Webcast Transcript for How To Write Proposals That Close

Following is the transcript of a webcast I presented on April 20, 2016 entitled How To Write Proposals That Close Without Lowering Your Prices. Grab a coffee and get comfortable - it’s about 12,000 words.



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Hello folks, please let me know in the chat room if you can hear me, and see me. Awesome, thank you Ryan, thank you Audrey. All right, so welcome, I am going to switch over to sharing my slides, and we can get started. All right you should be able to see my slides now, and my face. I'll see if I can just show the slides, there we go. You should just be seeing slides, there is slide number one. I am going to actually switch back to Crowdcast for a second, so let me know if you can see my slides, and if you can read them, I'm going to switch back to Crowdcast so I can see your answers.

Let's see, switchback, boom, okay, cool we can see both slides kind of small. All right I want to maximize the slides, so the tricky part is I can, okay you're seeing face and slides, so that's cool, I'm going to maximize the slides, and I'm going to keep my fingers crossed that it works, because I can't see the chat and the slides at the same time. Oh actually I can, sweet. Just slides now right? All slides, fabulous. Fantastic, all right let's get started shall we?

All right so before we get started, I like to always make sure that everybody who is taking the precious time out of their day is in the right place, so this talk is for people who are interested in decreasing the amount of time and effort it takes to write a proposal. People who would like to close more proposals, so have fewer rejected puzzles, and would like to while you're at it maximize the amount of money that you can charge, that's not 100% the focus of today, but that will be a side effect.

Specifically what I'm going to talk about today is what to do before you write your proposal, which is actually the most important part of the entire talk, then we're going to talk about the 6 parts of the structure that you can use over and over again for any kind of project proposal. I'm going to talk a little bit about how to maximize your fees while you're doing this without lowering your chances of closing, and we're going to talk a little bit about payment terms, so the reasons that I set up my payments, my prices, and payment terms the way that I do, and how it discourages clients from going back and forth negotiating with you.

All right, cool. All right everybody seeing everything okay in the chat? Cool, all right, great. Yes Brent this is being recorded, Ryan thank you. Glad it looks good. I've got a lot to cover, so I'm going to stop checking in on everyone to make sure that you can see. This is being recorded, so if there are any problems you can get the recording later, and I should also mention before we really plow into this, that these slides will be available for download, I'll send you an email with a link after this, and they have copious presenters notes, which will be available to you, so be looking forward to that.

Okay, so the number one thing that you can do to maximize your close rate and increase your fees frankly is to have a value conversation before you write the proposal. This is easily the number one reason why I close so many proposals. I was talking about this yesterday, and I was thinking back, I've been doing value pricing, and software projects for a little bit over 10 years, and I can only think of one proposal that's ever been rejected in that entire time, and it's because of what I do before the proposal.

The number one thing you do is you try and talk people out of hiring you, which sounds crazy, and I'm going to explain why it works, and why it's good for you and your clients, and your business. First we're going to talk about how to do it. It's actually pretty simple, what you do, here's the normal process. You get some contact from a potential client, or a prospect, they email you, or maybe they're introduced to you, or you are introduced to them, or whatever it is, you begin a conversation. They are interested in talking to you about maybe doing a project, so you jump on a call, or maybe you go to their office, or they come to your office, but regardless you have a meeting, and in that meeting it's critical that you keep asking them why about various aspects of the project.

The meeting will kick off, and then they'll probably give you a 10 or 15 minute brain dump of what's going on with the project, why they thought they should contact you about it, and it's usually very focused on the details of what they think the implementation should be, it's very much a self-diagnosis. Once they get that out of their system, you can thank them for their input, and tell them it was very helpful for getting some background, but you'd like to drill a little deeper and understand why they want to do the project.

You just keep asking why until you're convinced that the client would benefit from hiring you. I'm sure this is a very different concept for most people, it's a contrarian position, but the idea of making the client convince you that you should let them hire you is superpowerful, because it builds trust, because you are obviously willing to not take on the job, and they basically give you the argument why they should hire you that you can then put in your proposal. The entire sale happens basically in this conversation, so what does that look like?

Let's say somebody came to me and said, "Oh we want you to do a responsive redesign of our website, we hear you wrote the book on that, you're good at that." I say, "Great, let's talk." We get on a phone call, and they tell me they give me the brain dump, and then I say, "Okay, cool, so I totally get where you're coming from, can we back up a little bit and can you explain to me why you want to do this right now? Did something happen recently that is causing this to be urgent? Is this just some general thing that you think you should do?"

Then they'll some say something like, "Well you know, we've just been reading about this responsive redesign thing, it seems like something we should do," and if I hear that, I'm like these people don't have a real problem right now, they're just playing around with the idea. If they say something like, "We're seeing a massive increase in mobile traffic, and we're seeing that our conversion percentage in the shopping cart is 1% or 2%, lots of abandoned shopping carts on mobile, we're losing $100,000 a month because of this issue," or they could say something like, "Our competitors just launched a gorgeous mobile redesign, our customers are constantly complaining about our site not being available, usable on mobile, and we're afraid that our customers are going to start going over to our competitor."

They're going to give you some answer to why they need to do it now, why is it suddenly urgent, why has it become a priority, and that information is going to in my case it's either going to tell me that this is worth my time, or it's not worth my time, because if I can't deliver a massive amount of value to the customer, they're never going to pay my fee. It's just simple math. Another question you can ask is, "Why hire someone like me?" You could say, "Couldn't you save a ton of money by outsourcing this to India? Couldn't you get someone on Fiverr? Don't you have someone internally that could do this for you?"

