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Contractors and Freelancers: Tips for Crafting a Fair and Appealing Proposal

The first Monday of each month, I dust off a favorite post from the Bennis Inc Blog archives and give you another chance to enjoy the wit and wisdom that’s been shared. Enjoy this month’s treasure – and if it inspires you – be sure to share it with family and friends!


Tips for Crafting a Fair and Appealing Proposal

When you take the entrepreneurial leap and venture out on your own as a contractor or freelancer, one of the biggest challenges is creating a competitive and consistent pricing model you can stick to. It’s a real test of self-confidence to put a rate on your hours and truly believe you are worth this much. But it’s imperative to running a successful and sustainable business!

I have previously written on topics related to pricing services (like how to price for efficiency or tips for being smart and fair). However, even if “the price is right,” a subpar proposal can jeopardize your chances of getting a signed contract. How you package your proposal gives businesses a sense of your professionalism. It’s also an important opportunity to properly scope your work and protect your pricing.

As you might anticipate, I have passionate advice to share on this topic. This has come from my own trial and (sometimes critical) error, so take note! Here are six components that help to make up a fair and appealing proposal.

Account for any task that will require your time

When you create your proposal, you want to be as specific and all-inclusive as you can be with the services you will perform. My rule of thumb is to include any task that will require a reasonable amount of your time.

So often as contractors, we forget about the time and effort we put into things like doing research, attending meetings, answering emails and jumping on phone calls for clients. This doesn’t mean you necessarily need to charge more for these “expected” tasks, but it’s worth showcasing everything that goes into your relationship with your client so they understand the full value of the work you perform.

Quantify your deliverables

Simply saying “…will post to social media accounts” doesn’t put into perspective the tangible work that will be performed. Your client may worry about what they will actually get for the money. Be overly clear – there’s no reason to be vague with your efforts! A better version is, “…will post 6 times per week to Facebook, 3 times per day to Twitter and 4 times per week to Linkedin.”

I also prefer to use language like “up to 3 rounds of edits” because this protects you from getting stuck with a difficult client who requests that you redo your work from scratch 8+ time while still providing you with the flexibility to not have to deliver 3 rounds of edits, if they are not needed.

If you don’t define it, you can’t defend it. Should a project exceed its scope, you want to reserve the right to say that it is outside the terms of the proposal and is subject to an additional cost.

Organize services by goals

Showing your client you are an organized and detail-oriented professional begins with your proposal. Help them quickly grasp the value of what they will receive by organizing your services by the goal they aim to achieve. This will help to paint the bigger picture of how each service is strategically designed to work together and will also make your deliverables clear and direct. For clients who came to you without really knowing their goals, this added feature of your proposal will help them to feel secure under your direction (i.e. you’ll look like you have your stuff together).

Include an hourly rate for miscellaneous services

It’s natural for a project to exceed its scope once you’re signed into a contract and dig into the tasks. For example, your client may want five more web pages designed or would now like to add a weekly blog. These items will require more of your time and you need to get paid for this.

So long as you properly quantified your deliverables (see previous section we just discussed), you should have no problem responding to your client with “That sounds like a great idea! Let me get you a quote for that additional work.”

In an effort to appear both professional and transparent, I often include a line item in my proposals that note that miscellaneous writing and communication services can be completed at the rate of $X per hour. This gives clients a heads up for your normal hourly rate and reminds them that work outside the scope of this proposal is subject to additional cost.

Offer a discount for long-term commitments

For contracts that intend to be on a reoccurring basis (i.e. they have the same repeated deliverables each month with no obvious end date), I structure the pricing of my proposal to encourage clients to sign into a long-term commitment in exchange for a price break. Why? Contractors and freelancers love residual paychecks and clients love to feel like they’re getting a deal!

I suggest having three different price points. The most expensive is month-to-month. The added value here is the client’s complete flexibility to get out of a contract with minimal commitment. The next tier is per quarter. Finally, there is the annual contract pricing which is the best deal. I allow clients to still pay the breakdown each month (for cash flow sake), but they are committed to the length of the contract.

Bonus tip: I also include wording in the contract to allow for the client to adjust or increase services at any time, so long as the minimum contract price remains the same. This gives the client flexibility to add and remove services should their goals change over the course of a long-term contract, or should they wish to increase services (always a welcome change).

