How I Earned A Lot More on Projects by Changing My Pricing Strategy
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Re: How I Earned A Lot More on Projects by Changing My Pricing Strategy
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Re: How I Earned A Lot More on Projects by Changing My Pricing Strategy
#3> If I felt my agency couldn’t deliver the full solution, I saw that as an opportunity to partner with another service provider. I would pay them for the work, developing a lasting business partnership along the way. And in the process, I’d learn about their area of expertise to get better at both selling and delivering it to my clients.
This seems a little off to me. Would you tell the client that you're outsourcing?
Re: How I Earned A Lot More on Projects by Changing My Pricing Strategy
#4> If I felt my agency couldn’t deliver the full solution, I saw that as an opportunity to partner with another service provider. I would pay them for the work, developing a lasting business partnership along the way. And in the process, I’d learn about their area of expertise to get better at both selling and delivering it to my clients. This seems a little off to me. Would you tell the client that you're outsourcing…
I would venture into guessing that the client wasn't told about this. If I was in a similar situation and I'd be told the company I'm paying to work on my project is outsourcing it, I'd think they're either a) they're too busy for me/I'm too small of a client for them, b) money is money so they're taking my project, but I shouldn't bet on spectacular results. Also, there'd be some broken trust involved. There would also be the risk of losing the client altogether the moment they hear you won't actually be working on their project, but someone else would be instead.
Re: How I Earned A Lot More on Projects by Changing My Pricing Strategy
#5[deleted]
[deleted]
Re: How I Earned A Lot More on Projects by Changing My Pricing Strategy
#6Re: How I Earned A Lot More on Projects by Changing My Pricing Strategy
#7Yes! Note that you can get halfway to the place McDerment (and Patrick McKenzie) were at simply by not charging by the hour. Simply moving your pricing increment from hours to days or (ideally) weeks changes the conversation you're having with your client.
McDerment had to develop serious sales skills to pivot inbound requests for website paint jobs to strategic marketing engagements. But you don't need sales skills to establish a minimum billing increment of a day. Doing that will pull you towards more strategic discussions and allow you to dip your toes in the water of solution sales.
Incidentally, while my hat is definitely off to McDerment for pulling this off, I assume he'd be the first to tell you that this is the moral of every book on consulting ever written.
Re: How I Earned A Lot More on Projects by Changing My Pricing Strategy
#8> If I felt my agency couldn’t deliver the full solution, I saw that as an opportunity to partner with another service provider. I would pay them for the work, developing a lasting business partnership along the way. And in the process, I’d learn about their area of expertise to get better at both selling and delivering it to my clients. This seems a little off to me. Would you tell the client that you're outsourcing…
I would venture into guessing that the client wasn't told about this. If I was in a similar situation and I'd be told the company I'm paying to work on my project is outsourcing it, I'd think they're either a) they're too busy for me/I'm too small of a client for them, b) money is money so they're taking my project, but I shouldn't bet on spectacular results. Also, there'd be some broken trust involved. There would a…
Most boilerplate consulting contracts require you to notify clients of subcontracting arrangements, and many BigCo client boilerplates forbid subcontracting altogether.
But so what? You talk to your client about a prospective engagement, then you build a "dream team" proposal that puts you on the hook for the performance of the whole project and makes you the single point of contact for all project matters, but then uses the specialized expertise of partner firms as a sales point. You sell with the subcontracting arrangement, not in spite of it. It's not something you sneak in under the wire.
Re: How I Earned A Lot More on Projects by Changing My Pricing Strategy
#9Earlier quoted context omitted.
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I think you were downvoted because the comment is empty. "Hey this is cool" type comment that adds nothing to the discussion.
That's true, but they're empty comments that don't harm the site, unlike empty mean comments. That's not my observation; it's Paul Graham's. Probably better for us not to shout down people who like articles.
Re: How I Earned A Lot More on Projects by Changing My Pricing Strategy
#10Yes! Note that you can get halfway to the place McDerment (and Patrick McKenzie) were at simply by not charging by the hour . Simply moving your pricing increment from hours to days or (ideally) weeks changes the conversation you're having with your client. McDerment had to develop serious sales skills to pivot inbound requests for website paint jobs to strategic marketing engagements. But you don't need sales skills…
I'm completely on board with the "bill by the day, not the hour" idea. Having implemented it in our own consultancy, it's done wonders.
But it hasn't gotten us to the stage you're talking about - we're definitely making headway in establishing ourselves as (Python) experts, but I don't think we're really at the stage where we can sell based solely on the customer's value - building software is simply too replaceable a commodity (See note). Nor do I think we necessarily want to be there - lawyers don't sell on value, after all, nor do most professional services firms.
Also, increasing the billing increment too much and selling based on value starts taking you into "fixed-project pricing" territory, which is a whole different field. Not that it's better or worse, just different, with its own set of needs. This we discovered in retrospect after practically switching all our work to fixed-pricing, then realizing what a big difference that was (that we weren't equipped to handle).
Note: Building software is too replaceable in the sense that there are plenty of alternatives to get some software built (hiring, cheaper freelancers, etc). We certainly manage to sell ourselves as better than alternatives because of speed an expertise. But that's a far cry from building projects and selling on value, which IMO is again, a whole other field which is hard to shift into from any old software consultancy (different customers, different sales pitch, different needs). I mention this because tptacek's basic point of "switch to daily billing" is better advice in that sense - it's easy to do from just about any position with just about any set of clients, and by magic improves your life.