Tweak Your Biz » Growth » Pricing for a ‘Daily-Rater’: Some Issues And Solutions

Pricing for a ‘Daily-Rater’: Some Issues And Solutions



Yet again I’ve been asked by a client to show some flexibility on my price (i.e. reduce it!) so I thought I’d relate my own approach to this whole area. I hope you find it interesting and I’m really looking forward to hearing your comments on how you’ve dealt with similar situations.

First a bit of background:

I’m a business researcher. Among other things, I carry out feasibility studies for start-up or developing businesses: sizing their markets, identifying important trends, doing competitive analysis and the like. Typically my projects are one-off and usually require between 3 and 10 days’ work.

Be prepared for the ‘second ask’

I’ve been asked to provide a good price on a project for a client (whom I know very well). I’ve kept my days pared back to an absolute minimum, and as a result they’ll be getting a helluva lot of research for their money. The proposal has gone in and they’ve come back with the second ask: looking for a reduction on my daily rate.

I now realise I should have kept my number of days more realistic at the start, so that giving a small reduction on the daily rate would be more feasible.  Next time I’ll try to be ready for this: if I’m asked for a good rate the first proposal should go in as completely standard with an offer to ‘do something’ if it’s over budget. We live and learn.

Freebies

This is a very dangerous situation to be in, especially in these difficult economic times. Of course giving a freebie in many cases devalues our image and reduces the value that the client places on our service. But in some cases it can work. For example, I have one client who works in a cash strapped sector. But the fact that she’s one of my few repeat clients means that she’s very high on my list of valued customers (the vast majority of my projects are one-off, with little scope even for referrals due to the nature of my business).

On two occasions this client has approached me with a small project, saying: “I have zero budget for this but I really need your help”, and I’ve stepped up to the mark. However, I trust this person to treat me properly, and this trust has been well placed to date, as the client has returned again and again with fully budgeted projects. So a well-placed freebie can be a good thing.

Be generous with time

It’s a rare project that doesn’t have some level of follow up discussion or refinement. This often ends up with additional work, but not very much of it. I try to factor a little of this time into my pricing as a cost of sale. Just as working on a very comprehensive proposal can take hours, before the project, so too can fine tuning the research a little after it’s been delivered. I think when you’re talking about 5-7 day’s research; the least a small business can expect is a little bit of added time, where it’s justified. I’m happy to provide this, in the interests of delivering a top class result for them and in the interests of a good client testimonial. Having said this, any change in the brief/proposal must incur an extra cost, and I’m sure to include this warning in my proposal terms, every time. A few hours extra is ok, but changing the goal posts is not acceptable.

Proposals can always be reduced

If a client balks at a price it’s worth taking a step back. All of my proposals are written with the best possible result for the client in mind. But in a case where they simply can’t afford the associated price, then taking a piece out here and there can often do little to harm the end result.

First proposal is an ideal scenario project: second proposal can be best case scenario given the budget. A research project is composed of many elements, and shrinking these will almost always still result in a really valuable output. I’ve just recently started to use this approach. Instead of being an all or nothing proposal, it’s a first step in a process to getting the result for the client that they can afford, and that will still make the project very worthwhile for them. It’s logical, and it’s simple: but getting this across to the client can sometimes be difficult.

I’ve been in business for over ten years, and these changing times do bring new challenges.  What pricing issues have you been faced with and how have you overcome them? Have you any suggestions for how to improve my approach?

(pic: http://www.ehow.com)



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The Author:

Revealing opportunities, pitfalls and the true value of the market a business is entering, Roisin uses research to helping companies to successfully grow and expand their business. Roisin's work is backed up with 15 years' experience in desk based market research for business of all shapes and sizes, from start ups to blue chips. http://www.knowledgeworks.ie

Add Your Comment

  • http://www.tweakyourbiz.com Niall Devitt

    Hi Roisin, thanks for sharing these pricing tactics. I have use discounts in the past but in a slightly different way to most businesses. I use them like a surprise thank you gift after the work is done. This usually really resonates with the client as I tend to a very toughu00a0negotiator up front, so it comes as a bit of a shock and nearly alwaysu00a0results in themu00a0ringing/contacting me to say thanks. The key point for me is ensuring that I and anyu00a0discounting I provide areu00a0remembered :)u00a0u00a0

  • Roisin Bell

    How do you communicate the discount Niall – on your invoice or by email etc?

  • http://www.angelireland.com Paula

    Ha! Love that idea Niall – I might steal it! Thanks for a useful and timely post Roisin. At present we are offering enhanced pricing to valued clients based on hitting a minimum amount in a calendar month etc. and based on sticking to credit terms. Good for our cash flow and good for the client’s bottom line :)

  • http://www.tweakyourbiz.com Niall Devitt

    Usually both! Typically, I use it where I have developed a good partnership with the business and its people. “I really enjoyed working with you guys, we worked really well together and achieved what we set out to, thank for the opportunity and I’d love to work with you again”

  • http://www.tweakyourbiz.com Niall Devitt

    Feel free Paula :)

  • Marksecko

    Hi Roisin.nnYou seem to have a good handle on your pricing, how to do pricing for your projects. I deal in software sales for small to mid-sized projects (Microsoft Dynamics Great Plains (GP)u00a0reseller in Ontario, Canada). They range in price from $20 – $150k for software and service. I have been able to charge a higher rate and get it if you show the value. You have to be able to prove that you are worth more than your lower priced competitor. Further, sometimes, you just have to hold the line (i.e. – no discount). Some prospects are just testing you because they have been TAUGHT (PURCHASING) to do this. Good luck and do not be afraid to charge what you think you are worth!!nnMark SeckonEndeavour Solutionsnmsecko@endeavoursolutions.ca

  • Roisin Bell

    Thanks Mark. I think showing the value is something I don’t always do. Sometimes we presume clients ‘get’ what a valuable result they’re getting, but it’s always worth spelling it out to them.u00a0

  • Roisin Bell

    Spelling out to the client the good value they’re getting is not something I enough of and it’s crazy to assume they’ll realise it by themselves.u00a0Thanks Paula!

  • Connor Keppel

    Thanks for reading Christina. It’s going to be really interesting to see how this is going to play out. I know you don’t have to be a first mover to be a winner or indeed an innovator in the truest sense, but they better play this one carefully.  thanks for reading :)

  • http://www.smartsolutions.ie/blog/ Elaine Rogers

    A very well written post Connor.
    I have no idea how this plays with Apple, and just noticed their announcements yesterday that the new OS X Mountain Lion ans iOS 6 will integrate FB apps. This can only be good for FB, right?

  • Connor Keppel

    I’m assuming so although it may just encourage a monumental power struggle (almost hoping – we need another film on zuckerberg !). I can’t imagine Apple being keen on diverting people through the Facebook app store to get to the Apple store – they are all about from Apple to Apple and  keeping people on their devices and their software e.g. look at the history of Apple and Microsoft.  How this pans out will be one of the first real reflections of Cook’s leadership style: is it a case of bettering their offerings, or a case of the fact that they feel they have no choice. Either way, their approach is going to cause ripples. Can’t wait to see it pan out!