Fixed fee pricing is something that I’ve been implementing for the last six months.  Instead of offering a client an hourly rate — which they keep paying until a solution is reached — I’ve started to offer a fixed price to provide a well defined service.

The client approves the price in advance. The work begins.

At least that’s the theory.

Most of the time the fixed fee works great. There’s no more rushing to get off-site because if I stay longer the bill will increase. I’m free to return as often as I like until the issue is fixed — and the client no longer has to worry how big the bill is going to be — because it’s all been agreed upon in advance.

Like with any change – there are speed bumps along the  way. I’ve run into a few which I’ll list here in no random order.
The major lesson that I’ve learned?

Clients Used To Hourly Billing Think Your New Billing Means “Not To Exceed”

Clients used to paying by the hour sometimes/often/always — feel fixed fee means “not to exceed” – one lesson I’ve learned is NEVER EVER put a number of hours cap onto a proposal that is fixed fee. Those two are incompatible. It’s either fixed or it’s not.

For example — when I have proposed “on-site visit to work on several open issues – up to an 8 hour day” — the client automatically translates this to mean ” I will be there for 8 hours and if I’m there less will bill you less”… almost always if I’m on-site less than the “hourly cap” then I receive a call asking why the bill is so high because I wasn’t there for x hours.

I’ve found in some instances clients don’t have one major issue that they want to you to work on. Rather they’d like you to visit to address a “punch list”. These are the trickiest.

I never put an hourly cap on projects any longer – instead if the project isn’t defined by a scope document (which it should be ) I’ll phrase it as single site visit (avoiding the use of any term like “day” or “hours” which I think also prompts people to expect you’ll be there x hours).

Any mention of a number of hours puts the client into the “not to exceed” mindframe. Instead I’ve found it better to phrase the project based on the task to be completed (scope – or desired outcome) and not the time it will take.

Yes, this means your fee will be higher than a “best cases” hourly project because you must factor in the unknown.

Just Come On Down = Difficult To Price

The hardest projects to provide a fixed fee are those where the client calls and asks you to “come on out to work on a whole list of issues or questions that we have”. The problem is that ahead of time you have no idea what the client wants or how long it will take. This is probably 1/3 of my project (non-upgrade) business.

I’m not yet sure how to combat this though I think the  approach where a client can purchase a higher level of support that includes on-site might be the way to go for good clients (I wouldn’t offer this for new orphans unless the fee was high).

I’ve tried quoting $ xxx per visit — and unless you’re sure the visit is going to run a certain amount of time then it’s tough to quote $1,200 when the client has a 15 minute question.

Then again those types of fees probably will reduce the number of inefficient on-site meetings. I’ve found that clients have a very short attention span and often don’t pay attention to your verbal initial quote (which is why I’m using Freshbooks to send out quotes that must be approved electronically before I will even schedule a time to go on-site).

Ideally I’d like to develop a standard “un-determined agenda”  fee of say — $800.

If the client calls with no idea what they want to meet about (usually they know but they haven’t bothered to formalize it) and just wants you to “come on down” — then there has to be some type of middle ground fee that’s not unusually high but also isn’t so cheap that you’re living at a client site all day for $100.

I am still getting a LOT of questions about  (a) so what would be the number of hours and (b) what is your rate for (pick a task).

Try as hard as I might —   clients are very well conditioned to ask this.

I think it’s also a factor of the market. I really don’t care if a random (non client aka often price shopping) web visitor asks this — but it’s very tough to explain and work around to existing clients.

In my experience the classroom explanation of “just tell them hourly would be more” just doesn’t flow very smoothly.

I’ve no resolution to this yet other than raising my hourly to $400 and explaining “our hourly rate is $400 but most people find a fixed price is cheaper”

Other than these items the fixed rate method of pricing is working well. I get a lot of comments from resellers about how they could never price an engagement as fixed fee because if there’s a bug they’d “lose their shirt”.

