A True-Story Reminder About Pricing In Consulting

True story: back in my business planning consulting days, 1983-1994, Apple computer was by far my best client. I worked for the Latin America group, then Apple Pacific, then Apple Japan, and a bit for Apple USA and Apple Europe. I facilitated a lot of business plans, and did market research and some country plans, single-issue plans, and so on. I also worked with other clients, of course; but I depended on Apple.

money trapI priced my consulting by the engagement. The client would describe the job, I’d write a proposal, set a pricing and billing schedule, and then stick with it.

There was one person, among several dozens I worked for, who had a pattern of scope creep: meaning that after we’d agree on what was to be done for how much money, as I delivered the work in stages, he’d consistently want more than what had been agreed. It was always “But what about this” and “have you followed up on that?”

And it’s hard, as you know if you’re in this kind of expert business, to tell the client too often that what he or she is asking for is beyond the scope of the project. Sure, you have to sometimes, but it’s never easy.

So here’s my nugget about pricing: after I worked with that person and had that happen once, I was concerned with the problem. The second time he asked for a job, I wrote the proposal much more carefully, trying to block out scope creep; but it happened anyhow. The third time he asked, I calculated what I would normally charge, and tripled it.

That pricing idea worked. I didn’t want to have an enemy embedded among my favorite clients. So he didn’t accept that proposal, and I didn’t do any more work with him after that. But we remained on good terms at meetings, and he didn’t lobby against me when my name came up.

The worst I heard he said about me, second hand, was “how can you guys work with him so much? He’s really expensive.” And that was fine with me.

4 thoughts on “A True-Story Reminder About Pricing In Consulting

  1. There definitely are some people that aren’t worth working with at any price, but here is another option: Since you probably had a good idea of where the scope creep was going to occur, one could create a step plan in the full proposal that creates and prices out additional milestones. Meaning that once you had delivered what was promised, if the client asked for e.g., another version of something with “new information that just arrived,” or whatever, then there would already be a pricing commitment in place, avoiding the need for renegotiation along the way.

    Also it seems the “delivering in stages” process you mention just opens the door to scope creep by a client. Imagine if a furniture store delivered a living room set one piece per week and then wanted to get paid at the end.

    At least you got a funny story out the experience.

  2. The story is a wonderful example of emotional intelligence. You got out of having to work for a demanding client whose projects were prone to scope creep while not making an enemy of him.

  3. I encountered several clients similar to what was described above, customer who keeps on adding some process which were not included in the original proposal. To simplify the matter, whenever I submit a proposal, I always anticipate some related items which are beyond the scope of work and which may crop up during the billing period. I usually charge additional payment for any jobs beyond the scope of work. However, sometimes you get paid for it, sometimes for the sake of customer relation, you just accept the offer.

  4. I encountered three clients much more demanding than what was told. To keep the relationship cordial, I lost out in the that first encounter of such personality. The second being a competitor and a friend of the first saw the job very satisfactory at rediculusly low cost gave me a job which I charged additional payment beyond the scope of work. I enioyed everything.
    On invitation to renew the contract for another job, He wanted the scope to become more unlimited at the same cost, I doubled the charges. He posited that I am too expensive and we hugged ourself goodbye.
    The third put the scope limitless and I added 2.5% on gross income of the job within the contract period.He acepted the proposal. It is okey for me but very challenging.

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