Set an expiration date

Finally, I have learned to include an “expiration date” on my proposals (usually 30 days from the date issued) to protect my pricing. I’ve experienced some clients go completely radio silent after receiving a proposal and then come back 4+ months later ready to engage. I can’t anticipate what other clients I may take on in the future and how my pricing may need to change to accommodate my bandwidth. The proposal expiration date allows me the right to issue a new proposal after 30 days has passed and change my pricing as I see fit. Every business must be mindful of supply and demand and how this impacts pricing; for contractors and freelancers, this is your hourly rate.

Additionally, an expiration date should give clients a nudge of encouragement to make a decision within 30 days and lock in your pricing and services while they are favorable and available. I’ve preached about how “a no is as good as a yes.” You want to receive a response to your proposal, even if it’s a no, so you can move forward….or move on.

What other questions do you have for crafting a fair and appealing proposal? Ask and I’ll answer!

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5 Tactics for Extending Your Customer Relationships

5 Tactics for Extending Your Customer RelationshipsAs a business owner, maintaining existing client relationships is a major part of your job. It’s far more efficient, convenient and profitable to keep current customers than it is to go out and acquire new ones. For this reason, you should always have a focus on how you can ensure your clients are happy and also keep an eye peeled for signs that they may be looking to decrease or terminate your work relationship in the near future.

Before this topic begins to make us all paranoid, there’s some good news! Even when a client starts showing signs that they may be a flight risk, there are certain tactics you can use to help prevent your relationship from heading in this direction. In fact, by personally using these five tactics I will soon discuss, I have been able to extend many client relationships far beyond what might have been expected should I have let them “have their way.” Let’s take a look at how these strategies may also work for you.

Establish the “minimum length of relationship” from the beginning

A long and fruitful client relationship begins with the very first contract. No matter your industry, you can likely relate to the fact that in order to start seeing results, it takes time. So often new clients will get frustrated and impatient with waiting for these results and take off before the real benefits begin to show.

When you first sign a client, be sure to set a minimum length of relationship to start. I often negotiate three months, or one quarter with all new clients. In reality, this should seem like a reasonable investment. Any client who can’t commit this long, likely isn’t going to stick around anyways. Now it’s on you to do the hard work to make sure you prove the value of your services before you’re up for renewal!

Set reoccurring phone or in-person meetings to stay a part of the team

Don’t fall victim to being “out of sight and out of mind.” As a contractor or freelancer, it’s easy to get left out of important business discussions because you are not in the office every day. I’ve found a lot of success avoiding this pitfall by scheduling reoccurring monthly phone calls or in-person meetings with clients simply to touch base and stay in-the-know. The more accessible you are, the more likely you will be included as part of the team.

Your work shouldn’t be its own silo; weave it into multiple parts of the business

Depending upon the services you offer, your work may be kept in a silo, separate from other business duties. Yes, it’s a good thing for each employee or contactor to have their respective role, but being completely separate makes you an easy limb to chop off should budgets get tight. Instead, weave your work and expertise into multiple areas of the business.

Foremost I offer communications services, but these also branch into project management, administrative and human resource roles when needed. For some clients, I’ve even played the role of Executive Assistant when the situation called for it. In these scenarios, I watched other employees come and go, while my relationship grew to take on more responsibilities. Be sure and showcase everything you can do!

Be a resource to many employees, not just the boss

Back to making yourself a part of the team and weaving your services into multiple parts of the business, you should also aim to work with many different employees beyond your main point of contact. When the business owner realizes the value you bring to more than just him/her, you will be more likely to enjoy a long and prosperous work relationship with that business.

Structure freelance or on-demand work as a monthly contract

Finally, there may still come the day when a great client will say they need to “cool down” your contact or walk away completely. I’ve learned that this is always worth one last negotiation. Should the client say “We can’t pay for your services this month, but maybe we’ll start up again in a month or two.” Remind them of your policy that once they exit a contract, they must re-enter a new contract in the future and you cannot hold their current pricing for them. The risk of paying more for you in the future, is often reason to keep you on board in some capacity.

Or if the client should say “Let’s go to on-demand services. I’ll just pay as I need you.” This is detrimental because it’s a loss of monthly income, but also because you may take on more work to compensate and then be unable to meet this client’s needs when they need you. Offer them a minimal monthly retainer that pays for a few hours of work each month with the option to add on, if needed. This guarantees you a little income and also guarantees the client you will be available to them when they need you the most.

