Dealing with price dickering

One of the huge annoyances service providers encounter when they start talking pricing with clients is when the client asks you to provide the service for less.

You say you can do a job for $1500 and the next question out of the client’s mouth is:

How about doing it for $1000.

Yeah great way to ruin your day and to start the whole project off on the wrong foot. I think there is a reason that clients do this though and it’s partially your fault.

Intangible

When you hire me to build a website for you much of the work is intangible. I’m a knowledge worker which is defined by Wikipedia as:

Knowledge workers are workers whose main capital is knowledge. Typical examples may include software engineers, architects, engineers, scientists and lawyers, because they “think for a living”.

Your thought isn’t something that your client can touch. They can’t touch the website I built and while they can touch the brochure you designed it is a small piece of paper that cost a lot to print.

Since it’s intangible stuff it’s easy to think that it didn’t take me 6 years of coding WordPress sites to learn how do build huge eCommerce sites. It’s easy to think that you haven’t spent 10 years designing for lots of different fields and have learned what works in some and what just falls flat.

That time spent becoming an expert isn’t something that can be touched by a client.

Since they can’t touch it they easily devalue it’s worth.

That’s where positioning and showing the value of your work come in to play.

Bringing Value Back

Once I’ve decided that a client is someone I want to work with we go over our business goals for the site and make sure we have a plan to measure them.

Measuring data is something that makes sense to clients and it shows them the value that you are bringing to their business.

For eCommerce sites we measure improvements in conversions (if they had a store before) or increase in total sales (if this is their first online store).

For many other sites we look at pageviews (since we are surfacing more relevant content to the user) or sign ups to email lists.

Numbers have a tangible feel to them.

We’ll talk more about value based pricing tomorrow when we dive into price anchoring.

But my client doesn’t have business goals

If your client doesn’t have business goals then why on earth are you working with them? Are they actually invested in the work or is it just something that they feel they should do ‘because’.

I ask for business goals right up front and if there aren’t any my first suggestion is to hire me to help them develop some proper goals for the site. If they aren’t in to that then I’m not in to working with them.

I only want to work with people that I can provide real value for. Value that we can measure.

Reduced prices mean reduced scope

I do understand that some clients may have a smaller budget than their initial vision allows so I’m not against reducing prices on projects. I just don’t do it by reducing what I make.

I reduce pricing by reducing the scope to fit the price.

Say a client comes to me wanting an eCommerce site and they want to use their own custom
payment gateway that interfaces with their bank. But their budget is only $5k.

Their budget doesn’t match their desired features. The site development alone (for me to build the site from a well organized PSD) will start at $5k. The payment gateway will be $1 − 2k.

I don’t say yes to doing the project and reduce my rates to match their budget we look at an existing payment gateway and use that for our site. If that doesn’t work then the client will need find more money to get the work done or hire a different contractor that can do the work while matching their budget.

Take Away

Get and set measurable business goals on projects to show your business value to customers.
Only work with people that want to set and measure business goals since they are the ones properly invested in their work.

If they start drilling you down on price take a real hard look to see if they are someone you want to work with.

photo credit: pfala via photopin cc

Some initial thoughts on CRM tools

Clients are the life of any freelancer’s business. You should always be marketing to and talking to possible new clients to keep your pipeline full of work.

Let it drop off and you’d better go find a fridge box to live in.

Enter the CRM

If you don’t know what a CRM is lets get a definition from Wikipedia

Customer relationship management (CRM) is a model for managing a company’s interactions with current and future customers.

So it’s a system to help you interact with customers and leads easily.

For a while I used Trello to manage incoming clients. I simply created a card for each client with their contact information on it and moved it along a set of lists.

My Trello lists were:

  1. Prospects
  2. Meeting Scheduled
  3. Estimated
  4. Follow Up
  5. Won
  6. Lost
  7. When it’s slow

Most of those are pretty obvious so I’ll just mention the ‘When it’s slow’ list. That was longer term clients that often have work when I approach them or agencies that might be in the same boat.

