Finalizing my notes this morning for today’s teleseminar on proposals – a side topic which I plan to cover (but won’t have time for great detail) is pricing…
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So here are a few random rules on proposal prices:
1. Most resellers are pricing things too low – the thought is, your SMB clients can’t afford more, the problem is, you can’t afford less. Pricing is related to value…not your client’s perceived bank account.
2. T&M pricing is amateur.
3. T&M with a cap is foolish – you take all the risk, your client has no skin in the game.
4. Deals that schedule a given resource on Tuesdays and Thursdays (as an example), mean you must now fill their down time (every other day) with project work or their utilization will be too low to net a profit for the company.
5. Too much detail. You don’t have to break out every detail of a project’s pricing. Start quoting in milestones, and price based on value, while considering days and weeks, not hours and minutes.
6. Present options…a choice of yes’s. Give them the best option, and upside option, and a phased option to allow for tight budgets, but with future phases in mind.
7. Don’t present pricing before value has been established. Remember, business value can only be understood by a business person.
© 2010, David Stelzl