Price evolu5on. Single, Fixed Price Fixed Price with Op5ons Value-‐based Price
Before you consider proposing. Are you conﬁdent you know what the prospect will value most? • What are their real issues (pains)? • Can we ar5culate (truly) compelling reasons to hire us? Do we really know enough about the org? • Is this work we even want? hMp://bit.ly/bestclients • Are we aware of risks in pricing this work & promising a 5meline (true scope)? 5
BeMer process. • Discover (value conversa5on) • Debrief • Brainstorm, discuss, decide (pricing council?) • Conversa5on NOT presenta5on • Prospect should know what’s in your FPA document before you give it to them • Deliver quotes real-‐5me • Doc must equip the intermediary to make your case
Fixed price if: • Non-‐dis5nct specializa5on • Must-‐have services (e.g., compliance) AND price-‐ sensi5ve economic buyer • LiMle ability to create measurable or perceived value in the course of the work (unemo5onal) • Disconnect between technical or user buyer & economic buyer • CommiMed to “No bill & duck”
Value-‐based price if: • Demonstrated specialist (go-‐to ﬁrm) • Technical or user buyer same as economic buyer, or highly inﬂuen5al with • Can create measurable or perceived value in the work process • Success fee or “5p clause” based on client’s percep5on of outcome’s value • Hint: almost ANY service can qualify with a skilled seller & an educated buyer
Op5ons. • Anchoring eﬀect – buyer compares your prices to your highest oﬀering • Helps people decide what they want (no, they usually don’t already know) • If you don’t oﬀer a premium oﬀering, how could someone ever buy one? • Move people UP the value curve
Op5on ideas. Leverageable Areas SILVER GOLD PLATINUM (some of many) (stripped version) (today’s oﬀering) (premium) Audit/review Basic services Basic services Bundle complementary Tax Basic & might go on Basic plus “watch” Bundle proac5ve & extension by default services complementary Consul5ng Charge for assessment; Charge for assessment; Bundle assessment, less tailored; simple custom prework customiza5on, follow-‐ phase up Access 2-‐day responses Unlimited access First-‐class access Work 5ming At ﬁrm’s availability Standard turn-‐around On-‐demand Payment terms In advance Half-‐down Aligned to client’s cash ﬂow “Op5onal” (a la carte) List poten5al upgrades, complementary services & next steps
Control scope creep. • Clarify client due dates • Remind client • Educate team • Consequences (price shii)
10 elements of a project quote. 1. Objec5ves, needs, deliverables 2. Project structure, 5meline & milestones 3. Constraints, assump5ons 4. Deﬁne roles (customer’s responsibili5es too) 5. Detail scope & func5onal requirements 6. Include “Addi5onal Items” for common add-‐ons 7. Establish parameters for change request 8. Future projects list (i.e. what is NOT included) 9. Terms & guarantee 10. Approval
Preparing. Prac5ce areas, for each key service: • What does the average engagement include? • What can we strip? • What can we add?
Qs to ask the customer. Issues that can be measured: • How do you measure it? • What is it now? • What would you like it to be? • What’s the value of the diﬀerence immediately? • What’s the value over 5me? Unmeasurable? qualify on a scale (e.g., 1-‐10)
Intangible value. • Specialist exper5se/knowledge • Unique social capital • Brand/reputa5on • Unique result: crea5vity & innova5on • Reducing risk • Excellent service experience • Makes customer “look good” • Rela5onship brings beneﬁt or feels good What else?
Remember. • Price beMer: prac5ce makes perfect • Present op5ons • Use phases (WHK) • Preprice easy-‐to-‐an5cipate items • Project management begins with scope • Head oﬀ scope creep at the pass • Set then manage expecta5ons with clients • Communicate scope to team