Why Your Customers Would Be Happier If You Charged More • Hacker News Board

Re: Why Your Customers Would Be Happier If You Charged More

#81

Post by wpietri » Sat, Sep 22, 2012, 9:54 PM UTC

ef4 wrote: post #62

wpietri wrote: post #43

Earlier quoted context omitted.

That's a little tautological, and kinda glib for me given the dilemma he describes. As you surely know, you're using "returns" in a technical sense. I'm awfully fond of free enterprise as well, but it is important to note that there are a lot of kinds of scarcity it doesn't fix, and many sorts of returns that it ignores or can't handle well. Infant mortality, for example, isn't well served by market mechanisms; babie…

> Infant mortality, for example, isn't well served by market mechanisms; babies have no money. Stop and think about why this sentence is extremely silly. Who is really the customer?

Thanks, I thought about it before posting.

Parents can be the customer. Often they are, sometimes they aren't. Sometimes government is the customer. For some interventions, like public health education or vaccination campaigns, government is the only customer. Or perhaps a volunteer clinic. Or a concerned neighbor. Or...

In none of these cases is the baby the customer, which is my point: market mechanisms alone don't solve all problems. Which is why we have things like "parental love" and "public service". Markets are tools, not magic unicorns.

Re: Why Your Customers Would Be Happier If You Charged More

#82

Post by wpietri » Sat, Sep 22, 2012, 10:10 PM UTC

patio11 wrote: post #45

wpietri wrote: post #43

Earlier quoted context omitted.

That's a little tautological, and kinda glib for me given the dilemma he describes. As you surely know, you're using "returns" in a technical sense. I'm awfully fond of free enterprise as well, but it is important to note that there are a lot of kinds of scarcity it doesn't fix, and many sorts of returns that it ignores or can't handle well. Infant mortality, for example, isn't well served by market mechanisms; babie…

Infant mortality, for example, isn't well served by market mechanisms I disagree more with this statement than any other statement ever made in good faith on Hacker News. Kids not dying is an outcome we urgently desire, right? There are a variety of products which support this outcome. One is "soap." Soap scarcity is a real phenomenon: some rooms that children are born in have no soap. Those rooms kill lots of childr…

Since I already agreed that free enterprise is pretty awesome, I'm disappointed you felt obliged to given example where it works pretty well and ignored entirely the cases where it doesn't. I've seen you do better than picking one phrase to object to while ignoring the main point, and I wish you had done similarly here.

Re: Why Your Customers Would Be Happier If You Charged More

#83

Post by tomjen3 » Sat, Sep 22, 2012, 11:40 PM UTC

Natsu wrote: post #49

patio11 wrote: post #7

Earlier quoted context omitted.

You'll find that many authors have words, analogies, literary devices, etc that they go back to. It's part of having a voice. I'm occasionally downright embarrassed by HNSearch. Easy example searches to demonstrate include [ROFLstomp], [pathological customer], [patio11 "charge more"], etc. Or, if you want things that take a little effort to spot, you can see that I really, really like parenthetical statements (one En…

> Or, if you want things that take a little effort to spot, you can see that I really, really like parenthetical statements (one English teacher of mine estimated that I used them 20x more than her reference sets... oh, there I go again) And I thought I was the only one (I have the same habit). It does make Lisp seem more familiar, though (rather than "ack, too many parentheses!"). P.S. Was surprised you didn't give…

I believe that (ab)using parantesis are a side effect of having the engineer mind -- we have to quantify exactly what we mean, otherwise the mean compiler growl at us and so it becomes a habbit of our work.

Re: Why Your Customers Would Be Happier If You Charged More

#84

Post by yourapostasy » Sun, Sep 23, 2012, 3:31 AM UTC

patio11 wrote: post #38

Alan01252 wrote: post #34

As a freelance developer myself, and thanks to Patio11, I've always had the charge more mantra firmly placed at the front of my head. So it's a little disheartening to hear on the basis of what was said in this conversation, that I'm still selling myself short. Without the advice I've read here, I doubt I'd of lasted the four months I have so far... The hardest part of this "charge more" philosophy is finding the cli…

Would Patio11 be able to charge the same rate as a developer as he does as a "I will help you sell more software" consultant? I charge the same rate for software development as I do for making graphite etchings on paper in aesthetically pleasing patterns. Consulting clients buy both of these things from me, in isolation or combination, on a regular basis. So if that's the way you're asking the question, "Yes, I could…

It might be helpful to the wider community of freelancers if you used your popular bully pulpit to expound upon the procurement tactics you have encountered, and how you responded to still win over the clients.