In reality fixed fee pricing has to be be a middle ground. Don’t price it as if everything will go perfectly (it won’t). Don’t price it as if you’ll have to live at the client site (in all likelihood you won’t).

Instead what has worked well for me has been developing three options (as taught well by Ed Kless and John Shaver in their pricing classes).

Option #1 – Bare bones. Change orders applicable to just about anything that isn’t on the scope list. Assumes that the client will participate heavily on their end.

Option #2 – We carry more of the heavy lifting and include more common tasks like workstation setups, etc.

Both option #1 and #2 exclude hidden damage. If there’s a damaged data file. Program bug that requires a Sage case. The client is presented with a change request. This is the answer to how you exclude unforeseeable major issues from your engagement.

Option #3 – For a higher price we do it all - including cover hidden damage and following through on support cases.

The key to the above pricing is the options. You don’t necessarily have to throw in the kitchen sink for one low price. Give a range of pricing options and allow more budget conscious clients to pick a lower level of service. If you encounter bugs or damaged data on a low level of service engagement — then the client has the ability to sign a change request or fix the issue themselves.

On a higher level of service – you’ve already (hopefully) built one or two bug issues into your pricing.

Fixed pricing works best when you judge it not based on one individual engagement but all of your engagements. You may lose money an engagement but over the course of all engagements find that you’re making more money – and your clients are far happier which means they return to you for additional project work over the course of the year.

There’s a lot of talk about value based (aka fixed fee) fees. Listen to this three part series from a practioner who took his practice from waiting 180 days to be paid, not making money and wanting to give away his clients because they were so unprofitable.

Today this participants greatest fear? That he hasn’t priced himself high enough.

Here’s the second part

And the final segment – featuring a lot of Q&A from the audience:

If this is of interest – you may also want to attend the Sage Firm of the Future Symposium August 23, 2010 in Texas.  Hosted by Ed Kless this session (free to Sage Select business partners) will discuss pricing issue such as those shown above – and feature a presentation from Sage Partner John Shaver who has adopted these principles.

The real key to the session won’t be the lectures — but the open Q&A which will be available through each day of this two day session.

Firm of the future symposium and  Alan Weiss – Summit Consulting

What I’ve found is that one portion of the story is true – they have no slack in their schedule.

They probably don’t sleep much either.

That’s because they’re working 120 hours – and billing for 40.

Are they really collecting $150 an hour (or pick your favorite rate) for EVERY hour that they work?

No.

There’s one big part of the story that you’re never told though. Their average rate is somewhat closer to $50 (or less per hour). Why?

They’re Not Charging or Collecting For All Their Time

The dirty secret of the claimed big biller is that while the rate may be high — approaching $200 in many cases  - the number of hours they charge are far less than what they really work.

How does this happen?

• Working after hours to manage client conversions
• Phone conferences with “Our IT Guy/Gal” that aren’t billed
• Quick questions about unrelated project items
• Weekend time to “check up on ” system administration tasks
• Time spent revising, creating and explaining a proposal (often multiple times)
• Discussions with the software publisher over undocumented features (aka bugs)
• Mandatory attendance at live connect sessions with the software publisher

Is this happening with you? Do you know how much un-recovered effort are you gifting to your client?

You have un-recovered time when your proposals always “best case” despite knowing that all projects have some time consuming hurdles to overcome?

You have un-recovered time when you fail to factor in overhead items such as travel, proposals, project management, publisher interactions?

If you are not factoring these things in – then you’re working for less than what you think.

Fixed Pricing Always Seems Higher When Done Properly

Every one of my fixed prices has generated stares of disbelief. Both consultants and customers can’t imagine that an upgrade could take $ 5,000 from start to finish.

Certainly an hourly quote would be less?

That depends.

Does your hourly quote (tell the truth) allow for:

• Initial meeting
• Proposal time
• Extra tasks other than the project you’ve quoted
• After hours work (at a premium)
• Travel
• Time spent chasing bugs with the software publisher?

