Dionne Smith: Presenting Fixed Pricing to Clients
In month four, Dionne talks about presenting fixed pricing to clients in a way that helps them focus on the end result for their businesses.
To view her additional videos, please see follow these links to Follow Dionne Smith on her journey to value pricing, Month 2: The timesheet and Month 3: The value-focused mindset.
The big takeaway was changing my fixed price agreement. My early versions were a big long list of accounting terms, and tasks that I was going to do. I started changing that completely to show the value. What is the end result? What is the customer going to see? What do they want to see? It's really about my presentation, and my fixed price agreement. That is completely changed.
At this point, I'm probably about 85% fixed price agreements with my customers. Right now my goals are to live up to the promises that I'm making on the fixed price agreement. When you start putting in that you guarantee your work, and you're promising specific results, you have to live up to that.
There is actually more money in doing a fixed price agreement, because you're selling the value of your services. You're not just working on the time sheet where you're capped. There's only so many hours that you can work. There's only so many hours that you can bill. Well, my goal is not just a financial goal, my goal is to provide the best value. The result of doing really good work and high level work, is that the money follows that.
The challenges that I face are getting the prices right, really understanding how long everything takes, and then looking at the whole year. I'm doing fixed price agreements on an annual basis right now. You really have to look at what's happening in December. Is it going to be different? Is April going to be different? Looking at the whole picture and setting a good price that's going to last for the duration of the fixed price agreement term.
It's been challenging because you really have to change your mindset. There's a lot of hurdles that you don't anticipate coming up, and just sitting down and having those conversations. It's not always easy to say, "I'm changing my entire business model. Here's what we're doing now." I have a walk away price, basically. I'm not negotiating on those things. I price the things fairly based on what the values are, and that has meant that I do have to turn away some of the business. When you start valuing your own services, the customer also sees that. I always look for the win-win in these situations. That's the service I want to provide, and this has been the vehicle to do it.