August 23, 2016
How to respond to “How Hard Can It Be?” discount requests
Let’s assume you’ve given a client a fixed price quote for $10,000 to do X, and the client responds with something like this:
“Can you help me understand why you think it’s going to cost that much? I mean, I trust you 100%, but it seems $5000 would be plenty to just do X.”
I lump this sort of request into the following category:
How Hard Could It Be? - i.e., Client views you as a laborer (or themselves as an expert) and has a hopelessly naive idea of what the work entails.
There are a number of ways you might reply to this depending on your history with the client, their level of technical proficiency, the complexity of the work, how much you think they really trust you, and so on.
Therefore, the following list wouldn’t all work in every situation, but at least one should work in any given situation.
Your Lines
Without further ado, here are your lines:
LIne #1:
“$5000 would be plenty to just do X if that was all there was to it, but there are always surprises with work like this. As an expert, I feel it’s my responsibility to shoulder the risk of the unknown on your behalf. The alternative would be to low-ball price now and then come back for more money later because of some ”surprise.“ All software projects have surprises, so I consider the low-ball approach to be negligent.”
Why it works:
You are pointing out that software projects are risky and that you are the one taking the risk. To drill the point home, you paint a picture of the alternative which is them getting nickel and dimed by inexperienced or unscrupulous competitors.
Line #2
“X is just the surface level manifestation of the work. There are several things that need to be done under the hood to make X work. For example, [FAIRLY DETAILED EXPLANATION OF INTERNAL DEPENDENCY]”
Why it works:
You are telling them that it’s harder than they think and then give them a quick look behind the scenes. This works on dabblers (i.e., the self-proclaimed “I know enough to be dangerous” type of client) because they enjoy the behind the scenes stuff, but are easily overwhelmed by it. I’m normally against “educating the client” but this is one case where it can be effective.
Line #3
“X is the focus but there are quite a few unknowns that could turn out to be significant. If you’d like, we can start with an diagnostic phase to uncover any surprises. I could do that for [NON-TRIVIAL FRACTION OF ORIGINAL PRICE] and it would take about [NON-TRIVIAL AMOUNT OF TIME]. After we have more information, I’ll re-quote X. This approach often reduces the price but I can’t guarantee it. The price for X could even go up.”
Why it works:
You give them an option that feels less risky because it is less rushed and more deliberative. Even if it ends up costing the same or more over time, this can work with risk-averse or decision-averse clients. If it turns out that you can offer X for less than your originally quoted price, it’s not really a discount. Instead, you have changed the definition of X and priced it accordingly.
Line #4
“I’m curious... When you say ’$5000 should be plenty for X’, what are you basing your calculation on?”
Why it works:
You are turning the “how did you come up with your numbers” question around. This will force them to admit that their suggested price is irrational because it based on gut instinct, something a friend told them, unrelated past work with you or another vendor, etc. This reversal needs to be delivered delicately. If you don’t convey a genuine sense of curiosity, it will likely come across as defensive or combative.
Questions?
Do you have any questions on these lines? Just hit reply and let me know.
—J
P.S. These lines are predicated on the notion that your quote is a fixed project bid, and NOT an estimate based on an hourly rate. If you’re not sure how to escape from hourly billing without losing money, you might want to read my book: Hourly Billing Is Nuts.