The "we found someone else cheaper than you" line is used all the time. It doesn't matter if it is true or not. Procurement's job definition is to convince you, Joe Freelance, that you are a commodity that competes solely on price for them. If you let them manipulate you into that mindset, then it is time to re-evaluate your unique value proposition and your negotiation process. This approach is also why you always see the business "hand off" to procurement once you have convinced the business they need you. They are trying to use the process to negotiate piecemeal and divorce the value props you just used from price, and the failure of procurement to realize why you are different and a better value is not a bug, it is a feature of their process. There is a lot more to be said, but I find a lot of technical consultants who look down on sales people are unaware of these basics of negotiation.

Re: Why Your Customers Would Be Happier If You Charged More

#85

Post by tptacek » Sun, Sep 23, 2012, 11:51 AM UTC

yourapostasy wrote: post #84

patio11 wrote: post #38

Earlier quoted context omitted.

Would Patio11 be able to charge the same rate as a developer as he does as a "I will help you sell more software" consultant? I charge the same rate for software development as I do for making graphite etchings on paper in aesthetically pleasing patterns. Consulting clients buy both of these things from me, in isolation or combination, on a regular basis. So if that's the way you're asking the question, "Yes, I could…

It might be helpful to the wider community of freelancers if you used your popular bully pulpit to expound upon the procurement tactics you have encountered, and how you responded to still win over the clients. The "we found someone else cheaper than you" line is used all the time. It doesn't matter if it is true or not. Procurement's job definition is to convince you, Joe Freelance, that you are a commodity that com…

Walk away. If they really do have someone cheaper, you either got unlucky this time, or you've positioned yourself as a commodity. Neither of those is a problem you can solve with negotiation.

Often, procurement is actually at odds with the real buyer. All you have to say is "sorry, I cannot offer you a discount" (or "cannot without a 6-month commitment" or whatever value you might want to extract here). The buyer will yell at procurement, and procurement will back down. Walk away, and the client will often come back to you. Happens all the time. Be nice and don't raise your rates on them out of spite when they do.

But if you're getting this constantly on potential gigs, I would worry that you haven't done enough to position the work you're doing. If you're a (say) "Rails developer", then despite the fact that Rails developers are in high demand, a savvy client probably does have someone who will do your job cheaper. Don't be a "Rails developer". Be a world expert in solving XXX business problem who, lucky you!, just happens to use Rails as their tool.

There's more nuts and bolts to know about handling procurements people; there are rituals you'll have to do with some of them to close deals. But basically it's all a game of chicken, except when you lose you don't die, you just learn something important about your business.

Re: Why Your Customers Would Be Happier If You Charged More

#86

Post by ef4 » Sun, Sep 23, 2012, 4:01 PM UTC

_delirium wrote: post #71

patio11 wrote: post #45

Earlier quoted context omitted.

Infant mortality, for example, isn't well served by market mechanisms I disagree more with this statement than any other statement ever made in good faith on Hacker News. Kids not dying is an outcome we urgently desire, right? There are a variety of products which support this outcome. One is "soap." Soap scarcity is a real phenomenon: some rooms that children are born in have no soap. Those rooms kill lots of childr…

Certainly there is a large contribution made by markets, but in the western world markets still failed to fully solve the problem, and it took government intervention in the mid 20th century to really push down the mortality numbers, which were still quite high despite the ready availability of soap. The biggest problem is that there were few doctors, hospitals, or vaccination facilities available in certain areas, e…

> The biggest problem is that there were few doctors, hospitals, or vaccination facilities available in certain areas, especially rural areas and poor urban areas

A problem directly caused by earlier government intervention. Starting around 1910, the AMA managed to push through legislation in most states that solidified their cartel and gave them sole authority to license medical schools. As a result, half of existing medical schools were pushed out of business, and the supply of doctors contracted significantly.

A similar push forced most poorer (and predominantly black) hospitals to close, because regs were written so that only the wealthier hospitals could satisfy the requirements.

The motivation for all this was clear: it substantially increased the rates that doctors and hospitals could charge by restricting the supply. Naturally it was all done in the name of patient safety.

Re: Why Your Customers Would Be Happier If You Charged More

#87

Post by wpietri » Sun, Sep 23, 2012, 7:01 PM UTC

rmc wrote: post #76

wpietri wrote: post #43

Earlier quoted context omitted.