I’ve found most hourly quotes don’t allocate for anything except a best case scenario of the time a consultant expects to spend. The quote assumes everything goes perfectly, that there’s no administrative or project management, that you never call the software publisher or need to look in the knowledgebase.

The problem is that’s almost never true. There’s no perfect engagement in the increasingly complex world of consulting.

My advice? Drop the rate to zero. Give the client a fixed reasonable cost for a well defined project. You’ll be surprised how quickly you can turn that $50/hr into $150 again.

Isn’t that something we all promise ourselves that we’ll do – someday? Create that master checklist that guides us through routine tasks such as upgrades.

There are numerous paper  checklists  publishers provide – however the items are often tediously redundant and it seems so 1980′s to be flipping through 15 pages of photocopied instructions.

Today I’m off to upgrade a straightforward MAS 200 system and I’ll be trying  Google Tasks as my checklist generator.

Google Tasks is free – and located in your Gmail account listed on the left side as “tasks”. It’s a decidedly bare bones way to keep a list of items you need to complete.

Before I leave I’ve created a Google Tasks list on my desktop computer. Using software for the iPhone I synchronize the tasks in real time so that I can use them while on site with the client.

If I find that I need more items in my task list — I can add those on my iPhone and they’ll be synchronized back to my desktop list of tasks.

What I hope is that with a little tweaking that I can soon have a set of tasks that become my master implementation guide that also travels with me wherever I have my IPhone or access to the web.

You can easily drag, drop and add items just about anywhere on your Google Task list.

There are also Apps you can download to your iPhone – such as GeeTasks (shown above) which will synchronize your tasks so  you can use your list deep within a server room that gets no cell reception.

Google Tasks

I think you should too.

The two trends ?:

1. Customers searching the web compiling spreadsheets of what random consultants charge per hour  -with little apparent regard for whether the consultant is good,  has the capability to solve the problem or even has recent relevant experience with similar companies.

   Think I’m kidding? On an average day we’re receiving two calls that are nothing more than companies (or IT consultants who work for them) checking on our rates and “how many hours would it take” to [fill in random project here].

2. Consultants who,  desperate for work, have slashed rates to an unsustainable $125 per hour (billed in quarter hour increments) and below.

And if word-of-mouth is to be believed those eye-popping rates of $125 are appearing in large cities like New York and Boston.

We bill our time for support and consulting as a fixed guaranteed fee.

So  for me -  quoting an hourly rate is meaningless. It does nothing but lower my perceived value to the same – or less -  of the consulting morons firms who are underbidding,  under-serving (and ultimately losing)  their customers.

Some other thoughts.

Other Reasons You Should Double Or Triple Your Quoted Hourly Rate

Those who are fixed billing purists will comment that you should not have an hourly rate at all.

Perhaps that’s true.

However I am finding in real life  that nearly every customer has been conditioned to work their analysis magic based on an hourly rate. Almost 100% of suspects  ask the magic “so what is your rate”. This approach doesn’t work when you bill on a fixed fee. I’ve provided the fixed cost and the customer still wants to know “so what is your rate”.

My new reply?

$400 per hour. Full hour increments. Minimum charge $1,600 when billed hourly.

Guess what.

Hourly is no longer cheaper than fixed price.

I am no longer comparable to my competitor across the street who artificially chopped his rate to 50% of what it needs to be.

I will lose the projects that insist on paying by the hour in 10 minute increments unless the customer is focused on value and outcome.

As soon as I quote the new rate – the customer has two choices:

1. Price shop someone else (85% will)
2. Focus on the value of a fixed price

Now you see why this is potentially a brilliant idea?

You need to tell someone about the news.

Don’t assume that those who report it will automatically stumble across it (as the other two folks in the photo at left  - Isaac O’Bannon and Bob Scott – regularly do for their respective publications CPA Technology Advisor and Bob Scotts Insights).

