Yesterday we had a great conference call with Ed Kless. He facilitated a discussion centered around one of my hot topic goals for 2010 which is using fixed pricing instead of hourly billing.
I like fixed pricing for all sorts of reasons. Mostly I think it’s fairer to the customer who no longer feels a need to track the time you spend at their office – or raise an objection that they’re being billed while you take an emergency call from another client.
The most important thing I’ve learned about fixed pricing is that the process takes much more effort than the old method of quoting a rate.
Under the old hourly pricing model the conversation goes like this:
CLIENT: So what’s your rate
CLIENT: So how long should this project take
CONSULTANT: Oh, (shuffle feet) probably 40 to 60 hours — but if it’s less we’ll bill you less – and if it’s more we’ll bill you more.
See any potential problems with the old method?
There are two major issues. First, the hourly rate is not predictive of the value that the customer gets. Secondly, as Ed pointed out, who goes to the store to pick up milk and would be agreeable to a price that’s ‘between $3 and $5 – could be more could be less’.
This year we’ve been doing fixed pricing almost exclusively. There have been a lot of lessons learned. And I’ve compiled a list of my top 14 mistakes – I call them tips but in reality they are all mistakes I made this year and worked to develop a policy to make sure they didn’t happen again.
Continue reading “14 Ways To Avoid Being Screwed On A Fixed Cost Project”
Here’s an interesting article from Gary Boomer that I spotted online at WebCPA. About halfway down he argues that CPA firms should be offering value and fixed fee billings to their clients.
Gary’s a pretty widely used technology consultants. One of my prior employers used him to come in and make all sorts of recommendations regarding their technology.
It’s interesting that he previously touted what was termed “hotel billing” and that most fo the CPA firms he serviced naturally built their technology to deliver based on his recommendations. Continue reading “Fixed Fee Billing Fever May Soon Invade CPA Firms Too”
Fixed fee consulting is the hottest new trend in the ERP world.
You’ll see it used with new deals – and you can see it in the post-sale consulting world where upgrade, projects and other services are increasingly offered for one fixed price.
Consulting based upon a pre-set (fixed) fee has advantages for both the customer and the consultant. The biggest customer advantage is the lack of any surprise costs and the removal of any motivation for the consultant to drag out an engagement for the purpose of billing hourly.
For the consulting firm there’s an opportunity to make more money – but to do so you must enter the fixed fee world with a plan.
After having worked for a while on several fixed fee engagements with my clients – here are what I found to be the top 10 secrets of making money on a fixed fee ERP project. Continue reading “10 Secrets To Making Money on Fixed Fee ERP Consulting Projects”
This morning I’m off to see a long time client. Truth be told these guys are high maintenance and are much more aggressive users of my unlimited support plan than almost any other client.
Many of their questions end with a promise that they want me to perform more work – a promise that somehow never materializes.
Yet today I’m going to turn what for most consultants would have been a $100 fee into $1,500.
When I leave the client not only will I be paid – but the client won’t stop talking about the great value they’ve received.
Unless I miss my guess this will turn into repeat business – albeit probably only once or twice a year.
Given the choice between earning $100 and $1,500 – which would you take? I though so. Want to know how I’m doing this?
The answer to how I’m going to earn this larger fee is contained in one word from above — value. Continue reading “How To Turn A $100 Fee Into $1,500 – I Did It – So Can You!”