If you explore all of those possibilities, and at every turn they say, "No, we thought about that, but we can't do it because of X," or, "We tried that before, and it totally failed because of Y." You're pre-handling all the potential objections that are going to come later what someone's looking at your proposal, and your prices, and all that, and if someone else is looking at the proposal, they're passing it around for review, and they say, and then that person says, "Well why don't we do this internally?" It will say right in the proposal why they said they can't do it internally, so you're getting their objections upfront, and converting them, or nullifying their objections before you even write the proposal.

Another one that's really common in software projects, is I'll make a suggestion about buying something off-the-shelf, so they'll say, "Oh, we want this responsive redesign," and I'll say something like, "Well why don't you just use Shopify? Why don't you just use this WordPress plug-in? Why don't you just use Drupal, blah, blah, blah on down the line?" Same thing, they'll say, "Well we thought about that, and we can't do it because of this reason," or, "We thought about that, but we can't do it because of that reason."

By the time you finish asking all of these why questions, you'll finally be convinced at a certain point, or at least speaking for myself at a certain point I will finally be convinced that the customer really does, I really am the best option, and they really do have an expensive problem. They really do have an acute pain in their business that's either costing them money, or is emotionally draining, or is creating a lot of churn with their customers, or their employees, and there is a real problem to solve that I'm uniquely positioned to handle.

Okay, so I actually call that the why meeting, so we have a why meeting before the proposal, and my next slide is why to talk people out of hiring you? I already went through that, so you want to talk them out of hiring you because if they can convince you that you should work together, they have simultaneously convinced themselves that the two parties should work together. Again, this is the most critical aspect of the entire presentation, so if you want to drop off now you can, the rest of it is just details about how to put the proposal together, and how to take all of that information from the why meeting and structure it into a document.

All right, so how to structure your proposals. It gets very straightforward. In general, you want to keep your proposal short. I've closed multi-hundred thousand dollar deals with a five-page proposal. There's no reason to have 40 pages of spec about this table, and these field names, and business rules, blah, blah, blah. That's all paid work that will happen inside the project, you do not need to put that in the proposal. I prefer when people use conversational language, so basically the proposal is a written down version of the why meeting, the value agreement that you made on the phone, or in person, so you just want to use conversational language, so when the person is reading it it's like you're talking to them over again, it just triggers that memory.

Finally you want to focus on the outcomes, not so much the deliverables, so that's why you don't need a million pages of spec, and that sort of thing, what you want to do is focus on the outcome of the project, which you will have uncovered by asking all your why questions. If you focus on the outcomes, then that will control scope creep, because if somebody's goal is to decrease abandoned shopping carts on mobile, you can measure that, and it totally circumvents any mid-project conversations like, "Oh, could you make the logo bigger? Can you make that black blacker? Can you move the phone number over there?"

You don't have to do all that stuff, because you just respond to it, how does this achieve the desired outcome? Will making the logo bigger decrease shopping cart abandonment on mobile? If they can't make a compelling case for that, you say, "Okay I'll make note of the fact that you want to do that, but we'll put it on the side, and focus on the outcome, and then once that's done, we can talk about this other stuff, and maybe spin up another project to get that done." Okay so specifically the sections of the proposal that I use, and in the email after this webinar you'll get a link to an actual proposal that I use to close a big client, so you can actually see an example of this, and not just the theory.

Anyway, the sections are I'll have a cover letter, which is always less than one page, project overview which is always less than one page. Project options, which are sometimes more than a page, but usually about a full-page, maybe a little bit more. Then I'll have risks and assumptions, which is about half a page usually, then sometimes I'll put in a why me section, I'll talk about that specifically, and then finally one page of pricing and terms. I'll go into each of those now.

The first thing, the cover letter, right up front I let the client know that I'm going to include three options in the proposal, and I always include three options. I then highlight the fact that it's a fixed quote, and not an estimate based on hourly billing, so this is a value pricing thing that if you do hourly billing, and you're going to do estimates and that sort of thing, this whole talk still applies, I think hourly billing is terrible, and it's a bad thing for everybody involved, and I've done other webinars about that, but that's not the focus of this talk.

In my proposal I highlight that fact right up front, because it's a major differentiator between my quote and any other proposals they might by getting from other people. Then I'll set a specific date that I'll get back to them if I haven't heard anything, so something like, "Oh if I haven't heard from you by Friday, I'll reach back out and see if you have any questions," that sort of thing. Alright so the next section after the cover letter is the project overview. There I just do a very factual, almost dopey sounding, it's just like this is the facts, this is the facts, this is the facts, and these are the things that come straight out of that why meeting.

These are the things that they told me about their situation with absolutely no value judgment. I just plop them in there so that they know that I heard what they said, and if the person who I spoke with passes the proposal around to other people who weren't in the meeting, they'll know what we spoke about and what the context was for the conversation. Typically there are industry statistics that will reinforce the importance of doing the project, so I can think of one where mobilegeddon where Google started ranking search results based on whether or not a site was mobile friendly friendly.

There was a lot of information around how important that was going to be, or really just having a responsive site in general. I could site statistics that 65% of email are open on mobile, so if you're doing a marketing campaign via email, and people are expected to click on these links, they better open up a web page in a browser that's mobile friendly, because the majority of people are going to be on mobile, that sort of thing. Then I will point out evidence of the primary risk or opportunity.

