Dear Client, here’s how I’m going to price that job for you.
One is straightforward, rational and familiar. And it leaves you unhappy – which leaves me unhappy.
The other is less obviously rational but leaves us both a lot happier.
If we’re rational, you’re going to ask me how many days it is going to take us to do the job. (You’ve already chosen us to do the work for you so you’ve made an estimate of our experience, our overheads and our supplies of magic poofle dust.) The only thing left is the maths: hourly rate x number of hours.
The problem with this is, some bits will take longer than either of us expected. So should we charge more? We wouldn’t feel comfortable doing that, because the best case scenario would then be that you think you can’t even trust us to price a job correctly. At worst, you’d feel like we were shaking you down. Either way, you’re not coming back to us. And you’re too important a client for us to let that happen.
Of course, some bits might take less time than we expected: but we’ve already costed and weighed the job and made room for it in our schedules. So, honestly, we wouldn’t want to give you the money ‘back.’ Especially because, if we underestimate the next job, we can’t ask you for more money (see above).
Suddenly, the most rational, balanced straightforward solution seems like the one sure way for both of us to lose out, begrudge the work and part company.
Here’s another way. Far less obvious. Far more useful.
Remember how we talked about Behavioural Economics? And the fact that behind the curtain of our carefully-considered, carefully-weighed, and frightfully well-educated thinking, we’re making thousands of sub-conscious assessments on the fly every second, just to let us crawl out of bed in the morning and get on with the day?
Let’s think about Framing. You already know we don’t have a marble-lined lobby. Good, you don’t want to pay for that: you need to get some work done, not sit around watching marble shimmer in the sunlight. But neither are we working out of our back-room. So there are overheads that allow us to do the work with reliability and consistency and coffee.
Of course, we’re one part of your bigger process. A process that we both know is costing you a lot of money. Now, I’m not saying we’re going to charge you more because you’re already paying more, but I am saying we need to charge you enough to do the job as we’ve both discussed it, but not so much it sits like the fat kid on one end of the see-saw.
If you were paying a bit less for the whole process, we’d ask for time to go away and think about how we can do a good (but different) job for a bit less money, so it’d fit in with your overall budget.
Our shared openness and honesty here rewards both of us. We’re a lot nearer to finding the right price.
So, what is it?
Now we have the problem of Anchoring. If I open with a price, our discussions will naturally circulate around that price and that price might not be anywhere near the right price for you. So one of us will come away unhappy. Or you start with a price, and our discussions can circulate around that price. But now, if you’re suggesting to pay us far more than we thought we should charge, what should we say?
Instead I’m going to suggest a radical solution.
I’ll tell you what we charged for a similar project to this one. Then I’ll ask you one simple question about the job. And if we both think the answer sounds right, then we’ll both know how to price the job.
So the questions is, Dear Client,
“What is it worth to you?”