Captain’s log, stardate 20220727
Longtime list member Frank McClung replied to my Regret vs Delight message to ask about guaranteeing outcomes (shared with permission):
I totally agree that hourly billing is nuts on projects, and a great way to set you and a client up for project failure.
Yet, it is easy to sell results based on a redesign, very hard to define those results in the contract then deliver. Why? Because there are so many additional business factors impacting results besides the website redesign.
Even for an e-commerce website, where design could have a more direct impact on sales (say, through the checkout process), guaranteeing increased sales like the example you give, isn’t something I would ever promise a client with a website redesign. What if no one really wants their product? A redesign won’t fix that.
And for services based organizations, website redesigns pinned to results get even more risky.
For example, a client wants a website redesign with the result of 2 new “good fit” prospects closed through the website per month. Yes, a redesign can enhance and encourage those “good fit” clients to engage, but those results are also related to your marketing, sales, team performance, and business focus.
Anyway, my two cents. But your billing point is well taken.
Hi again Frank!
A point of clarification...
Almost nobody can guarantee the ULTIMATE results that a client wants. As you point out, there are often too many variables that are out of any one person’s control.
The prospective client has reached out to you because they strongly believe you can contribute something that they think will lead to the results that they want.
If they didn’t believe this, they wouldn’t waste their time on the phone with you.
You try to uncover their desired outcome in the sales interview using The Why Conversation in order to:
- To decide for yourself if you agree with their assessment that you can actually help them achieve their desired outcome, AND
- To figure out roughly what their desired outcome is worth them as an anchor for the three prices in your proposal.
The reason the value pricing formula I recommend starts at only 10% of the value of the client’s desired outcome is because you are merely contributing to the outcome.
If you could single-handedly guarantee the outcome, you could charge 100%
Am I making sense?
Jonathan, I’m embarrassed to say, that with all the emails I’ve read of yours over the years, I’ve never made the connection that the work is only contributing to the final outcome some subjective percent and not the full result of the work performed.
And I can see now the percent one contributes is justified because, as you point out, “they strongly believe you can contribute something that they think will lead to the results that they want.”
This helps me “justify” connecting my service value to the client’s ultimate results, and frame my services value as a percent, but not the whole, of the contribution.
Appreciate you taking the time to point this out. Extremely helpful!
I’m glad to have helped Frank and I hope this has helped you, too!
As always, if you have questions please hit reply and ask :-)