If someone is having a pain like shopping cart abandonment on mobile, I will detail that, and this is me saying back exactly what the person told me on the phone. They told me that they're having only a 1% or 2% conversion rate, or they're having a 90% drop off in conversions on mobile, I'll just take that evidence and stick it right in there. It may have occurred to me, or we may have discussed some secondary risks or opportunities, and I will also put those in there as well in the project overview.

Again this is almost always less than a page, it's' about three quarters of a page regardless of how big the project is. All right, and then I'll get to the project options, like I said I always provide three options, I think this is critically important. You can look up my pricing webinar to find out more about how I price the three options relative to each other, but I always use three options. I make the options incremental, so that option two includes option one, and option three includes everything from option two and option one.

The prices naturally go up with each option, and I make each option different, which sounds obvious, but what I mean to say is that option two isn't more of option one, it's something in addition to option one, it's something different, so if option one is that I will write up a report, a competitive analysis report of all of the mobile websites that are in the customers industry, then option two might be a follow-up workshop where I describe the individual things that they could do to make those changes on their own website. It's not like a bigger report, option two is not a bigger report, option two is a totally different thing.

Now the first option of the three needs to be exactly what you agreed to on the phone with your project contact. When they read the proposal, that first option is going to be very familiar to them, they're going to be like, "Yes, this is exactly what we talked about, Jonathan captured all of the information properly, this is yes this is the outcome that we want. These are the ways that we would measure the progress towards the goal, etc. etc. Then in option two is going to be something where he'll be like, or if he or she will think, "Huh, I didn't think of this, it might be a nice add-on to have Jonathan come in and do this workshop after the report is done."

You can think of it as an upsell, or an added service. Sometimes people will do a maintenance period after a website release or something like that. Then the same with option three, option three would be more access to you, more value from you, and like I said the pricing that you use for each of those three options is a subject for an entire other talk, so I'm not going to get into that today. It is important to point out that I do not put prices in this section, so at this point they are focused on the value, and the outcomes, and they don't yet know what the price is.

The next section will be risks and assumptions, and this is super important, so assumptions first. Assumptions are things that I think normally I'm pulling them straight from my past experience, so the more experienced you are, the more easily you're going to recognize assumptions. That would be things like we're assuming that the third-party shopping cart site will allow us to modify the CSS, but if that's not true, then the deal is off, or the assumption is that the clients data entry people are going to retype the current CMS into the new CMS, or whatever the thing is.

Another assumption is that there are no unusual security needs, or government regulations involved in the modification of the website etc. etc. You want to list out maybe a dozen things that it depends on the project, but I usually find that there's somewhere between 6 and 12 assumptions that I'm making that the proposal is based on, but maybe we didn't talk about. I call those out and say something like, "If I'm wrong about any of these assumptions, then let's talk about it immediately, and I'll revise the proposal appropriately."

The other thing that you list in this section are risks, and these are things that you are aware of that could be troublesome. The reason that you call them out, is because surprises are scary, so if you're in the middle of a project and it turns out that you I don't know can't set up the SSL certificates the way you thought you were going to be able to, or GitHub doesn't support [inaudible 00:22:31] in the way that you thought they were going to, there's some risk, then depending on some third party basically, in a lot of cases where there's a risk that this third-party isn't going to do the thing that we both think it does, if that's true, we'll deal with it, but I just wanted to call it out here.

What that does is that if the risk does manifest itself, then it's not surprising, and you can say, "Well, it's too bad that we have to deal with this, but we will, and we knew it was a possibility, so we will just do it," and it's a lot more, you appear much more in control of what's going on, and much more professional than if you had not called out the risk in the first place. All right, the next section is the why me section, and this section is for the benefit of anyone, it's especially for the benefit of people who you didn't talk to on the phone that maybe in a position to review the proposal, and make a decision about the proposal, or at least weight in on the decision.

In general, in my case when people approach me, and when they do approach me it's because they read my book, or they heard about me online, or they came to webinar, they already trust me basically. Other people who look at this, other people that they show this proposal might not trust me, and they might not know that I have a special expertise in this particular area. This is a great place for you to toot your own horn and say something like, "You know there's a lot of smart people out there that could do this for you, but there's some things that I think are unique about me that you might find compelling, so here's a list, and these are the things that are unique about you that make you a good fit for the project, and oh by the way this probably would have come up in the conversation the why meeting upfront, because you'd ask, "Well why me? Why not outsource this to India? Why not go with one of my competitors who is less expensive?"

This helps you justify your fees, and like I said it is helpful for informing readers who may not have been on that phone call, or don't trust you as much as the person who initially made contact. All right, now the pricing and payment terms section is where the rubber meets the road, so this is where you give the pricing for your options, well in my case I repeat the fact that I don't charge by the hour. If you do charge by the hour, obviously you'd skip that, but I call more attention to that, because I think it's an extremely unique differentiator.

Then I take the prices for all the options, and I lump them into a paragraph format. I don't give them a grid, or an easy way to scan them, because I know that the natural inclination for a person when they receive a proposal is to jump to the end, or scan through it looking for dollar signs, and immediately have a reaction to the price. I think that's bad for them, because it leads to snap decisions, and irrational decisions, and I don't think that a software project is a good thing to make irrational decisions about, so I make it difficult for them to make a snap judgment by lumping the prices together, and this is another reason to give options, because if they look at the options, and there is a $10,000, a $22,000, and a $50,000 option, then they're like, "I had some expectations about how much this might cost, I don't understand why there are three prices here," they have no choice but to go back and actually read what you wrote.