That's a little tautological, and kinda glib for me given the dilemma he describes. As you surely know, you're using "returns" in a technical sense. I'm awfully fond of free enterprise as well, but it is important to note that there are a lot of kinds of scarcity it doesn't fix, and many sorts of returns that it ignores or can't handle well. Infant mortality, for example, isn't well served by market mechanisms; babie…

babies have no money Correct. But parents have money and are very protective of babies.

You're close. Some parents have money, and some of those parents feel protective of babies, and some of them know how to do that well.

But that's a non-market mechanism, and when that mechanism fails, the market still doesn't help.

Re: Why Your Customers Would Be Happier If You Charged More

#88

Post by yourapostasy » Sun, Sep 23, 2012, 9:21 PM UTC

tptacek wrote: post #85

yourapostasy wrote: post #84

Earlier quoted context omitted.

It might be helpful to the wider community of freelancers if you used your popular bully pulpit to expound upon the procurement tactics you have encountered, and how you responded to still win over the clients. The "we found someone else cheaper than you" line is used all the time. It doesn't matter if it is true or not. Procurement's job definition is to convince you, Joe Freelance, that you are a commodity that com…

Walk away. If they really do have someone cheaper, you either got unlucky this time, or you've positioned yourself as a commodity. Neither of those is a problem you can solve with negotiation. Often, procurement is actually at odds with the real buyer. All you have to say is "sorry, I cannot offer you a discount" (or "cannot without a 6-month commitment" or whatever value you might want to extract here). The buyer wi…

The rituals you mentioned is information I feel is too-frequently overlooked by hackers trying to don their businessperson hat, and the wisdom of how to respond is diffusely spread out on the Net. What most need to hear from someone who has been-there-done-that is after saying "sorry, I cannot offer you a discount", they are going to hear lots of scary talk from procurement. Most hackers have no idea how this dance is done, and have never learned before starting in business.

Procurement will shoot back with all sorts of lines, but basically they will try to intimidate you by saying something along the gist of "we're going to have to reconsider this/shop this around since you can't offer us a discount", or "we're disappointed in you/to hear that". The trick here is to have a good enough pipeline that you feel comfortable to stand your ground and not take it personally when procurement finds someone else; learning how to shrug off losses as long as we were pulling in on target was one of the harder skills for me to pick up when I started.

Most hackers trying to freelance need to hear the kind of talk they will run into out there, and not just what to respond, but how to respond. When hackers hear about "don't sell on price, sell on value and positioning", many don't know how to translate that into the nuts and bolts of what happens in the trenches and thus even if they themselves do not sell, a key toolkit for evaluating non-technical co-founders is underutilized.

There is lots of talk here on HN about how rare great non-technical co-founders are, but there is precious little on actual pragmatic ways to detect them or adopt their principles and methods.

Re: Why Your Customers Would Be Happier If You Charged More

#89

Post by tptacek » Sun, Sep 23, 2012, 9:32 PM UTC

yourapostasy wrote: post #88

tptacek wrote: post #85

Earlier quoted context omitted.

Walk away. If they really do have someone cheaper, you either got unlucky this time, or you've positioned yourself as a commodity. Neither of those is a problem you can solve with negotiation. Often, procurement is actually at odds with the real buyer. All you have to say is "sorry, I cannot offer you a discount" (or "cannot without a 6-month commitment" or whatever value you might want to extract here). The buyer wi…

The rituals you mentioned is information I feel is too-frequently overlooked by hackers trying to don their businessperson hat, and the wisdom of how to respond is diffusely spread out on the Net. What most need to hear from someone who has been-there-done-that is after saying "sorry, I cannot offer you a discount", they are going to hear lots of scary talk from procurement. Most hackers have no idea how this dance i…

All of these scary things you're talking about mean the same thing. "Give us a discount or we're not going to give you a purchase order".

From what I can tell from dealing with this problem (not nearly as directly as my business partners, but enough), there are basically just a few things you can productively do:

* Walk. A lot of times, the company will come back, and procurements is bluffing.

* Cave. You need the money enough to permanently sacrifice your rate at the client. You should really avoid doing this, because it is extraordinarily difficult to recover a concession on your rate.

* Convert to budget discussion. Try to get procurements to talk about a "number" they want to hit across the project (you can't do this with hourly billing HEY WAIT MAYBE THAT HOURLY BILLING STUFF ISN'T SUCH A GOOD IDEA AFTE--- anyways). Now take that number back to the real buyers and massage the scope of the project.

* Trade. Procurements wants a discount, you want a committed pipeline of work, a customer reference, or whatever. Again: if you're negotiating, make sure it's on the project rate, not the hourly.

You do not need a nontechnical cofounder to understand this stuff. You just need to know the role of procurements and you need to truly grok positioning.