Cards get due dates so I’d be notified when it was time to deal with the lead and that was about it.

A simple system.

I found a few problems with my Trello system though.

Problem 1: No centralized contact management

Getting a new customer means recording their contact information in my Mac Contacts book. Then I’d need to transfer the pertinent information to Trello.

Bah to repeated work.

I hate repeating myself. I hate repeating myself.

Problem 2: A lead is worth????

What is a lead worth and how much time have I spent on it? Is Client A worth $1000 but I’ve spent 10 hours on them? That means I’m loosing money if I figure my client acquisition at my effective hourly rate of $150.

Trello doesn’t provide a great way to list how much a lead is worth or to track how much time I’ve spent on a lead.

Problem 3: Analytics

This is a fault of Trello in general, it doesn’t have any analytics at all. Sure it has that gold feature that fades a card as it gets ‘old’ but that’s it.

I’d love to see all cards that I lost because I was priced too high. Or how about prospects that simply stopped replying. Maybe I thought the project was a bad fit and I backed out?

I tried to apply labels for these scenarios and yes it works but there are no views to really dive in to the data.

Problem 4: Lead Source Tracking

Yes this is still an analytics problem but it’s one that has weight on it’s own.

I want to know where my leads come from. Did I get $2k worth of work from one referral source or $20k? That makes a big difference and I want to know about it.

Maybe interviews on other sites/podcasts are the best lead source and I should work for more of those?

The thing is I just don’t know with Trello unless I dig through each card and pull the data into a spreadsheet.

Ugh spreadsheets.

Ugh 2x data entry.

So my Trello system ended up rotting away in favour of OmniFocus tasks that linked back to MailPlane. Using those 2 things meant that I didn’t have to double enter addresses since they were already on my Mac.

No it didn’t solve any of the other issues but I’m already invested in OmniFocus and GTD so it makes sense to stick with what you know till you find something better.

That quest to find something better is why I started trying other CRM tools.

In a few days we’ll be taking a good look at OnePageCRM which was my first stop of note in my look for a CRM solution.

Don’t Quit Clients

The dream of many freelancers is to quit clients and focus on products. It may be themes, or books, or custom yoga pants that you want to make and sell.

The specific product doesn’t matter. It’s the thought that no more clients around would be awesome.

Quitter is a book about moving from your ‘day job’ to your ‘dream job’. One of the things that has stuck out to me as I’ve been reading it is the thought that you should probably stay in your ‘day job’ a lot longer than you really want to.

This concept applies to quitting clients in favour of product based income.

Why quit clients

At it’s simplest level many freelancers want to quit clients because they are tired of unreasonable requests and silly deadlines.

I got tired of that as well and by positioning my relationship with clients in a totally different manner I was able to kill most of those silly requests. I have better clients at higher rates with some strategy.

I think that the reason to build products is to help diversify your income streams. What if you get hurt or sick and can’t work for a bit.

If you’re only doing client work (even if you price based on value) your income will dry up at some point. You won’t be doing work and that means that you won’t be earning anything.

Having a fleet of products around can smooth out the bumps in health and work hours till they don’t really matter.

Having a decent amount of product income can mean that the low income months are still more than enough to pay all the bills and live comfortably on. Instead of having the low months eat in to the profit of the good months.

I’m all for having diverse income streams with a bunch of products that don’t not rely on you doing much work once they are set up.

But clients allow you to…

The thing is that quitting clients too soon may mean you kill that product dream.

Right now clients bring in 95% of my income. If I was to quit client work right now I’d also have to figure out how to live on a few thousand dollars a year.

Not possible and my wife would be pretty upset.

Hey honey I just quit all my clients so you’ll have to start growing cotton and making all our clothes. Okay? It’s my dream so just go with it.

Yup I’d sound like a privileged ass and I’d deserve the cast iron frying pan upside the head.

Instead I devote time each week to working on longer term projects (books, writing here, plugins…) and to client work.