Then they have to go probably back to the top, and read through, and then they find the options, and they read through those, and they can consider them without the prices staring them in the face. Also in the payment terms section I ask for 100% upfront, and again if you are billing by the hour can't do this, but if you're giving a value price, you can do this, and there are some major benefits to this which I'll go into briefly. The biggest one is that if they come back and want to negotiate about price, you can say, "Well I don't negotiate price, but we could do different payment terms. We could do 50% now, 50% in 30 days, something like that if that makes it easier for you to pay."

Another thing that will happen since I mentioned it there, is if they do want changes to the proposal like, "Oh we want option two for the price of option one." You just flat out say, "Well I can't make a business case for that, but if what you are trying to do, if I wrote the proposal wrong, if I misunderstood your primary needs on the phone call, I would be happy to rewrite the proposal in a way that gets the most important pieces from option two and option one for the price of option one."

Basically you would be writing a new proposal with no options on it, and just do specifically what they ask for in a way that you think is a fair price. I also specify a start date for the project, and usually this will be a couple of weeks out. You don't want to say, "Oh I'm available to start tomorrow." First of all I don't think that's a good idea, that's a little too, they're not going to approve the thing in one day anyway, so it makes more sense to push the thing out a couple of weeks, it makes you look less desperate, it's more in demand, and I think that's a good way to be.

Tied to that is an expiration date for the proposal, so I would put an expiration date on so that I have a reason to call them back and say, in the cover page I would say, "I'll call you back on Friday if I haven't heard anything," but then I'll have an expiration date that's maybe 14 days out, and if I call them on Friday which is say four days, or five days after I submitted the proposal, I still don't have any answer back, as the expiration date starts to approach, I'll email them and say, "Hey, just want to make sure you have had a chance to look at the proposal, it's going to expire on Friday, it's been two weeks, and I can't guarantee my availability, or even the pricing after that date."

Sometimes I've had clients freak out about this, because they feel like I'm holding them over a barrel or something, but the way to address this is to say, "Look, this is a time sensitive thing, everything is time sensitive in this business, and the further we get away from the conversation that we had, the more your business case is going to change, the more your market is going to change, the more your competitors are going to change, so this proposal starts to get less and less relevant potentially. There is an expiration date on it, after the expiration date we need to at least touch base to see if anything important has changed."

Priorities in businesses can change all the time for a variety of reasons, and if it turns out that somebody was on vacation, or two people were on vacation back to back, and they couldn't get back to you, that's fine, you can extend the expiration date. You want to bring it up so that they don't think that six months later they can just send you a check and be like, "Okay, let's get started tomorrow." All right, and that is section six, so what we've covered today is what to do before you write your proposal. You want to have that why meeting, that is the most important thing you can possibly do.

If you only do one thing of all of this, it's talk the client out of working with you. If they can convince you that you should work with them, then they will have simultaneously convinced themselves that they should work with you, and then it's just a question of whether or not they can afford it. I've given you a proposal structure in general, and specifically that you can use repeatedly, and you'll get a download link for example, an example template. I have explained a little bit how to maximize your fees, and that's a side effect of having the why meeting.

You don't have to, you won't be competition with anybody, because nobody else is doing this, so you'll end up being able to charge what your worth, because you'll know what the value of the outcome is from having the why meeting, and you'll be able to position, or set your prices in a way that is a small fraction of the value to them, you'll be able to be articulate that to them, because in fact they will have said it to you in the first place. Then finally the payments terms page I think is very important, because that will discourage clients from haggling about your fees, it gives you a way to negotiate over other things like the terms, 100% upfront, versus 50-50, or let's say an extended expiration date, or if they want to reconfigure the proposal, you can write a new one, but typically that doesn't happen.

All right, so when you get this slide deck it will be in a PDF format, and the links that you see here will be clickable, so you can go to the webpages where you can download the template, the proposal template that this presentation is based on, and you can also read an in-depth blog post about how and why to ask for 100% upfront, and how to address the common objections if you get any objections on that. Now it's time for questions, and so I'm very excited because we've got almost a half an hour to do questions, hopefully there are some questions, so I'm going to go back to Crowdcast, close the slides, back to me.

All right, so I see, so folks if you have questions, don't put it in the chat, put it in the Q&A section so people can vote it up and down, and then also that allows me to click on the question and answer it in the video, so people can jump to those sections later. All right, so the first one is from Ryan. "Value pricing work we do for agencies who love to know how many hours will X take you has proven to be a tougher sell than value pricing for a direct client, any thoughts on that?"

Yes, it's really hard. I'm not surprised that you had that experience, because you are not talking to the entity that stands to benefit from your work, so it makes it incredibly difficult, and I recommend that people don't do it, because of that. You will forever limit yourself to the market hourly rate for whatever your discipline is, and that's not good. It's okay to work for agencies if you're doing something for them specifically, but having a three way relationship between you, another party, and a client is brutal.

I've never had a situation where there were three parties involved where it wasn't horrible, so basically you're doing staff augmentation at that point, and if they're not willing to accept, you can't determine the value, because you can't talk to the client. I would recommend either giving up on value pricing if you're going to go through agencies, or to take the agency out of the mix. All right, next question.

