Thank you, Neil. I feel this is the first article that has specifically addressed the "voluntarily registered but remains well below the £85k threshold" with a clear confirmation of what I believed to be the case.
David Winch,
Sales & Marketing Consultant, Cambridge
If the "letter of the law" doesn't reflect the "spirit of the law" then surely the law needs to be re-drafted.
Whilst we obviously can't have split-testing of different wordings of statutes, should it not be easier to re-word laws in the light of experience?
If the law is a "donkey" [the only meaning of the original that had subsequently been redacted], the lawmakers should be blamed and tasked with improving it (there are many lawyers in Parliament I believe), and the citizen who keeps within its current format should not be blamed.
David Winch
Sales & Marketing Consultant, Cambridge
P.S. I've never had a minute's legal training in my life!
"There are quite often extras that you will expect to recover and the client will not be willing to pay without a fight."
Why? If you quoted a fixed-fee for a fixed-scope, fixed-time project that offers both parties a handsome RoI, the client will be happy to pay the fee, possibly up-front, and you can adopt the stance of "If it's within the scope, it's within the price".
And as for "Try to negotiate somewhere in between", that's not negotiating - that's haggling!
As the article eventually suggests, you need to "give and take" - That's to say if the client wants you to give them a lower price you have to take something away. If you don't know what to take away, ask them, "What would you like me to leave out in order to consider offering you a lower price?"
David Winch
Sales & Marketing Consultant
Cambridge
You do not appear to mention Value-Based Fees in this discussion.
This is just as valid a way of charging and is far fairer to both parties than time-based charging. It is a particularly good process for arriving at a "Fixed Fee" and gains strong buy -in from clients as well as protecting against scope-creep when used properly.
David Winch
Sales & Marketing Consultant, Cambridge
UK Value-Based Pricing Expert
"Clients neither know nor care whether it will take you two hours or 20 hours to provide your service."
This sums up perfectly why you need to help (prospective) clients understand for themselves the value of what they are asking you to do for them. That's the only thing they're willing to pay for.
And the pre-qualification is essential too.
David Winch
Sales, Marketing and Pricing Consultant,
Cambridge
If your charges are based on a fraction of the value your client knows/tells you they will derive from your work, then any way you find to work smarter should mean increased profit for you. The client is only interested in the result, not in how you create it.
In the extreme, if your smart way of working allows you to create and deliver the result much earlier, and if the value derived by the client would increase as a result of early delivery, you could offer them a choice - Delivery on the day requested at the agreed fee, or early delivery for a premium added to the agreed fee. Let the client decide.
David Winch
Sales & Marketing Consultant, Cambridge
The answer's in the article. In the main, like Bernie and Rupert, we continue past 65 because we enjoy it.
If others of any age have a problem with this, it's up to them to do something about it (and I don't mean 'banning' anything!), although we may well be happy to offer help and advice if asked.
David Winch
Sales & Marketing Consultant, Cambridge
It is sometimes possible to complete a sales conversation in under an hour, but it's not something that should be rushed. The prospect knows this before we start as setting their expectation of its length was part of the process of making the appointment.
The usual reason for it lasting longer is that no-one previously has sat the prospect down and said "Tell me about your troubles," with the result that it's their lengthy answers that extend the time.
And, yes, I do try to 'get the deal on the day' but that's totally different to 'refusing to leave without an order'!
There's a lot of ground to cover in a sales conversation and I'm constantly looking for signs that the relationship won't work, in which case I'd draw the conversation to a close to avoid either of us wasting any more of our time.
The deals that result from reaching the end of the sales conversation are then all win-win arrangements with 'clients from heaven' who've already agreed - amongst other things - that I won't start work until they've paid me.
That's how I keep my debtor days to less than one!
This is just the sort of scenario I am talking about, Vaughan.
The sales conversation will possibly be quite lengthy (two or three hours maybe), but every minute is essential. Effectively you need to guide them through the process of being able to work out for themselves what it will mean to them, their new business, their life savings, their life, their relationship with their partner maybe, if nobody helps them.
Whilst doing this, you will be deciding your own 'cost of delivery' to between an order of magnitude and one significant digit.
What you are seeking is a large enough ratio of perceived value to delivery cost so that when you name your price somewhere in the middle, both of you are set to receive a 'bite your arm off' percentage return on your investment.
Hence you can quote a fixed fee and be sure that, even if your estimate of costs and their perception of value are both adrift - and working against each other - by factors of two or even three, both of you will still make a handsome return.
If it emerges that their naivety is considerable, their pace of understanding is very slow, and/or their records are rubbish you can cut the conversation somewhat short and quote them a fixed fee for a 'project zero' - in other words a training session - where you can bring them up to speed with the business essentials they lack.
Once this is complete and their understanding has increased, you can have the sales conversation for the longer term work.
You can't tell a client what value you will deliver. You have to develop the skill to get them to tell you.
They'll not be used to thinking this way so you'll have to gently guide their thinking, but my goodness how strong the buy-in will be. People rarely disagree with their own opinions!
It all begins in the sales conversation - Understand their problems and what it will mean to no longer suffer them; make sure you would both enjoy working together; suggest what you can deliver for them and remind them how much difference they told you it would make; name your price - a fixed fee for a fixed-scope project - which gives both of you a huge return on your respective investments; and have them asking you how soon you can start!