Do you struggle with clients cutting you out or canceling contracts? Leave your specific questions in the comments below and I’ll weigh in with my advice!

 
 

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Contractors and Freelancers: Tips for Crafting a Fair and Appealing Proposal

Tips for Crafting a Fair and Appealing Proposal

When you take the entrepreneurial leap and venture out on your own as a contractor or freelancer, one of the biggest challenges is creating a competitive and consistent pricing model you can stick to. It’s a real test of self-confidence to put a rate on your hours and truly believe you are worth this much. But it’s imperative to running a successful and sustainable business!

I have previously written on topics related to pricing services (like how to price for efficiency or tips for being smart and fair). However, even if “the price is right,” a subpar proposal can jeopardize your chances of getting a signed contract. How you package your proposal gives businesses a sense of your professionalism. It’s also an important opportunity to properly scope your work and protect your pricing.

As you might anticipate, I have passionate advice to share on this topic. This has come from my own trial and (sometimes critical) error, so take note! Here are six components that help to make up a fair and appealing proposal.

Account for any task that will require your time

When you create your proposal, you want to be as specific and all-inclusive as you can be with the services you will perform. My rule of thumb is to include any task that will require a reasonable amount of your time.

So often as contractors, we forget about the time and effort we put into things like doing research, attending meetings, answering emails and jumping on phone calls for clients. This doesn’t mean you necessarily need to charge more for these “expected” tasks, but it’s worth showcasing everything that goes into your relationship with your client so they understand the full value of the work you perform.

Quantify your deliverables

Simply saying “…will post to social media accounts” doesn’t put into perspective the tangible work that will be performed. Your client may worry about what they will actually get for the money. Be overly clear – there’s no reason to be vague with your efforts! A better version is, “…will post 6 times per week to Facebook, 3 times per day to Twitter and 4 times per week to Linkedin.”

I also prefer to use language like “up to 3 rounds of edits” because this protects you from getting stuck with a difficult client who requests that you redo your work from scratch 8+ time while still providing you with the flexibility to not have to deliver 3 rounds of edits, if they are not needed.

If you don’t define it, you can’t defend it. Should a project exceed its scope, you want to reserve the right to say that it is outside the terms of the proposal and is subject to an additional cost.

Organize services by goals

Showing your client you are an organized and detail-oriented professional begins with your proposal. Help them quickly grasp the value of what they will receive by organizing your services by the goal they aim to achieve. This will help to paint the bigger picture of how each service is strategically designed to work together and will also make your deliverables clear and direct. For clients who came to you without really knowing their goals, this added feature of your proposal will help them to feel secure under your direction (i.e. you’ll look like you have your stuff together).

Include an hourly rate for miscellaneous services

It’s natural for a project to exceed its scope once you’re signed into a contract and dig into the tasks. For example, your client may want five more web pages designed or would now like to add a weekly blog. These items will require more of your time and you need to get paid for this.

So long as you properly quantified your deliverables (see previous section we just discussed), you should have no problem responding to your client with “That sounds like a great idea! Let me get you a quote for that additional work.”

In an effort to appear both professional and transparent, I often include a line item in my proposals that note that miscellaneous writing and communication services can be completed at the rate of $X per hour. This gives clients a heads up for your normal hourly rate and reminds them that work outside the scope of this proposal is subject to additional cost.

Offer a discount for long-term commitments

For contracts that intend to be on a reoccurring basis (i.e. they have the same repeated deliverables each month with no obvious end date), I structure the pricing of my proposal to encourage clients to sign into a long-term commitment in exchange for a price break. Why? Contractors and freelancers love residual paychecks and clients love to feel like they’re getting a deal!

I suggest having three different price points. The most expensive is month-to-month. The added value here is the client’s complete flexibility to get out of a contract with minimal commitment. The next tier is per quarter. Finally, there is the annual contract pricing which is the best deal. I allow clients to still pay the breakdown each month (for cash flow sake), but they are committed to the length of the contract.

Bonus tip: I also include wording in the contract to allow for the client to adjust or increase services at any time, so long as the minimum contract price remains the same. This gives the client flexibility to add and remove services should their goals change over the course of a long-term contract, or should they wish to increase services (always a welcome change).

