Archive for the ‘Pricing’ Category
It’s my profession, What Do You Expect Me To Do?
The secret to being able to get more things done in a day is preparation.
By virtue of my business (ERP consulting) I tend to come into contact with quite a few users of MAS90 software who’ve found my company through a web search or read an article that I’ve written somewhere.
I don’t want to seem like I’m ungrateful – because I really enjoy working with new companies. However many of these companies have deep technical questions they’d like answered (for free) or want to get a bid on a complex problem such as a system upgrade — for free.
If you’re asking yourself “shouldn’t bids be free” — my answer is no. Not when the bid often also requires that the provide have expert knowledge and diagnostic capabilities around the subject matter.
A range of pricing should be free. That’s what we provide.
A proposal with an exact price, steps that will be taken, and schedule for performing that work should be paid.
Using the power of easy search and this tool called a search engine visitors send a seemingly endless flood of emails looking for free advice.
I never make the mistake in thinking that I’m the only one receiving the emails – and you shouldn’t either. Most seem generic enough that they’ve probably been crafted to be sent to multiple people hoping that one of them will provide a free answer to a technical question.
Should these answers and proposals all be free? My answer is no.
To quote my friend Ed Kless who in turn is quoting one of his favorite TV Shows (Mad Men) – “It’s my profession , what do you expect me to do?”.
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. Read the rest of this entry »
Don’t Let Clients Use An Off-Peak Ticket During Peak Times
Just a quick thought that came to my mind as I struggle (as I’m sure most of you are) with prospects/clients who I proposed on back in March/April and maybe started some work in June – only to have the client back off because of any number of concerns (not ready, need further data fix-up, etc).
I have about four of these with varying degrees of complexity.
They suddenly want to become active in what I feel is the prime consulting season (aka busy time) – November through January 31.
Which leads to my question – why the heck do I (we?) allow clients to be quoted on one price (usually an off-peak rate) for work scheduled for our down time — and then the client delays and comes back to us in peak season. Read the rest of this entry »
My WOW Moments For IT Alliance Fall 2010 Meeting
This morning I awoke to an email from Jo Ann Benzer who is the Executive Director of The IT Alliance. This is a group of IT Professionals who have a general meeting twice a year to compare notes on best practices in IT, hear from interesting speakers and share a nice dinner and bottle of wine or 15.
Jo Ann’s email requested a list of top WOW moments for 2010. These are items that you have found worked well in business and can be practice tips, marketing advice or cool technology that you’ve used.
One of my top WOW tips is to never write a lengthy general purpose email to someone without also re-purposing it as a blog post. These items which if sent via email can go to waste or reach only one or two people. Whereas if you post the item on your blog you share with the world.
Therefore, in the spirit of sharing – here are my top WOW moments for 2010!
Random Lessons Learned About Fixed Fee Pricing
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? Read the rest of this entry »
Why You Should Use Value Based Fees
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.
How To Turn $150 An Hour Into $50 (And Back Again)
In the consulting world there’s no shortage of people claiming to bill $150, $175 or $225 per hour. To talk with them you’d think they were invoicing an average of 40 hours every week with no slack in their schedule.
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?
Read the rest of this entry »
Why My New Rate is $400 Per Hour
There are two ugly trends in the world of consulting. I’m counteracting them today by more than doubling my “rack” rate to $400 per hour.
I think you should too.
The two trends ?:
- 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].
- 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.
Not Responsible For Hidden Damage
Last week my car had an unfortunate meeting with the back of a car carrier.
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. Read the rest of this entry »