The world of public relations is changing fast. More news is moving online which means a greater opportunity to spread your good news faster – and cheaper – provide that you know some of the secrets of effective public relations for 2010 and beyond.

The people who you should tell and involve in your message have greatly expanded.  With the advent of LinkedIn and Twitter and Facebook you need to be talking to key members of the communities that you want your message carried to.

Public Relations Secrets:  Old School Tactics Don’t Work (As Well)

The old way of printing up a press release and calling a half dozen print publications don’t work – of if they work you probably are far less effective than your competitors who have expanded their news releases to other areas like blogs and LinkedIn.

I’ve stopped subscribing to any newspapers.

It’s not cheapness but a desire to read information on line as it happens.   There are lots of others  who have done the same thing. Sure, newspapers are still around but more often they’re wafer thin shells of their former selves and people are abandoning them in droves each year.

Content and discussion has moved online and it’s never going back.  At least not in the volume that we once knew.

How do you adjust to the new method of distributing your news and information?

Find people who have authority and influence. Notice that I did not say who are active. Loudmouths with opinions are active – though they often have little influence. The people you’re looking to reach are those who can restate the important part(s) of your news and not just re-publish a press release.

Expand your horizons beyond traditional press. Bloggers, LinkedIn, Twitter, Discussion Forums and Facebook all have seriously active members who regularly post analysis of the daily news and links where other members can find more information – these are the people you want to reach.

How do you reach these influencers? Connect with them in their media of choice.

Don’t, however, make the fatal mistake of thinking that if you connect on Facebook or another social site that you have a green light to give a sales pitch.

Use the tools of social sites to build trust and relationships rather than sell.

Don’t give up when your story or message isn’t rebroadcast — or is rebroadcast in a different manner than you wanted.

The influencers of the Internet have become that way for their ability to put their own analysis on top of any information they forward to their respective social sites.

The number one mistake  with public relations is to stop communicating the first time that news isn’t re-broadcast.

Wrong Wrong Wrong.

Keep sending information. If one particular news item wasn’t rebroadcast simply move onto the next (Tip: Don’t keep re-broadcasting the same information – just keep communicating as you have new information to share).

Sage and Intacct Get It

This year at the Sage reseller conference I received a press invite.

This allowed me to sit in on most of the press conferences – though I’m still treated as an outsider when it comes to face to face interviews and I hope Sage may change this for future events.

What’s the benefit to Sage?

After all they didn’t get a shiny whitepaper out of me or a headline on a flashier news site or a name that they could use in quoting my delight in some new technology.

Instead as Sage took time to meet  over lunch and briefings where they explained key technology initiatives.

These explanations allowed me to come back to my discussion groups, Blogs,  LinkedIn and Twitter to offer more analysis (both good and bad) about what I sensed was coming from Sage.

One thing that Sage still has lagged in — which Intacct has embraced — is the idea of embargoed news.

An embargo is when advance news is sent to the press (usually only a day or two early) so that they have time to write up the story and “go live” at about the same time the story breaks. There’s a deadline before which everyone is asked not to write or discuss the news. In almost all cases unless news has leaked this embargo is honored.

Intacct embraced the concept of an embargo by mailing out news on the Taylor Macdonald hiring prior to their official press release being sent the next day.

While it’s fun to write news stories as they break – it’s more important that your story be as accurate as possible. Having an advance release (which you agree not to publish or discuss until a preset deadline) allows you to research your story rather than rush it online.

The point being is that traditional public relations and promotion is much broader.  Instead of only sending releases to formal publications – enlarge your distribution to a pool of active online users. These folks are the ones starting conversations on LinkedIn, discussion forums and blogs. They’re usually easy to find – and eager to learn of your news.

