“Estimated Price” is an oxymoron

Sent by Jonathan Stark on May 10th, 2018

One of weirdest things about charging for services on an hourly basis is that clients are forced to make a purchasing decision without knowing the price of what they’re buying.

Estimates are not prices - they are expectation setting instruments.

If you bill by the hour, it’s likely that you’ve never actually priced anything in your professional career.

And maybe that’s fine. It’s how professional services are typically sold. It’s the norm.

But ask yourself this:

How often do you chose to buy something without knowing the price first?

I’ll bet the answer is:

“Almost never.”

It’s exceedingly rare to agree to pay for something without knowing the price. And there a good reason... it’s super risky to the buyer. Try to think back to something you agreed to pay for without knowing the price first. I’ll wager that the experience was remarkably stressful.

Clients who pay you hourly feel this same stress. The bigger the project, the more stressful the engagement is. It’s risky and they hate it.

In lots of cases, clients are willing to pay a premium for the certainty that comes from knowing the price before they decide to buy.

What this means is that if in the sales process you are willing to present an actual fixed price to your clients (and they believe that you’ll stand behind it), you can set that price way WAY higher than you would normally estimate for the same job.

Yours,

—J

P.S. Do you run a dev shop, agency or firm and don’t know how to grow your profits to the next level? My private coaching program might be for you: https://www.jonathanstark.com/coaching


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