Reader question about unbundling strategy and implementation
Longtime list member Ludovic Mornand wrote in to ask a pricing question about unbundling strategy and implementation (shared with permission):
Usually, in my phone calls, clients ask for a quote/price. If I follow the advice of David C. Baker to unbundle strategy and implementation and tell them "I charge €5,000 for strategy first", they always answer "and how much will it cost me after the strategy?".
I never know what to answer... Do I have to say ‘I don’t know, it will depend’ or "maybe it will cost you between €10,000-€50,0000"?
That’s why I used to include strategy+implementation in a whole package and come up with 3 different prices.
The thing is, by doing that, there’s a little nonsense to include specific scopes before having done the strategy.
Maybe you could help us with that point?
This is a juicy question that raises several points.
Here are my general thoughts:
- I whole heartedly agree with DCB’s advice. If you want to start selling high profit strategic engagements, you need to break them out separately and price them differently than how you would price implementation. But here’s the thing: in your marketing, don’t mention that you do implementation work at all! When making a shift to more strategic engagements, you want your prospect’s first impression of you to be as a strategist, not an implementor. If you appear to be both (or worse, as an implementor who’s dabbling in strategy) it’ll deflate your credibility. (NOTE: You can tell from the question that Ludovic’s prospects are well aware of the fact that he does implementation.)
- If you still need to do implementation work to keep the lights on while you transition to strategic engagements, you keep doing implementation for your existing and past clients. Just don’t talk about it in your marketing... it’s strictly for cashflow to get you over the hump.
- As you start to deliver strategic work to clients, some of them will organically ask whether you would be willing to help them implement the plan. If you decide you want to assist a strategy client with implementation, I would do so privately and omit it from my marketing.
Here are my thoughts on Ludovic’s specific case:
- These clients might not feel the need for the strategy piece and really just want the total price for what they see as "the project". If they don’t see the need for strategy, then you shouldn’t sell them strategy. And if you don’t want to do implementation without strategy first, then you shouldn’t work with them at all.
- If I were in Ludovic’s shoes and a client asked me, "How much will it cost after the strategy?" I would say, "That depends on who you hire to do it. I might not be a good fit for what needs to be done."
- If all of L’s clients are asking for a quote that includes implementation, then his marketing probably needs to be changed so that it’ll attract clients who are more interested in strategy than implementation. Strategy buyers and implementation buyers are two different breeds of cat.
Here’s the thing...
Selling strategy engagements is harder than selling implementation work. Strategy buyers are more savvy. If they detect that you’re just playing at it, they’ll run. You have to really understand what you’re selling and commit to it in your marketing.