Respect that not every bit of news gets rebroadcast. Work on building long term relationships with these key influencers and you may be surprised at how quickly you can expand your message beyond traditional media and into the discussions and communities online where those you want to reach are increasingly spending their time.

It’s probably one of the only times  I’ll ever be hit in the front end while I’m frantically steering my car in reverse.

Seems that a local trucking school undergraduate forgot to read the part in “Trucking 101 for Dummies” that says it’s not recommended to stop in the middle of a road and shift suddenly to reverse – without looking behind you.

I’ve heard  some good comes from every situation. In this case the “good” is a simply brilliant phrase that I’m eager to incorporate (with slightly different wording) into my proposals and engagement letters.

This  phrase covers much of the challenge that I’ve been having with fixed fee pricing – especially when applied to upgrades with many different unknown variables – data integrity being the biggest.

While traversing the fun world of auto insurance claims, and body repair shops I was introduced to this phrase.  I’m claiming for my own use.

Not Responsible For Hidden Damage

The “A-Ha” moment for me was when I realized that the fixed price the repair shop gave me – really wasn’t fixed if there were areas that they couldn’t readily see when preparing their estimate.

Right there on the quote in bold letters was the phrase “NOT RESPONSIBLE FOR HIDDEN DAMAGE”. They continue by saying that if there is damage beyond what the realistically can be expected to observe that they’ll issue you an additional quote to fix the damage.

Note that the body shop doesn’t step into the role of an unpaid insurer by fixing things that were laying beneath the surface and not readily detectable.

How often does this type of issue happen to you on a consulting engagement?

• The client’s data is corrupt – an issue only uncovered during the actual process of converting?
• A third party add-on selected by the client doesn’t work the way the documentation claims.
• That special integration promised by an outside service bureau amounts to a CSV file that lands in your lap instead of a fully complete on-button-push smooth transfer of data.
• Suddenly 10 new requirements are added by the purchasing department – who were not part of the initial evaluation team that approved the purchase of that new accounting system.
• The client’s server refused to allow you to install the upgrade disk due to a last minute patch automatically installed by the operating system.

The Three Ways I’m Guarding Against Being Stuck for “Hidden Damages”

Since starting to offer fixed fee engagements nearly exclusively – I’ve learned three very important things that must be present on every project to avoid losing money and client confidence.

Effective immediately we’re also adding that during an upgrade engagement we aren’t responsible for damage that’s hidden which we were unable to discover using ordinary care and best practices prior to starting a project

A detailed scope letter - This one seems like a no brainer – except it’s  the one area  everybody skimps on. This scope letter is simple. It defines exactly what you will and won’t be doing. For upgrades we’re sure to define the company codes, versions and enhancements (if any) that we’re upgrading.

In order to make sure that each of our engagements has a scope letter I’ve created a template in my Google Docs. Two clicks of a mouse and my scope letter has all my boilerplate advice – and is ready for me to start adding client specific tasks. It’s not perfect – but having the document nearly complete and easy to finish (and email via PDF through Google Apps) makes it that much more likely that I’ll create a letter that covers all the details of the project.

Clearly explain that upgrade means upgrade – not fixing or re-training  on old issues -  As consultants we naturally want to fix everything. When we get into a fixed fee upgrade there are many areas that we’ll see that need improving.

Avoid the temptation to make those “one second fixes”. The danger? As soon as you open up Crystal Reports to modify a report from version 4.0 (assuming you’re working an upgrade from 4.3 to 4.4) then you own any future or present problem with that report — even though you will not be paid one cent to have fixed it as part of your fixed fee UPGRADE.

Keep an issues list so that non-upgrade items are quoted separately – Similar concept as above – keeping an issues list of non-upgrade related issues means you don’t get sidetracked on half a dozen “quick fixes” that in actuality add up to a day or more of unquoted effort.

One last great concept that was taught to me by Brett Zimmerman was to always send a pre-project list of items that the client is responsible for. This serves as a baseline list of readiness that you agree will be expected from the client.