It’s likely that at the end of this year my client work will be more than 50% of my income still. Who knows maybe client work will be more than 75% of my total income.

Working for clients allows me a flexible schedule and no one looking over my shoulder to make sure I put in my 40 hours. Working for myself gives me freedom in how I allocate my time, and clients make it all possible.

I’ll never quit clients

While I’d love to have less income reliant on clients I don’t think I’ll ever quit client work entirely.

The fact is that clients ask for things that are hard because they don’t know it’s hard. They want that last pixel adjusted and get you to do it. Sure it can be frustrating since we think it’s close enough but it pushes us. I know when I’m working on something for myself I can be biased to sticking with the easy way I already know to do things.

Even if the easy way I know how to do things is not actually in the best interest of the project.

My ideal would be to take 1 client a quarter for minimum 4 week engagements. Then spend the rest of the quarter finding that right client for the next quarter and working on my own products.

What I want is the ability to not find that right client for a quarter and not worry about how that will affect my life at all. That is my goal with product income, not to quit clients entirely.

So if you want to build products, take a good hard look and where you income is coming from. Make sure you don’t quit that income stream too soon.

Unless you like killing your product dream before it’s really had time to mature.

photo credit: Thomas Hawk via photopin cc

5 Things A Client Should Ask a Prospective Web Designer or Agency

Man and Woman Dancing

Man and Woman Dancing
Man and Woman Dancing

Evaluating a company or person to build your website is a tricky thing. What do you expect? What things do you need to know? Here are 5 questions that a client should be asking all companies in the running to build their next website.

  1. Have you worked on any similar projects? While it is possible that the designers and agencies you are talking to about your project have never worked in your specific field before building an e-commerce site for a canoe shop or for a place selling paintball equipment is very similar. The target market might be a bit different but the issues that you will need to deal with are the same. Find out what projects they have done that they feel have similar issues to your site.
  2. What type of communication can I expect? Communication is key. Sure it is an often heard motto, but really how often does a company really take that to heart? My experience from working full-time in-house and contracting out work, is that many companies don’t really take communication seriously. At one point I sent enquiries to a number (link) of agencies in BC and only heard from 2. I’ve also dealt with a company that would, seemingly, drop off the face of the earth for a few days (10 at one point). Not the type of communication I would allow.When I work with a client I touch base at the very least on Friday and Monday of each week, while a project is active. Sure a late Thursday email counts as well but the point is to wrap up the week, setup what you’ll be working on next week and then on Monday communicate again about the goals of the coming week. All it does is let the client know that they are a priority. Make sure that heading into a project you know what type and how frequent communication will be. Make sure that you establish your communication needs.
  3. What is the design process? Will you see a wireframe? How many design options will you see? The reality is that there are many differing opinions on what is needed in a design process. I do wireframe. Some project get a lot of wireframing. Some projects start with a bit of sketching, then move quickly onto wireframing then get into Photoshop. That wireframing may have only been to sketch out ideas and may really not be anything to show off. Sometimes in the middle of a project I’ll start sketching out some elements on a page to get my creative ideas solid. Just because I went through all of the items above on a project doesn’t mean that I end up showing the client each little stage of the process.Make sure that you know what the creative process is and what parts you can expect to see. As I said I do wirfeframes sometimes. If at the end of a full wireframe I’m not sure about content layout then I show it to a a client. This probably only happens on about 20% of project. Often I get part way through the wireframe and the content layout gets solid and I start thinking of the visuals. In that case the client probably will not see the wireframes. Just be sure you know what to expect and make your expectations know.
  4. Do you have the capacity to meet the deadline? Just because the agency you’re talking to employ’s 20 people doesn’t mean they have the time to meet your deadlines. It is entirely possible that all of the staff are tied up with other clients already.One note for clients though, an average blog project easily takes 4 weeks from contract signed to finished. If it’s anything more than that you need to add time. While you may have a preferred finish time (asap is typical) remember that it may not be a realistic one. Use this question to evaluate how they schedule themselves as well as how many staff (or hours in a week) they will devote to your project.
  5. What are your pet peeves in web design right now? This is a great time to listen to the web designer talk about the pet peeves they have in web design right now. Some will talk about the design of forms, some will wax poetic about elegant code. Don’t ask them this to judge them on the specifics, ask them to hear their passion. Ask them to make sure the things you see as issues with your site are issues that your designer is passionate about.Remember that just because they don’t express your specific concerns as their passion doesn’t mean they don’t have strong opinions on them. As with anything passions and pet peeves run in cycles. While they may not be passionate today about the things that bug you they may have been bugged by those same issues 2 months ago. It’s always a good idea to read through their blog (if they have one) and to ask them questions specifically around the items that are of concern to you.

