June 18, 2017
But what if I need to work?
When presented with the opportunity to bid on a project, there are three numbers that you need to figure out prior to writing your proposal:
- The value to the client
- The cost to you
- The price for the engagement
In order to have a profitable outcome for both parties, value must be greater than the price and the price must be greater than the cost.
For example:
- Value equals $100,000
- Price equals $10,000
- Cost equals $1000
The numbers can be nearer or farther apart, but they have to be in this order. Any other order means that someone is losing money.
For example, you would lose money in this scenario:
- Value equals $100,000
- Price equals $10,000
- Cost equals $20,000
... and the client would lose money in this scenario:
- Value equals $10,000
- Price equals $20,000
- Cost equals $10,000
... and both of you lose money in this scenario:
- Value equals $10,000
- Price equals $20,000
- Cost equals $30,000
If in the sales cycle you determine from conversations with the client that their value is lower than your cost, you can not just set your price higher than your cost and expect them to be happy.
The easiest thing to do in this situation is to refer the prospect to a cheaper alternative like Upwork, 99 Designs, a less established competitor, etc.
But what do you do if you need to work?
You’ve got two options: figure out how to increase the value to the client, or figure out how to decrease your cost.
Neither is easy, but if you need the money it’s worth a shot.
Increase their value
The way to increase the value is to have a deeper Why Conversation with the client. Get at the underlying motivations behind the work request.
This can be difficult because the client contact might not be used to this sort of questioning. Heck, the person you’re talking to might not even know the answers.
Decrease your cost
The way to decrease your cost is to talk to the client about the specific business outcomes that they are looking to achieve, and how they will measure progress towards those goals throughout the project.
If you can get answers to those two questions, it’s possible that you can find a shortcut to reaching them.
In other words, get permission to achieve those goals however you see fit instead of in the manner in which they suggested initially.
Best of luck!
Again, neither of these approaches are very easy. But if you’re desperate for the money, they are potentially viable alternatives to passing on the work.
Yours,
—J