Here’s and example of my MAS90 & MAS200 pre-upgrade and project readiness instructions– which admittedly is a work in progress which I continually fine tune– but outlines our expectations as to the readiness of the client’s site. This eliminates all types of delays for which I haven’t budgeted (example – waiting for a backup, making sure things are posted, having to reschedule because a server can’t be rebooted, etc).

Taylor takes over the position from Jerry Jalaba who left Intacct in July 2009 after about a year in the position of VP Channel Sales.

Intacct is a Saas (Software As A Service) provider noted for their Salesforce.com integration capabilities, complete set of financial accounting modules and strong revenue recognition capabilities.

Most consultants first took notice of Intacct in April 2009 when Intacct, the AICPA and CPA2BIZ announced an alliance that resulted in their being named the preferred provider of financial applications. CPA2Biz was also named the preferred distributor of Intacct to the CPA profession. At the time the alliance covered over 350,000 individual CPAs and 45,000 firms governed by the AICPA.

Intacct described the relationship as ” The alliance will help CPA firms and small and mid-sized businesses adopt “cloud computing” to improve their financial performance, take better advantage of financial advice and make better and faster business decisions. Intacct and CPA2Biz will also co-develop a new version of Intacct’s on-demand financial management and accounting applications specifically for CPA firms and their clients that includes unique content from the AICPA“.

Because Intacct is privately held it’s difficult to get an exact measure of their partner channel – or their revenues.

In January 2009 Intacct was quoted as having 50% of sales derived from their channel which according to a press release issued on April 2010 included about 100 CPA members.

In a blog posting dated July 5, 2010 Dan Drucker, SVP of Marketing and Business Development at Intacct states they are are “now well above 100″ channel partners here at Intacct.

If the results of a channel program that kicked off in 2008 - and included marketing to 350,000 CPAs with the endorsement of the AICPA/CPA2BIZ –  is just “well above 100″ channel partners  (which I take to imply less than 200) then it may be simple to see why Intacct would be eager to recruit Taylor to bolster their channel plans.

Some of the lull in partner recruitment may be due to the departure of Jerry Jalaba. After Jerry left, Intacct’s channel program (which was introduced in March 2008) seemed to be in a state of flux.

Intacct had been quietly meeting with a number of the largest Sage partners. After Jalaba’s departure the recruitment buzz quieted significantly with at least one report that Intacct was re-examining their channel strategy.

Apparently the company is done re-examining strategy and has decided to bring on one of the industry heavyweights to move full speed at further developing channel sales.

Taylor Macdonald is well known within and without the Sage Software community where ran the Sage North America channel for over 9 years. As a former VAR he’s respected for introducing or assisting with numerous partner focussed programs such as sales and consulting academies and numerous additional programs in support of Sage’s over 6,000 business partners.

After leaving Sage during a management shakeup in December 2007 Taylor joined Deltek, a provider of software for professional services industry,  and promptly recruited a full slate of firms to act as channel partners which greatly enhanced Deltek’s channel program.  In 2008 Macdonald left Deltek to join Promethean, a provider of educational software where he remained for a year prior to joining Infor in his last position as VP Worldwide Channels.

Challenges facing Intacct include reconciling a distribution strategy where 50% of revenues are reportedly direct, attracting and signing VARS who produce more than one-off single client sales and maintaining an attractive margin to adequately compensate VARS for their initial sales efforts.

The Intacct press release follows (online pdf) – which is also noteworthy for the quote by Sage Business Partner Dave Cieslak who, while not an Intacct partner, does serve on the BPAC for Sage Software.

Intacct Taps Industry Veteran Taylor Macdonald as Vice President of Channels
Former Sage and Deltek Channel Chief to Lead Expansion of Intacct’s Successful Channel Programs

SAN JOSE, Calif. – July 8, 2010 – Intacct, the leader in cloud financial management and
accounting applications, today announced it has named Taylor Macdonald as its new Vice
President of Channels. In this position, Macdonald will accelerate the growth of Intacct’s already
successful Value Added Reseller (VAR) and CPA channel initiatives.

