"I've been transparent with you, which has obviously been a mistake." That's the sentence that actually came out of my mouth on a pricing call recently, and I meant every word of it, dry as it sounds.
A new client wanted a fixed price. I'd offered two options: a time and materials rate based on my actual hourly cost, or a fixed price twenty five percent higher to cover the unknowns. Showing them the real number underneath the fixed price was meant to be helpful. Instead it just made them suspicious, because now they could see the buffer sitting there and wanted to know exactly why it existed.
Most agencies never show you that number. They quote one fixed price with the contingency already baked in, and you're never shown it. You feel comfortable only because the risk has become invisible, not because it's gone. The second I made it visible, the question stopped being about the size of the number and became a negotiation over who was actually carrying the risk, because somebody always is.
In the end I agreed to split the work into two paid phases, so the client could check the relationship was working before committing to the rest. Nobody got to hide the risk in the small print, and nobody got stuck carrying all of it either.
Funny how showing your workings is the bit that apparently makes you look difficult.
#ClientManagement #ConsultingLife #PricingStrategy
A new client wanted a fixed price. I'd offered two options: a time and materials rate based on my actual hourly cost, or a fixed price twenty five percent higher to cover the unknowns. Showing them the real number underneath the fixed price was meant to be helpful. Instead it just made them suspicious, because now they could see the buffer sitting there and wanted to know exactly why it existed.
Most agencies never show you that number. They quote one fixed price with the contingency already baked in, and you're never shown it. You feel comfortable only because the risk has become invisible, not because it's gone. The second I made it visible, the question stopped being about the size of the number and became a negotiation over who was actually carrying the risk, because somebody always is.
In the end I agreed to split the work into two paid phases, so the client could check the relationship was working before committing to the rest. Nobody got to hide the risk in the small print, and nobody got stuck carrying all of it either.
Funny how showing your workings is the bit that apparently makes you look difficult.
#ClientManagement #ConsultingLife #PricingStrategy
