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Justifying your Fee

October 29, 2010 — 2 Comments

My son has never had pizza!  Can you believe it…you should know by now that I eat pizza at least once a week, and that’s a bad week for me.  Why have I deprived me son?  Be cause he is allergic to everything.  Gluten (which knocks out just about every restaurant bread), wheat, corn, dairy…that is, until yesterday.

After seeing numerous doctors, some local, some far away, we finally have the problem solved.  The local doctors offered him cortisone to treat skin rashes which covered his body head to toe when he was an infant.  My wife, believing the surface treatment was the wrong answer, began researching this.  She soon discovered the food allergy problem, which is actually the result of your body not properly digesting a food, which leads to a toxic substance in the body rather than properly digested food, which in turn must come out of the body, generally in the form of a rash.  Well, with a long list of allergy foods in hand, we were able to keep Tiny Tim (as I call him) somewhat free of rashes.  The problem is, that means Tiny Tim can only eat a hand full of boring foods while watching the rest of us enjoy pizza and ice cream.

Then a couple of months ago someone refers us to a doctor just three hours from my house.  Two visits, three weeks of treatment using natural products (no drugs), and he’s free to eat whatever.  Of course Insurance doesn’t pay for this type of treatment…it’s all out of pocket.  But do you think I questioned the fee?  Did I send out RFQs, collect three bids, push the doc for a 30% discount, count his hours?  No!  He solved a serious problem using his intellectual capital.  He earned the right to advise me, charge me, and convince me to call him the next time I have a medical need.  This is the essence of becoming the trusted adviser.  This is not a commodity.

PS.  Tiny Tim and I are having pizza tonight!

© 2010, David Stelzl

When to write?  That is always a great question.  Some say you must be first, others say, “Last.”  A wise mentor of mine told me long ago, “When they are ready to buy.”  Of course it’s rare that you’ll actually know when they are ready to buy when competing for the business.  But two things stand out in my mind as important factors:

1. You must have identified the people who actually make the decision.

2. You must have established the value of the deal with the buyer before presenting your price.

Your proposal should never be asked to sell the deal for you – it can’t.  The sales person gets paid to sell the deal, then the document formalizes the agreement.  If the buyer is asking for a proposal (usually it’s actually a custodian asking), and you have not completed both of the tasks above, you are just not ready to write.  Submitting the proposal too early is destined to fail.

Instead, find ways to continue the sales process through discovery or demonstration that will allow you to further establish value and discuss the prices and budgets before writing.  If the prospect is unwilling to work with you; not allowing you to take them through the proper steps, then consider yourself one of their possible vendors.  What can you do to move up?  It may not be on this deal, but I would pull out and continue to market your value for the next one.  The last thing you need is another vendor-client relationship.  Assume they’ll be looking for the best price from now on, stripping you of all value and margin.

© 2010, David Stelzl