“Intacct and cloud computing represent a massive business opportunity for the channel.
Synergistically, we believe that the channel is the key to driving broad adoption of cloud-based
financial management across North America,” said Robert Reid, president and CEO of Intacct.
“Bringing on Taylor, with his tremendous track record of success and channel leadership will
fuel the adoption of cloud computing and will further drive Intacct’s already rapid growth.”
Macdonald brings more than 20 year of experience building and operating some of the world’s
largest and most successful channel programs at leading financial management and ERP
providers including Deltek and Sage.

Uniquely, Macdonald also has extensive experience running a Value Added Reseller business,
having founded Macdonald Consulting Group in 1990, which he built into a five time repeat
winner as Sage Software’s top worldwide business partner. Macdonald has also collected
numerous channel accolades including being named a Top Channel Executive from
VARBusiness and Top 50 Channel Champion from CRN three years in a row.

“We recently took a very close look at the Intacct product, organization and overall strategy, and
were frankly very impressed,” said David Cieslak, principal at Arxis Technology, Inc., a leading
technology consulting firm and one of the top software resellers in the industry. “As customers
consider cloud-based solutions, Intacct will mostly certainly be one of the top products to
consider and bringing Taylor Macdonald on board represents a very strategic win for the
organization. We are anxious to see Taylor bring his experience and expertise to help craft a
world-class channel partner program at Intacct.”

“We allied with Intacct in 2009 because we knew that cloud computing would improve
productivity, increase transparency and reduce costs for both AICPA members in public practice
and the millions of small and mid-sized businesses they serve – and the partnership has greatly
exceeded our expectations,” said Erik Asgeirsson, president and CEO, CPA2Biz. “We’re
delighted to see that someone of Taylor’s caliber has joined Intacct. Clearly, it will help to
accelerate the joint success of our partnership with Intacct even further.”

“We have reached the tipping point when it comes to cloud computing and the channel – there is
tremendous opportunity for channel partners to leverage the cloud to provide better solutions for
their clients and at the same time run more profitable and predictable businesses,” said Taylor
Macdonald. “Intacct is unique in that it presents channel partners with a compelling combination
of a huge market opportunity, award-winning, partner-centric products and a channel-oriented
company culture and business model. I couldn’t be more excited to join the Intacct team.”
Macdonald holds a Bachelor of Science degree from Yale University. He also currently serves
on the board of directors for the Information Technology Alliance.

About Intacct
Intacct is the market and technology leader in web-based financial management and accounting
applications for businesses and CPA firms. Bringing cloud computing to finance and
accounting, Intacct’s award-winning applications are the preferred financial applications for
AICPA business solutions. Intacct applications are used by thousands of businesses from
startups to public companies and are designed to improve company performance and make
finance more productive. The Intacct system includes accounting, contract management,
revenue recognition, inventory, purchasing, vendor management, financial consolidation and
financial reporting applications, all delivered over the Internet via cloud computing.
Intacct is headquartered in San Jose, California. For more information, please visit
www.intacct.com or call 877-437-7765.

Image via ITA

Press release via Intacct

As of this morning (7/2/10) the Sage  knowledgebase used to research technical support issues is down again – either in whole or in part.

This is the latest knowledgebase site outage in what has become  frequent enough that that our consulting group  routinely downloads and saves major program patches to a fantastically helpful service called Sugarsync (referral link) which allows us to then access the files over the web or from our mobile devices.

We need these patches to ensure that we can deliver an Exceptional Customer Experience to our customers.

For most of yesterday 7/1/2010 the portion of Sage’s support site used by the MAS 90 and MAS 200 consultants who log in over the web to research problem reports and provide support to mutual customers and deliver on Sage’s stated goal of an Exceptional Customer Experience was down.

