How Much Trust When the Meter is Running?

Jacquie has been self-employed as a graphic designer for four years. She has found that her prospective clients (for example to design new logos and use those logos in designing stationery) typically start the buying process by asking her, “How much?”

In her first year, Jacquie found this frustrating because she could not answer right away. She needed to learn each client’s needs and expectations before she could provide a reasonable estimate, and her estimates were based on how much of her time would be needed.

Eventually, she learned to redirect that question to gauge the scope of each new project. This allowed her to provide reasonable estimates and close sales. Still, from that first question until the client signed her estimate, there was always uncomfortable uncertainty and a sense of risk.

There seemed to be a problem of trust intrinsic to the pricing aspect of the sales process. For example, one prospective client said, “I understand that you’ll show me three logo options with samples of how they’ll look on stationery. I am then supposed to choose and you’ll proceed from there. But what if I don’t like any of them as-is and want you to adjust or mix-and-match before I approve one? Would your fees stay the same?”

Jacquie dreaded this. If the client was not satisfied with her initial work, then she would have to charge more or make less money for her time and effort. Under the circumstances, neither possibility was welcome.

She considered that she would have to improve her skill at developing trust. She also longed for a way to make buying from her easier – especially if she could avoid the tension involved in estimating and hoping to make a decent profit when working for clients whose need for her billable time could exceed their budget.

Q1 What if Jacquie reviews her process for each type of project to establish a range of cost? This way, somebody interested in a new logo and stationery, for example, could ask, “How much?” and Jacquie could reply, “It would cost between X and Y dollars. Let’s discuss what you’d get.”

Q2 What if, in addition to replying as above when asked, “How much?” Jacquie would say, “If we can discuss how important it is to you, then we can fix the fees in advance with a satisfaction guarantee”?

- Glenn R Harrington
Articulate Consultants Inc.
www.articulate.ca

Paying for the Solution – Not the Time It Takes

Dexter is a management consultant with an accounting firm. He has been advising the owners, directors, and senior managers of various companies long enough that he typically begins formulating solutions to their problems during the initial stage of discovering the problem. Understanding that each situation is unique, Dexter still pays close attention throughout the discovery stage.

Because he always brings to bear his years of experience, and because he has the expertise to “sometimes come up with a $10,000 solution in 10 minutes,” Dexter eschews the billable hour as unfair. Rather, his firm charges fixed fees, established up-front based on the client’s gauge of importance, and includes a satisfaction guarantee. When the scope of any project changes while underway, the fee is adjusted on the same basis – all in writing.

Q1 Would it still be more fair for Dexter’s firm to charge according to his time spent, with his rate per hour linked to his seniority?

Q2 Should any other professions that apply experience and expertise to solve client problems also consider value-based fees, fixed up-front with a satisfaction guarantee, and accommodate any changes in scope by adjusting the fees?

- Glenn R Harrington
Articulate Consultants Inc.
www.articulate.ca

Questioning the the Price of Pizza

In Canada, there is a great number of pizzerias. Even small towns typically have more than one pizza place. Though there are pizza chains, there is also a variety of independent pizzerias across the country. Despite the number and variety, the industry has certain standards for ordering and pricing, anywhere you go, based on size of pizza and number of toppings.

As Emile considered opening a pizzeria in Morocco, he had the opportunity to consider the Canadian model: standard sizes of pizza, each with its own basic price, then standard pricing for toppings, plus free delivery within a certain radius.

Emile analyzed the pizza business and found that toppings do vary in cost to the pizzeria. He also found that, with the overhead to keep a pizza oven at operating temperature, the cost to bake a pizza would vary with size each and number per day. The cost of any one ingredient could also vary over time, as would the price of fuel for a delivery car. These all factored into Emile’s business plan.

Q1 How important is it to you to know how much a pizza will cost when you order it?

Q2 If your pizza order today matches your pizza order from a month ago, do you consider it reasonable for the price to be the same, even if the pizzeria’s costs might have varied?

- Glenn R Harrington
Articulate Consultants Inc.
www.articulate.ca