David Winch
Sales & Marketing Consultant, Cambridge
My answers
Thank you, Neil. I feel this is the first article that has specifically addressed the "voluntarily registered but remains well below the £85k threshold" with a clear confirmation of what I believed to be the case.
David Winch,
Sales & Marketing Consultant, Cambridge
If the "letter of the law" doesn't reflect the "spirit of the law" then surely the law needs to be re-drafted.
Whilst we obviously can't have split-testing of different wordings of statutes, should it not be easier to re-word laws in the light of experience?
If the law is a "donkey" [the only meaning of the original that had subsequently been redacted], the lawmakers should be blamed and tasked with improving it (there are many lawyers in Parliament I believe), and the citizen who keeps within its current format should not be blamed.
David Winch
Sales & Marketing Consultant, Cambridge
P.S. I've never had a minute's legal training in my life!
"There are quite often extras that you will expect to recover and the client will not be willing to pay without a fight."
Why? If you quoted a fixed-fee for a fixed-scope, fixed-time project that offers both parties a handsome RoI, the client will be happy to pay the fee, possibly up-front, and you can adopt the stance of "If it's within the scope, it's within the price".
And as for "Try to negotiate somewhere in between", that's not negotiating - that's haggling!
As the article eventually suggests, you need to "give and take" - That's to say if the client wants you to give them a lower price you have to take something away. If you don't know what to take away, ask them, "What would you like me to leave out in order to consider offering you a lower price?"
David Winch
Sales & Marketing Consultant
Cambridge
You do not appear to mention Value-Based Fees in this discussion.
This is just as valid a way of charging and is far fairer to both parties than time-based charging. It is a particularly good process for arriving at a "Fixed Fee" and gains strong buy -in from clients as well as protecting against scope-creep when used properly.
David Winch
Sales & Marketing Consultant, Cambridge
UK Value-Based Pricing Expert
Brilliant article, Mark.
"Clients neither know nor care whether it will take you two hours or 20 hours to provide your service."
This sums up perfectly why you need to help (prospective) clients understand for themselves the value of what they are asking you to do for them. That's the only thing they're willing to pay for.
And the pre-qualification is essential too.
David Winch
Sales, Marketing and Pricing Consultant,
Cambridge
If your charges are based on a fraction of the value your client knows/tells you they will derive from your work, then any way you find to work smarter should mean increased profit for you. The client is only interested in the result, not in how you create it.
In the extreme, if your smart way of working allows you to create and deliver the result much earlier, and if the value derived by the client would increase as a result of early delivery, you could offer them a choice - Delivery on the day requested at the agreed fee, or early delivery for a premium added to the agreed fee. Let the client decide.
David Winch
Sales & Marketing Consultant, Cambridge
The answer's in the article. In the main, like Bernie and Rupert, we continue past 65 because we enjoy it.
If others of any age have a problem with this, it's up to them to do something about it (and I don't mean 'banning' anything!), although we may well be happy to offer help and advice if asked.
David Winch
Sales & Marketing Consultant, Cambridge
It is sometimes possible to complete a sales conversation in under an hour, but it's not something that should be rushed. The prospect knows this before we start as setting their expectation of its length was part of the process of making the appointment.
The usual reason for it lasting longer is that no-one previously has sat the prospect down and said "Tell me about your troubles," with the result that it's their lengthy answers that extend the time.
And, yes, I do try to 'get the deal on the day' but that's totally different to 'refusing to leave without an order'!
There's a lot of ground to cover in a sales conversation and I'm constantly looking for signs that the relationship won't work, in which case I'd draw the conversation to a close to avoid either of us wasting any more of our time.
The deals that result from reaching the end of the sales conversation are then all win-win arrangements with 'clients from heaven' who've already agreed - amongst other things - that I won't start work until they've paid me.
That's how I keep my debtor days to less than one!
This is just the sort of scenario I am talking about, Vaughan.
The sales conversation will possibly be quite lengthy (two or three hours maybe), but every minute is essential. Effectively you need to guide them through the process of being able to work out for themselves what it will mean to them, their new business, their life savings, their life, their relationship with their partner maybe, if nobody helps them.
Whilst doing this, you will be deciding your own 'cost of delivery' to between an order of magnitude and one significant digit.
What you are seeking is a large enough ratio of perceived value to delivery cost so that when you name your price somewhere in the middle, both of you are set to receive a 'bite your arm off' percentage return on your investment.
Hence you can quote a fixed fee and be sure that, even if your estimate of costs and their perception of value are both adrift - and working against each other - by factors of two or even three, both of you will still make a handsome return.
If it emerges that their naivety is considerable, their pace of understanding is very slow, and/or their records are rubbish you can cut the conversation somewhat short and quote them a fixed fee for a 'project zero' - in other words a training session - where you can bring them up to speed with the business essentials they lack.
Once this is complete and their understanding has increased, you can have the sales conversation for the longer term work.
David
Great article, Richard!
You can't tell a client what value you will deliver. You have to develop the skill to get them to tell you.
They'll not be used to thinking this way so you'll have to gently guide their thinking, but my goodness how strong the buy-in will be. People rarely disagree with their own opinions!
It all begins in the sales conversation - Understand their problems and what it will mean to no longer suffer them; make sure you would both enjoy working together; suggest what you can deliver for them and remind them how much difference they told you it would make; name your price - a fixed fee for a fixed-scope project - which gives both of you a huge return on your respective investments; and have them asking you how soon you can start!
David Winch
Sales & Marketing Consultant, Cambridge