Other portions of the site for downloading patches and fixes have sporadically been up and down. It looks as if Sage is working to create better redundancy in their servers and apparently as the saying goes – things have to get worse before they get better.

In an effort to keep surprise bills out of sight of their clients –  consulting firms often engage in  what’s known as  “eating time”.

That’s when they’ve told a client that a task will cost $ x when it actually costs $ x time two.

The problem is the task usually does only cost $X. But  they’ve unwittingly caused it to expand in cost by widening the menu of items (aka scope)  that they’re fixing without informing the client (who probably would have gladly paid for the extra service).

I liken this to bringing your car into the mechanic for an oil change – and the mechanic fine tuning the brakes or transmission (at no cost) while your car is up on the lift.

This little action costs the garage nothing and it builds goodwill. Or does it?

Offering a little something extra for free is a great idea.

I’m all for these types of add-on services which are often referred to by various phrases such as “going the extra mile” , etc. But they need to be factored into your engagement planning and the “little extra” that you provide should be well planned ahead of time and not a haphazard policy of fixing every minor pain that the customer brings to your attention during the time you’re on site.

The problem is not offerin the free added service. The problem is when you offer  free services and something goes wrong.

Let’s say when I leave my mechanics shop I notice that now my brakes (which we’ll assume they tuned as a freebie while I was getting my oil changed) are squealing every time I slow at a red light.  So I bring my car back to the mechanic and they’re obligated to schedule me in quickly (at no cost) and repair or replace the issue that presumably their “quick/nice guy ” free fix to my brakes caused.

Note: Let’s pretend for the sake of argument that your mechanic is honest and admits that as a freebie they adjusted your brakes when you were in for a simple oil change and admits fault — which I understand is somewhat of a stretch.

What’s the problem here?

Expanding the scope of what we’ve promised to a client is excellent. Except if those free add-on services  aren’t planned in advance (which most aren’t) and create problems down the road that we have to fix for free.

Congratulations! You’ve now given away a free service which created a problem which  requires you to spend unlimited time fixing for free. Here’s hoping the problem isn’t a big enough issue that you lose the client.

What consultants overlook is that in total all those little “I gave them some pointers” often push the job budget sky high and way out of the scope of what had been discussed with the client.

And as soon as the consultant touches the computer for any items not related to an upgrade – -THEY NOW OWN THE ISSUE in the client’s mind.

Invariably there are followup questions related to that “quick pointer” and sometimes even serious bugs or procedures that consultants wind up owning and later fixing for  free.

Technology is complex enough that the days of being a “good guy/gal” and covering/curing every minor client pain (most self-inflicted) are long gone and those consultants who do that as a practice probably are effectively making about $40k a year with all the free time they give away.

Instead what I recommend is that as you practice “going the extra mile” that those extra services you offer are well planned and scoped in advance. Instead of tweaking every customer’s brakes – provide a less invasive and risky service extra.

For consulting engagements on ERP systems it might be leaving the customer with a monthly checklist or running through a list of best practices that they implement on their own – or you can help them with for a fee.

The free services you provide should be limited in scope and defined ahead of time. Don’t walk into a client site guaranteeing an upgrade price and deliver a complete upgrade, system re-design and three day training class just because you’ve observed that the client could really really use the help.

Define ahead of time the little extras that will be offered on every engagement. These should be very low risk items which don’t typically generate follow-up calls but provide client benefit. For extra items such as clients confused about procedural issues unrelated to your upgrade (and I find that 85% of questions have nothing to do with the upgrade engagement) have the client keep an issues list separately.

As a part of closing out the upgrade with your client – review their issues list and ask which items they’d like to solve.

Then give them a price. But whatever happens, unless you think working for free is good business, don’t fall into the common trap of solving the unrelated issues list items while also completing the other engagement which you’ve both quoted and agreed upon the scope.
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