Wrap It Up

Really figuring out who to work with on a web project is a bit like getting a new dance partner. You need to communicate up front to make sure that you’re both in sync.

Your Clients Best Interest

client-trust
When clients come to you to do a job they do it with the belief that you are the best person they can find for the job. Often if we are honest with ourselves we are not the best person for the whole job. With very few exceptions there is always someone better at user interface, e-commerce, social media…than you. Your job as the main contact point for your client is to provide the best possible solutions to their problems. Sometimes that best possible solution isn’t you.

Over the years I have been working in the web, both in house and freelance, I have come across a few projects like that. Currently we are rebuilding our entire site at my fulltime job. I would love to do that but the reality is that I am a one man team. The site needs to be launched quickly and we have to rebuild the e-commerce as well. Realistically I can’t do all of that and maintain our current content output.

With disappointment I advised by boss to outsource the building and configuration of the main chunk of the site while I would continue with the e-commerce rebuild. I readily admit that I wanted to do the whole project since a site of this size would look really good in my portfolio but it’s never going to get done in the timeline.

Even as a freelancer I am only an intermediate PHP developer. When it comes to big intricate PHP scripting I call in others who are the best solutions for those problems. While I make less money (sometimes none if I just provide a referral) on that particular project I get happy clients that recognize that I give them the best advice for them, not for my pocketbook.

So come on web designers/developers, make the right decision for your clients. Just being good will have benefits in the long term with referrals and reputation.

Just Fix the Problem Now Regardless of Cost

It would probably be a safe bet that you have a cell phone. It would also probably be a safe bet that at one point or another they have been less than stellar in their customer service. Whether it was billing or a DOA phone or dropping your message box it has happened. The worst part is not that is happens but that it takes them so long to fix the problem.

Personally I bought a new phone in August and have had all of the above. At one point it cost me over $3000 in lost work let alone the time I spent on the phone with Bell Canada. They have lost my message box, over billed me, and given me problems over a phone that didn’t work when I got it.

I am not a happy customer. I would not recommend their service. I will not buy a phone on contract again cause they essentially have my money garaunteed so they have no incentive to fix my problem.

This is totally contrary to how you want to deal with customers. We all know that word of mouth is the best way to get new clients or customers in the door. With the recommendation I gave above would you use Bell Canada? Probably not. The first time I called with a problem it should have been fixed the first time.

Blindly Good Customer Service

When I used to work sales the policy was that a happy customer would bring in their friends and their friends would purchase. I remember trading in for full value a 1 year old $4000 kayak that someone didn’t like. They had come in over the year to talk about the boat. We test paddled it with him gave him tips and he tried them all. At the end he sheepishly came back and said that it still wasn’t the right boat and we said okay let’s get you the right boat.
sea_kayak_panorama

The Payoff of Lost Income

With surprise on his face he asked how much he would get for the old one and we said full price at time of sale. More astonished he bought a boat for himself and upgraded his wife’s boat. Two weeks later his friends came in and boat two boats.

That $1000 loss in value of selling a used boat returned $15,000 in sales so it was well worth it. So how do you go over and above to provide service to your clients? How do you make sure that they’re you biggest fans? Short term loss can win long term relationships.