"How do you use value pricing when A you're not focusing on a single client at a time, and B, it is going to take you several months to deliver?" I almost don't even understand this question, because it's not exactly related to value pricing, so let me put myself in your shoes for a second. I'm imagining this is about scope creep, perhaps Ricky could chime in in the chat to elaborate on this question, but I'm imagining it's about scope creep, because I've had related questions about this in the past.

Assuming you're doing a software project that involves implementation i.e. you're writing code for something like a website or whatever, if you've focused on the outcomes of the work, then you should be able to, it shouldn't affect your work load necessarily do you know what I mean? It's not going to, honestly I don't understand this question. I guess if you had a deadline, I don't know, Ricky I guess you're going to have to elaborate, I see a couple voted this up to, I don't understand the question. Maybe you can elaborate, and I'll come back to this one. Maybe add a comment.

Oh wait, there is a comment, "Some of your example proposals are more retainer like, scope creep is very much part of the question." Okay, so if you focus, now I understand. If you focus on outcomes, you won't have scope creep. If you say the goal is let's say somebody says, "Oh we want to hire you to do a from scratch redesign of our whole mobile shopping cart, our whole shopping cart on mobile," and there is a particular outcome, then you never have conversations about like, "Oh can you move this over there." You never have conversations about, "Oh I don't like these colors." That's not up to the client anymore.

If you focus on the outcome, say, "We're focusing on achieving this outcome, we're not going to make arbitrary design changes because you don't like, you personally don't like a color or something." You can take input like that from the client if it's not dramatically going to increase the amount that you have to to like, I'll change this blue to a different blue, that's not that big a deal. You can be like, "You know what? That's fine, I'll do that," and the way that I have worded this in the past is that to clients is that you're welcome to give me input about the visual aspects of the design that you like or don't like, but if we're to achieve this outcome, then I need to retain veto power over these aspects of the design, otherwise we're not going to achieve the outcome.

In that way you can control scope creep. I can think of a handful of occasions when someone has halfway through a project got a bee in their bonnet that, "Oh what we really should have asked you for was this other feature that we never talked about." I'll say, "Well, okay if you want to put the current project on hold, and we can work on this different feature, or this tangent basically, then we can do that, but I'm not going to do two projects at once, and this is clearly a different project, because it never came up before."

In the rare occasions that that's happened, the client sleeps on it, and is like, "Yeah you're right, that was just a reactionary request," and it gets pushed to V2, and it eventually disappears because it wasn't that great an idea. Another thing that I'll say in that case is like, "If this is such a great idea, why are we only thinking of it now? How is this going to get us closer to the desired outcome," and if they can convince me, I suppose if they could convince me that it was going to help with the outcome, then I would consider doing it, but that typically doesn't happen. That was a very long way of saying focus on outcomes, and you won't have to deal with scope creep.

All right, Bill asks, "Do you use Socratic questioning in gathering information when on the phone for your proposal later on?" You know I get this Socratic question occasionally, and I know who Socrates is, and I get the idea, but I don't know why people keep asking that. Since I don't know exactly what you mean by Socratic question, I can't really answer yes or no, but I do to reiterate, I just keep asking why until it's clear to everyone what the goal of the project is, why its urgent, why now, why me?

Annie says, "It's because Brennan Dunn calls the why conversation that." Okay, maybe it's the same thing. Socratic questioning I imagine is just pure questioning, like you never tell anyone anything, which is true, that's how I run the why conversation, I don't tell anyone anything, I'm just asking them questions about why this is so important. Okay, Ryan, both people are referencing Brennan Dunn, so I'll check that out, it forces either a yes or no answer, nothing else. No, I don't do that, no I don't yes or no, nothing else, I'm looking for exploratory answers.

Definitely not yes or no. I'm looking for conversation, I'm looking for their language, and I'm capturing all of that to put into the proposal, I definitely do not want just yes or no, so hopefully that answers the question. When asking the potential, when asking a prospect wait, these keep jumping around, all right, Annie, "When you're asking the potential why they didn't just use a third-party solution, or something cheaper/easier than you, what if they don't know about that stuff, should you educate them about how they could not hire you?"

I do it briefly, if someone is considering hiring me to do something that they could accomplish with a free WordPress plug-in, I don't want them to hire me. Imagine if they did hire me, and found out later that there was a free WordPress plug-in. I would much rather say to that person, "There's a free WordPress plug-in to do this, have you considered that?" If they say, "No, I hadn't." Then I'd say, "Maybe you should check that out first and see if it's going to suit your needs," and I'm totally fine with that, now I don't have to write a proposal, because I hate writing proposals if that didn't come through loud and clear, I do not write like writing proposals.

Yeah, I wouldn't spend an hour telling them about how the WordPress plug-in works for them, maybe I would say, "If you don't want to do it yourself, maybe I could set it up for you," but that's a very low value thing to do. I would probably either pass that client to someone who specializes in WordPress plug-ins to stick with the example, or just let their internal team do it or whatever. I would much rather build trust with them by doing that instead of landing this deal when it's really fairly low value, and they can solve it another way very easily. I'd rather just say, "Just use this WordPress plug-in, you don't need to spend a million dollars with me," and then in the future when they have needs, they're going to potentially come back to me, because wow they know that I'm honest, and that I'm going to give them the best bang for their buck etc. etc.

