April 13, 2024
An estimate is better than nothing
A coaching student (I’ll call him Chris), asked me to review a project proposal he was getting ready to send out.
The proposal was for a client who had three silo’d software systems and Chris was proposing to consolidate everything into one system to alleviate a lot of inefficiency and frustration.
The proposal was pretty good overall, but the following paragraph jumped out at me:
The benefit from the system is not easy to substantiate financially. The savings of personnel time and the simplification of the computing infrastructure, although they will have long-term financial effect, cannot easily be measured. Instead, this is an investment of strategic importance.
Not good.
Just at the point where Chris should have been quantifying the value of the project to the client, he threw up his hands and said, “I have no idea how much money this project will save your business!”
Here’s the thing...
Just because something is hard to measure, doesn’t mean that you can’t make a useful estimate.
I suggested he change the paragraph to something like this:
Although it is hard to say exactly how much financial benefit the new system will provide, estimates can be made. We predict that the new software will save each user at least 1-2 hours of work per week. If you multiply that by 10 users making roughly $20/hr, and again by 50 working weeks per year, the software will save between $10k-$20k annually.
Naturally, Chris would be spitballing the numbers somewhat, but the client would be able to easily adjust up or down in his or her head.
In any event, $10k-$20k is way better than “I have no idea how much you’ll save.”
Having numbers–even estimated numbers–gives the client something to compare your price against.
If your price is substantially lower than their estimated financial benefit, then your odds of closing the deal are excellent.
Yours,
—J