Do you know that a significant number of kings and emperors throughout history have been totally and utterly mad?
George III, who was also called Mad George, ruled England in the 18th Century, and was afflicted with porphyria, a maddening disease which ended his life rather prematurely in 1765.
For instance, Caligula got his father, mother and brothers murdered to become emperor. Nero got his mother and first wife murdered.
There’s been so much incest among royalties that over time rulers have become dumber and dumber.
And the reason why I mention this interesting fact is because when it comes to business development, many IT companies simply “mate” their situations with the prevailing orthodoxy of the whole industry, and end up doing what the rest of the industry is doing.
Consequently, business development efforts are lifetime vpn getting dumber and dumber, and many IT business development managers exhibit similar dumbness when it comes to pricing their solutions.
Don’t get me wrong. It’s not their fault per se. It’s mainly peer pressure from their “professional” associations. These associations are pretty good at inventing “the only way” certain things can be done and then turn them into code of ethics for association members.
And many IT companies, believing that this is the only ethical way of running a business, eat up this rubbish left, right and centre. Sadly, many of them later choke on it… unless they spit it out in time.
So, in this article I’d like to discuss some methods you can use to price your solutions in such a way that you capture all the value your company delivers and your clients benefit from, and you get paid for all that value.
While some of the mentioned pricing methods are good for certain situations, some of them are plain duds and can land you in deep scope creep.
So, let’s see what we have here.
Flat Negotiated Fee (Project Fee)
In this method, IT companies usually calculate how many hours it will take to do render their services, including materials, mark up the costs, quote that number a price and hope that the quoted price is lower than buyers’ perceptions of value.
They try to justify their fees for the time and effort they take to create various deliverables, often with no regard for the end results.
But from clients’ standpoints the “I install and new server and set up a new VPN system for you” is roughly as useful as a barber shop on the steps of the guillotine. Clients are seeking business solutions to improve those indicators that show up in boardrooms.
So, the question is how to improve indicators like talents retention, client attrition, profit margins, etc. using IT solutions.
If it’s VPN, then be it VPN, but we have to understand that the purpose of installing a new VPN (tactic) is to put the client’s company on the path of achieving a specific strategy, such as reducing client attrition. As a result of the VPN, all client service people can be more responsive to clients, which in turn reduces client attrition and increases repeat and referral business.
And if you can establish with your client that the purpose of working together is that your client wants to accomplish a specific objective that will contribute to a specific organizational goal of reducing client attrition by 25%, which is a valuable proposition.
You can’t improve the overall performance of the fire brigade by running workshops on the physics of fluid dynamics. Hey, they don’t need to know that aspect of water.