Maybe it's a little bit of playing the long game, but to be honest, it's very, very rare when I talk to someone in one of these why meetings, and actually talk them out of hiring me, it almost always results in them trusting me way more, in me knowing exactly what the issue is, and them knowing exactly what the issue is. Now all of a sudden we're talking about right thing, we're talking beneficial outcome of the project instead of silly stuff like features, like specific features, or implementation details, or somebody's hourly rate, or blah, blah, blah. All that stuff is incidental. Hopefully that helps.

All right, from Audrey, "Do you ever review of proposal with a potential client via GoToMeeting instead of sending it by email?" I never have, I never have, but I know people that, and I don't really have an opinion about the effectiveness one way or the other. In any talk I give about sending in proposals, and having a better than 90% close rate, it's all been strictly five-page proposals PDF that I email. I don't send it in the mail physically, it's always a PDF that I email to them.

"With your comments on scope creep answering Ricky's question, I can imagine some fairly awkward conversations with clients telling them to focus on outcomes. Is your strength of argument in setting expectations early on in the project?" Yeah, absolutely. Yeah, think about it, anybody who's been in a scope creep situation, it's almost always certain death for the project, okay maybe not certain death, but it's always bad for the project. If people start to panic, like here's another funny thing, is scope creep happens more when you're billing by the hour, because the customer gets panicky, so they start to try and control the situation by telling you what to do more.

If they paid $100,000, and they know that's it, and you're going to achieve that outcome for that amount of money, or they're going to get their money back, then they calm down, and they don't try and micromanage you, they don't tell you what to do. I'm not going to say they don't care, but they let you do your job, so I guess those things are fairly strongly tied together, so value pricing and scope creep are very closely tied together on a psychological level. Still, if you say to them, "Look," and yes early on at the beginning of the project you can say, "Look if you ask me to do something, and can we can't come to an agreement about how that's going to help achieve these objectives, I'm going to say no for your own good, because if I don't, this project is going to get dragged all over the road, and it's never going to get finished."

If you're getting a lot of these the scope is ballooning out of control, or it feels like it's going to, then you say, "Look, I'll start making a list for V2, but if we try and squeeze this into V1, we're never going to hit our deadline, we maybe never release, this project is going to turn into a money pit for you guys, and I don't want to let that happen, because that's just going to reflect poorly on me." That's how I would handle it, I guess I do have a strength at that, I do not take orders from people. If you hire me to be an expert at something, you're not going to tell me how to do it, it's a waste of their money.

If they're telling me how to do my job, that's a complete waste of their money. If I had some suspicion that that was going to happen in an early conversation, I would make that 100% clear in no uncertain terms. Anthony asks, "What should you do to follow-up after the proposal has been sent?" I think I mentioned that in the talk, I will give them a follow-up date in the cover letter, which is usually three or four days away depending on if it's holidays or something like that. Three or four business days, and then I will have an expiration date, which is usually two weeks, so I'll do a follow-up on the first date, and then if I don't have an answer yet, then prior to the expiration date I'll ping them again, and say, "I'm not guaranteeing my availability, or prices after this date, so if there's anything I can do to help you come to a decision, then let's do that."

After that, I would just let it go cold. Maybe, yeah I wouldn't keep bugging people, I would basically have written them off. If they ask for a proposal, and didn't even get back to me within two weeks, I would not be interested in working with them anymore if they hadn't given me some good reason why they couldn't get back to me. Danny asks, "Before your why meeting, how do you whittle down or qualify these people so that they're not wasting time on meetings with everyone who asks? Good question. I don't do cold outreach, so I only do inbound, in other words I do content marketing, and that sort of thing.

I don't get that many leads, and when I do get one, I can almost almost always tell from the email if they're serious, and then I'll research the business a little bit to get a sense of whether or not my fees are going to be acceptable to them based on the size of the company. If I get a phone call from, I don't know, I don't have bullet points to follow on this one, it's just a gut sense, I don't get so many that it would be a huge time commitment. I probably only have one a month at the most, those clients turn into six figure clients with recurring income like for a year or more, so I don't really need that many clients.

I don't think probably most of the people in here if you do software development of some kind, you'll need fewer and fewer clients as time goes on, because you can charge more and more money, and you can get bigger and bigger clients. I'd be curious to know how many in the poll for example, most people are doing five or fewer proposals per month. It's really not that much time. Yeah, like 72% of people are doing five or fewer per month, so is it really to have a phone call for each of those, it's really I don't see it as that big a deal.

What's cool though, if you do that phone call correctly, and let's just say your average quote is for $3000 worth of work, if you do that call correctly, and if you look at the percentage of proposals poll, fewer than 75%, most people are having fewer than 75% acceptance rate, or lower than 75% acceptance rate. A quarter of the people are doing less than half, so if you do one of these calls right, do one of these phone calls better, that's an extra $3000 revenue if that's the average, so all of a sudden you can start landing more deals, and wasting less time on these things.

Then as you're busier, as you're booked more to capacity, you can have fewer and fewer of these calls, so it's never really been a problem I guess is what I'm saying having too many of these phone calls. Ian asks, "What can be done about scope creep that's brought on by third parties, or an internal department? For instance if we focus primarily on the backend for a project, but are implementing the front end too, when graphics and assets come midway through a project, that changes things."

Great question, this comes up frequently, and so I don't see this as scope creep. What this is is deadline creep usually. What happens is is it pushes the deadline farther and farther out, and we didn't talk about this in this call, but I never agree to deadlines for this exact reason. As a consultant, or as a freelancer, you cannot guarantee a deadline on a software project, because it's a collaborative relationship. You can't control it, you can get your deadlines can get blown out of the water, and there's nothing you can do it.

