March 17, 2018

Reader question: “What if my client doesn’t understand what they’re getting themselves into?”

List member Theo Chupp wrote in with the following question (shared with permission):

Hey Jonathan, I have a question about offering options in a proposal. My team is in a situation where a potential customer has told us that we are the only company offering the kinds of service that will fit their need. The customer is a group of three guys that have an idea they want to demo and sell; they don’t have a company formed yet, they don’t have any engineers of their own, they just have capital. Since they come from an engineering background that doesn’t deal with software, they don’t have an understanding of how expensive custom built software can be (licensing fees alone for a piece of technology they’re interested in add $200k to our costs) Their vision involves far more bells and whistles than I believe are necessary given their goal, similar to the “Mom & Pop pizza shop wanting a Domino’s level website” situation you’ve talked about on your podcast. Since they want to use the product we build for marketing/demos, they are interested in seeing more features than (I believe) are necessary to get the idea across. I want to write a proposal where I list their “explicit ask” as the highest level option, where the 1st option is an assessment of market viability and the 2nd option is a working demo for them to use in sales meetings (without crossing the boundary where licensing fees are necessary). Is this a reasonable way to structure a proposal? Thank you, Theo Chupp

There are a few things going on here so I decided to answer in audio format:

Ditching Hourly 52: Bells & Whistles

Here are some talking points from the episode:

The sales meeting is not over until you’re reasonably confident that you can help improve the client’s condition
Don’t quote work that you believe will most likely hurt the client (even if they insist that they know what their doing)
If you are skeptical of the client’s vision, tell the client so and ask them to help you “connect the dots” to understand their business case
You need to understand the client’s desired business outcomes in order to write a value based proposal (a feature list is not sufficient)
Separating fools from their money is bad way to build a long-term business
When offering options, the lowest price option should be the thing that you agreed to in the sales meeting
Higher tier options may or may not have been discussed in the sales meeting
The lowest price option should be the most risky to the client and the highest tier should be the least risky to the client

As always, feel free to reply with questions. I read every message!

Yours,

—J