Daniel: So we’re here today to talk about, “How do I come up with a price for client engagements? If I’m a consultant, an individual contractor, et et cetera.” And Steve, I believe you have a story to give us some guidance on that.
Steve: Well a little while back I was looking for a designer, like thousands of people do. In my case, I was looking for a high end designer, somebody that’s up there, at kind of the enterprise level of the expertise. I had two constraints, and three requests. Two constraints were, no change to the layout, and no change to the text, or the written information that we had, which was pretty severe. We were looking to change stock photos, and looking for recommendations on the color palette. And, recommendations for fonts.
So, I found a designer whom I was enamored with. Loved her work, thought it was a great fit, and so I’m all excited to reach out to her, “Yes, yes, we can talk.” And, we get into the conversation, you know, the usual exchanges. And after I’d explained what we were looking for, just kind of a recap of what I said in an email, the question which came back was, “What’s your budget?” Microphone drop. I was crushed. “I don’t know what my budget is, that’s why we’re talking.”
Now, let me be clear, she’s a very professional designer. She’s got a lot of experience with enterprise clients. But I didn’t … It just killed the flow of the conversation, and I was feeling the uncertainty of, “Well, you know, now I’ve got to kind of figure it out and this isn’t my expertise. I don’t know what stuff costs, that’s why we’re talking. I need advice, I need guidance.” It really stopped, full stop in the conversation. I’m thinking, “How do we do this?” ‘Cause I was still interested in her. But it told me a lot that, she doesn’t really know how to launch this kind of a project when there’s a lot of uncertainty.
And so, we talked through it, and kept dancing around it for two or three more loops. And she did finally come around. We’d almost given up on each other, and she finally came around, and she did what attorneys did. And I didn’t think of this, but as soon as she said it, it made sense. What attorneys do when it’s kind of an open ended project is they’ll say, “Listen. To get started, my retainer is this much.” And hers was pretty hefty. It was a few thousand dollars. But it made sense, relative to the quality of work that she does. And that’s how she reconciled the uncertainty. She said, “Listen, if you do … We can launch with this retainer, and then from then on we can chunk it up with payments for pieces of work.”
So that’s how we managed to resolve the question, but holy smokes, there for in the middle of the conversation, that was tough.
Daniel: Yeah, I’ve seen this a lot actually. And I think your point is that we need to be able to lead clients. It’s us that needs to step up to lead the clients to a pricing model that matters, or that matches. Even in the face of uncertainty. I work with another company that’s recently redefined their pricing models, and they’ve kind of cracked this nut. For them, they listen to the nature of what the client needs, and they offer either a project fee for a one time project. It’s best when there’s a very defined need, and a very defined time frame. Or, they offer a subscription fee for a recurring thing when they’re defining needs. But, there is a recurring defining time frame also, like monthly.
And then, when there are undefined needs, the needs are unclear. It could be a variety of different things we need over time, we’re not sure yet. And perhaps and undefined time frame, it’s sort of,