You can't control the client, and so this is totally a case of setting expectations upfront. If I send in a proposal, notice that I put nothing about deadlines in my description. If they come back to me and say, "Oh well we want milestone dates, or deadlines," I say, "I have no control over that, because this is a collaboration, I'm going to need to, you guys could be a bottleneck, I could be a bottleneck, this third-party could be a bottleneck. Your art department could be a bottleneck, I can't control any of those parties, I can only control myself.

What I can tell you is that there is no way we can finish this in less than say three months, or whatever you think, but it could easily be six months, it could be a year. I have no idea, and so this ties back into me doing value pricing and asking for 100% upfront. If I'm waiting for graphics from somebody, I don't care, I don't care if I'm waiting, I just do nothing, I'll do a different project, I'll do something else, and then when those graphics and assets finally come in, then I'll do it, but I didn't do anything, and I wasn't waiting for the money, it doesn't matter to me, because I got all the money upfront.

I guess in answer to your question it's a combination of things, where that block in the schedule, if you're blocked by a dependency. If you're billing upfront, it doesn't affect you, it doesn't matter. All right, Kent asks, "Do you have a process for evaluating the risks you list in the proposal, how do you address the problem of you don't know what you don't know? No not really, I don't have a process for that. It's experience, so that's not a great answer, but whenever I come up with risks, it's always based on experience.

Things like if we're talking website, software development, that kind of thing, it's always things like special security considerations, regulatory constraints, if you're doing a medical website or something. Dependency on third parties for an API or something like that. Outside of that, I don't have a good answer. I will say that I probably fall back on the fact that since I charge a lot of money, so I don't have to have a lot of clients, and I can be really choosy about who I work with, so I'm really careful to work with people I get along with, and like, and click with in the original meeting, and those are reasonable people. I've got there back, they've got my back, and if something crazy happens, then we work it out.

I can't even think of one example when that's happened to me. My coaching students it happens to sometimes, because they're migrating out of hourly into value, and maybe not as sensitive to some of the risks, but those are the big ones, dependency on third parties is brutal, that's definitely true. Another one that is brutal if not knowing who the decision-maker is ahead of time. If you don't know who's going to actually approve the project, if your project contact is not the last word, and they let's say agreed to an outcome that isn't what the boss actually wants, then that's a problem too, so those are, I'm trying to come up with things from my experience that maybe you could incorporate into your process. Hopefully that helps.

All right, Andrew asks, "What split should a proposal offer between the what will be done against the how it will be done? Actually so those are actually very similar things. I never talk about, well not never, I barely talk about how something is going to be done. I'll talk a little bit about what is going to be done, and I'm assuming by that you mean deliverables. I'll talk a little bit about that, because they will have talked about it in the why meeting, and if I don't put it in the proposal they'll ask about it, but more importantly most of the proposal will be the why, not the what or the how, it will mostly be the why.

I would say like in terms of word count, I don't know it's probably half-and-half, but in terms of emphasis, it's much more, my emphasis is much more on the why. I'll hammer on the why, and I'll talk about what enough to make them comfortable that I heard what they asked for, or the ways that they think and I think that we should do it, but in my experience no one ever goes back and checks that later. Six months later if you've achieved the goal, no one remembers if you did exactly what you said you were going to do, and they sure don't remember if you did it how you said you were going to do it, and they don't care, because you achieved the goal.

All right, Bill, "Are we going to get the recording and slides after this presentation?" You sure are, I should have an email out to you today with that information, and a proposal template which you may already have, but I'll send it again just in case. What kind of earphone am I using? It's the regular Apple earphones. My headphones are the regular Apple ones. Locke asks, I hope that's how you say it, "Do you think RFPs are ever worth responding to?" Not in my experience, no, not really. Not in my experience.

That's a pretty big blanket statement, but I can't think of a time when I've been happy responding to an RFP, it's usually a mess. Andre asks, "How do you tie business goals to logo designs, thanks?" Okay, so this question comes up a lot, because design tends to have less of a bottom line an obvious bottom line outcome, so what you want to do with a design type a thing in general, is to you're still going to have your why meeting, why are you redoing your logo? Why do you care about this? Get all of the underlying reasons, and then you're going to want to set up in that meeting you decide how you're going to decide if it's a success.

That is very uncomfortable for most people, because it's such a subjective thing, but you can totally measure the subjective differences, as long as you know who the subject is. In your conversation you'd be like, "Okay, why are you redoing this logo design?" "Well because our clients hate it, or, because my spouse hates it," or whatever the reason is you find out what the subjective measurement is going to be, and then that's just your measurement. If you're tying it business goals, is totally doable, even though this is more of a pricing question by the way, but from a pricing standpoint, you need to get a sense from the client how important this is to them, and why it's important to them.

How urgent it is, and from that you can get a concept of what the value is to them, and then you price yourself at a tenth of what you think the value to them is, and when they react to that number, when they see that number, they'll react to it, and if you estimated their value roughly correctly, they'll say yes. It's like asking what's the ROI of putting my kid in a karate class? I couldn't measure the benefit of putting my kid in a karate class, but I know it's worth more than 100 bucks a month, because they charge 100 bucks a month, and to me that was well worth it, so I don't know what the value is to me exactly, but I know that it's way more than 100 bucks a month.