Set an expiration date

Finally, I have learned to include an “expiration date” on my proposals (usually 30 days from the date issued) to protect my pricing. I’ve experienced some clients go completely radio silent after receiving a proposal and then come back 4+ months later ready to engage. I can’t anticipate what other clients I may take on in the future and how my pricing may need to change to accommodate my bandwidth. The proposal expiration date allows me the right to issue a new proposal after 30 days has passed and change my pricing as I see fit. Every business must be mindful of supply and demand and how this impacts pricing; for contractors and freelancers, this is your hourly rate.

Additionally, an expiration date should give clients a nudge of encouragement to make a decision within 30 days and lock in your pricing and services while they are favorable and available. I’ve preached about how “a no is as good as a yes.” You want to receive a response to your proposal, even if it’s a no, so you can move forward….or move on.

What other questions do you have for crafting a fair and appealing proposal? Ask and I’ll answer!

 
 

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Moving Beyond the Time Sheet: Making Efficiency Part of Your Pricing

mowing lawnSeveral months ago I wrote about how to be smart and fair when pricing your services. This is a critical area for any business and also one which can be the most challenging. It’s hard to put a price on passion. We risk either under valuing our services or becoming too-consumed with our work and pricing ourselves too high. Even after we have developed a consistent method for setting an hourly rate and accurately predicting the hours involved for any given project, we’re still faced with the double-edge sword of efficiency. To better illustrate my points, let me offer this analogy:

Say you want to pay someone to mow your grass. Your yard provides a well-defined scope and size for a project, yet several mowing companies provide you with very different pricing. Why? The difference between each company’s tools, experience and efficiency all play a role in the variables of their rate. One mowing company may only have access to a push mower and so they have to account for an employee taking 4-6 hours to complete the work. Another company may have equipment with all the bells and whistles requiring just 20 minutes to complete the project, but they must recoup the cost of the capital for this equipment. The second mowing company may spend far less time on your yard, but they can’t (and likely won’t) charge you just for 20 minutes of work. There’s the factor of efficiency which also has a price.

As business owners we should strive to become efficient with our work, but we shouldn’t then penalize ourselves for this skill. Although our ability to complete a project in less time means technically less billing hours, we need to keep in mind that there’s much more to pricing services than just our time. Take a look at the following three pillars of pricing that move beyond the time sheet and are worth considering when pricing your services. These may also help you understand why other companies price their services the way they do:

Scope of project

The size (or scope) of a project plays a large role in pricing, but not the only role. Businesses shouldn’t price a project based upon time alone. There should always be built-in motivation to be efficient with both time and resources and to not take advantage of a time sheet. I’ve moved as far from time sheets as I can because it penalizes my efficiency while leaving clients with an unknown variable of cost for my work. I prefer to quote a project in full based upon its scope and then I stick to this price, regardless of hours spent on the project, unless the scope should substantially change. Whether this works out to be my client’s benefit or my own, it ensures I work efficiently which most often results in completing projects well before deadline.

Cost of capital

A business invests a great deal of capital into their tools, resources and talent that allow them to provide optimum service. While a particular project may take an efficient business less time to complete because of these tools, there’s a cost to that investment that also must be taken into account when pricing services. Most commonly I see this in printing services. The cost of professional printing equipment is expensive! So while it may take mere minutes to print off a 5,000 piece mailer, when before it would take hours, the bigger and better copier required an initial investment from the company. I wouldn’t expect this printing company to charge for just 20 minutes of work when resources, much more than time, were the real expense.

Paying for professionalism

Finally, there is the cost of professionalism. If you want a service done right the first time, it’s worth paying a higher price to work with a business with a great reputation and track record for producing results. Sure, it can be tempting to go for the lowest price possible, but most of us have also experienced the repercussions of such temptation. In the long-term it’s often worth investing a little more to get exactly what you want the first time. Your time is also valuable and so the less time you spend fixing errors, or micro-managing projects the more time you can invest back into growing your business. When pricing your services, the point is very similar – don’t compete on price alone. Offer clients value, professionalism and high-quality service along with a price you feel is fair.

How do you currently price your services? Do you reward yourself for efficiency or penalize yourself? This is a critical question worth giving some thought – especially because it could save you hours of work and a lot of profit in the long-term. Weigh in on this topic by leaving your comments below!

 
 

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