Archives For fees

Photo taken by David Stelzl

For some reason, discussing money is the major hurdle.  Yesterday I had several sales calls with potential buyers.  One example stands out… We had discussed the need, talked about options, come to a conclusion on next steps, and even picked dates to begin.  My prospect then said, “Send me a proposal with some options and pricing.”

I was tempted to agree, but then that little voice reminded me of Mahan Kalsa’s book, Let’s Get Real or Let’s Not Play (which I highly recommend). Why would we wait for the proposal to agree on options and pricing.  Paper doesn’t sell, I do.  We have verbal agreement on the vision, but no specifics.  Why waste time and possibly ruin the opportunity by putting the wrong thing down on paper?

Instead I simply said, “Let’s review some options right now and make sure we are in agreement on how to proceed.”  I verbally gave him my interpretation of what we were planning to do, offered a couple of options, restated the value, and then offered a fixed fee.  I then said, “How does that sound to you?”  He said, “That sounds great.”  Now I can write the proposal, which is now really an agreement, with confidence.  I converted it to a PDF, attached it to an email, and wrote, “Here is exactly what we agreed to.”  The likelihood of closing this kind of agreement is much higher than the elusive agreements made in most sales meetings.  Meetings end without any real commitment, and the request for proposal is often just a polite way of ending the meeting.  There is no agreement, and there are no specifics from which to craft the proposal.  In the end, this type of proposal goes nowhere, leaving the sales person to forecast at 50%.  In other words, I have no idea…

© 2011, David Stelzl

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The most frequent comment I get when talking about the need to memorize or practice sales calls is, “I’m not an actor”.  In fact I received a Tweet reply this morning stating, “Sales people who talk like robots irritate customers”.  Both statements are true, however these comments miss the mark.

The most irritating sales call experience is ill preparedness.  When the sales person shows up without doing their homework, and stuttering through the first several minutes of their meeting they are seen as wasting everyone’s time.  They are also competing with those currently providing the services;  those who already know the needs of the customer.  Only in the wake of a previous provider’s failure will this strategy work.   Even “open ended” questions such as, “What keeps you up at night” are irritating to executives who have heard these “lines” meeting after meeting.   Executives need input from people who bring experience, understanding, and can communicate effectively.

I would argue that great speakers never sound like robots or they would not be able to command such exorbitant fees.   Actors who we recognize as “Stars” take on the personality of their character so effectively that we forget who they really are for the duration of the picture.   And sales people who speak with confidence and illustrations that are inculcated into their process will deliver truth in a way that seems natural and spontaneous.  On the other hand, sales people who have simply memorized sound bites from their data sheets are bound to lose along with those who have failed to prepare.

© 2011, David Stelzl

When was the last time you raised your fees?  If your business still quotes T&M most of the time, now is the time to make the change.   If you set fixed price fees based on estimated time, you might consider moving to “value pricing” this year.   Don’t wait; it’s the New Year, meaning people are open to change.

If you’re looking for justification on fee increases, look at the value you bring to your clients.  If your value is low, it’s time to upgrade.  However, most companies I talk to insist their value is high and their clients are highly satisfied.  If this is the case, you have justification to raise your fees.  But don’t penalize your existing customer contracts.   Guarantee pricing to your best clients while you move new business opportunities to new prices.  Consider adding new offerings to your existing programs that deliver more value with a higher price.  Figure it will take several months, if not a year to see bottom line impact, so get started now.  Those who wait until their income statements are in a crisis will be sorry.

Some considerations.  It’s time to charge more if:

o You are losing money on existing contracts

o Installations are coming in with lower margins than expected

o Fixed prices are turning into losses

o You are the low price leader in a high-tech market

o Larger companies won’t consider you because of amateur pricing levels

o Your business is project oriented

o Your value exceeds your price

© 2010, David Stelzl

http://www.stelzl.us/business_strategy_TeleS.asp

Tomorrow at 11:30 est I’ll be covering fees in much greater detail – by request, I did change tomorrows topic to “fees”.  Everyone struggles with this, everyone paid on gross profit is hurt by this. One of the most important changes you can make in 2011 is how you price projects and how much margin is realized per deal.  Doing thousands of small deals is exhausting, so learn how to increase deal size, gross profit, and value price.

The program is one hour, it will be recorded, and all those who sign up will receive a free recording of it on Monday.

Remember, if you are attending, feel free to submit questions and issues by email prior to the meeting.  I will cover as many as I can based on relevance.

Here is the link: http://www.stelzl.us/business_strategy_TeleS.asp

© 2010, David Stelzl

Here’s a rare clip from a recent Making Money with Security Workshop…don’t forget to check out my upcoming virtual workshop.  I only have 16 seats left and there is no travel on this – perfect for smaller sales organizations.

http://www.stelzl.us/sales_development_MMS1_virtual.asp

© 2010, David Stelzl