and John Shaver taught. I’d never heard Ron speak before but knew of his reputation as one of the leaders of the key concepts behind value billing (aka fixed fee) .
This experience is dedicated to the possibility that a professional organization can be run more effectively when it becomes a knowledge firm rather than a service firm. Creating such an organization is hard work and not for everyone as it requires partners to think differently than they have in the past about what it is that they do.
I went to the class not because I’d never heard or tried the concepts before. I’ve been a regular attendee to most of Ed’s classes. We’ve been applying fixed fee concepts for about a year. We’d already done fixed fee exclusively for support. This past year we converted to fixed billing for projects as well. It’s been a lot of hard work – and yes it’s a pain for quoting small projects and for projects that aren’t well defined. In short pricing on a fixed fee basis forces you to understand the work before you begin.
Some of the key concepts that I’ve learned:
– Customers love options. They love to be given a range of pricing to cover varying levels of service that range from a lower “do it yourself” price all the way up to the “we do everything” price. In the class this is discussed as the American Express Green/Gold/Black card.
I’ve been blown away in the past year by the number of customers who’ve chosen the highest option (which means they’ve requested MORE involvement on our part).
One of my first projects selected an option that was over three times higher than I would have priced the project hourly ($14,000 vs $ 4,000). Their reason for doing so? They explained they were more comfortable knowing that I would be on-site for the entire duration and would manage all aspects of the project.
They’ve just returned for another upgrade of their system. The pricing option was similar. They selected the “black card” price.
– Pricing is hard. There’s no magic bullet to compute a fixed price. We’ve made mistakes – but never to the extent that we lost a lot of money. Because all of our customers have an ongoing recurring support relationship with us I’ve always considered the lifetime value of a customer more important than the profit from any one project. (Note: If we don’t feel there’s an ability to help a customer on a long term recurring basis we generally decline the work).
– There’s no better feeling than being able to devote whatever time a project takes without worrying that you need to run from a customer’s office because the hours are starting to add up and the bill woud be too high if you stayed longer.
The question naturally may be — is the $2,000 fee for Firm of the Future Symposium worth the investment?
During the last class one of the first exercises was to develop a “Why’ statement. This is a summary of what you believe in. It’s purposes is to attract people who also believe in the same thing. Think of it as a fancy form of qualifying a prospect.
My statement was a little rough —
I believe that businesses need a trusted resource to provide candid experienced feedback when selecting or improving their existing technology I do this by surrounding myself with smarter people with varied experiences who aid me in providing that feedback – even if it doesn’t result in a sale
As luck would have it on day one back from the class I received a call from a company looking for assistance with evaluating their existing system. They’re stuck not knowing whether to junk it – or upgrade it.
In my case using my “why statement” (developed in class) worked. We’re starting a fully prepaid in advance assessment next week for roughly twice what the course costs. For me that’s a pretty good ROI. It’s also one of the first times I’ve made money from attending a course.
Here’s a link to the PDF of the Agenda – http://goo.gl/LvBSr and a link to Ron Baker’s Book – Implementing Value Pricing: A Radical Business Model for Professional Firms which is essentially the manual for this class (and well worth the $46)