It sounds like I'm oversimplifying it, but I feel it's the same way with design. I'm not a designer though, so what you should do is if you haven't read Mike Monteiro's books, you should totally check that out, "Design is a Job," and he does a great job talking about how to have sales conversations around design. Okay, follow up question from Danny, "Follow-up to the question about scope creep, deadline creep, has anyone pushed back on you if you say if I have to wait for your graphics department once you have the graphics, I'd expect them to ask so when will this be done? When it is all just you and no other departments working on a project, and you're dealing with the decision-maker, do you still avoid …"

I never commit to a deadline ever under any circumstances, except for one. The one circumstance that I'll commit to a deadline, is if there's a tradeshow, or something like that that the work needs to be done before, and if there is a case like that, I will not commit to the scope. I'll say, "all right, I know what the desired outcome, the desired final outcome is, and I understand that you have to have this stuff ready for this tradeshow in December, I can't control both things, so the scope has to be flexible."

We will prioritize the features, or whatever I'm doing, we'll prioritize the outcomes, or the deliverables, and say, "I'll get as many of these things done in this order as I can before the tradeshow, but I will not guarantee a fixed outcome on a fixed date, it's absolutely impossible." It just sets the wrong expectations for everybody, and sets yourself up for failure. Hopefully that was clear.

All right, Elliott asked, oh cool, thanks Elliott. "Annie asked in the chat is your cover letter actually the email in which attach, or a link to the proposal?" Good question, the cover letter is actually in the PDF with the entire proposal in case the person who receives it shares it around with other people, that other person might not see the email that it was attached too, so I make sure that the entire proposal is self-contained, so people can share around, and multiple people in different departments can review it.

If the CMO, and the CFO, and the CEO, and the CTO all want to read it, they don't have to also reference my original email. I want the whole thing in the email, and in fact I barely write anything in the email itself, unless it's something like, "The proposal that you requested is attached. The cover letter is in there if it makes you feel more comfortable. Good question. All right, Marcus asks, "How do you propose to a client who doesn't yet know he has an expensive problem?

You can't, you can't, it's a total waste of time for everyone. You need to talk to a client and find out what the expensive problems that they are aware of are, otherwise you're barking up the wrong tree. Martin, "Following up on waiting for the client, if you do nothing, then that's time you are not earning, so that reduces your effective income, so how do you actually deal with that?" It depends on how you measure it, I would disagree that it's time when you're not earning, it's also time when you're not working, so it doesn't reduce my effective income, I'm making the same amount of money for the same amount of work, I just did it later.

You might be talking about cash flow, so if you were counting on some money coming in in October, then if you were counting on the money coming in in October, then it doesn't matter if you get the money all upfront, right? If you get the money 50% upfront, and 50% in 30 days, you still get paid the same amount, and you can take that money and keep it in a escrow account, or in your savings account, so it has no affect your income. You don't care. You're probably thinking this because, I don't want to put words in your mouth, you might be thinking this because you're billing by the hour, and invoicing in arrears, in which case you can get yourself in a bad cash flow situation, so if that's what you're thinking, it's because you're billing by the hour, that's what's causing the problem.

Last question, Martin, "Can you elaborate on the deadline, if a deadline is okay without a guaranteed scope, why not generalize that choose deadline or scope?" I think I used the word scope, because that's how I talk to the client about it, but really what we're talking about is an outcome. I don't want to guarantee a deadline, that doesn't make sense, I want to guarantee an outcome. I don't know what date that outcome is going to happen exactly, it will roughly be within three months, it will roughly be within six months, or roughly be within a year, but I'm not going to commit to a deadline.

A deadline it's arbitrary, with the exception of an event where the software needs to be available for the event, so unless you have a situation like that, or a board of directors meeting, or you're meeting with VCs or whatever, if there's a date, okay fine. Then the scope has to be variable, the outcome has to be, we have to be allowed to only be halfway there on the deadline, but I would never give them an option to choose a deadline over the scope, that wouldn't be beneficial to them even.

Kevin asks, "What is the typical pushback you get when you won't commit to deadlines, and how do you address it?" Wow you guys are really into the deadlines thing. The typical pushback is that I'll send the proposal, they'll get back to me and say, "Oh this sounds good, but we don't want to pay 100% upfront, we want to pay 50% upfront, and 50% when it's done." I'll say something like, "Well if we agree to when it's done, that means that we're both going to have pressure to sign off, and if you do sign off, then work I do after that is going to be charged work. If our projects don't work like that, they dry like paint, or they freeze like a late."

At some point it's done, but it's something that you look back on and you're like, "Oh at some point the lake became solid, but I don't know exactly what day it happened," what I do instead is say, "Instead of having sign off on a particular deadline, I'll just keep working until the objective is met, or until you're happy, or whatever," and they typically will be fine with that unless there's an event like a tradeshow or something. In the post, the 100% upfront post, that I'll link to in the notes, in the slides I mean, there's a whole blog post, probably 1000 or 2000 word on exactly what to say, and how often it happens, and that kind of thing.

Martin follows up with, "What I mean on waiting is this, if $100,000 project takes two months, I earned $50,000 per month. If it takes three months, I earned $33,000 per month, so waiting …" I understand you're saying, but it means that one month you didn't do any work, so I guess I would argue your definition of the word income Martin. I would say that it's not reducing your effective hourly rate, let's put it like that, because when you're waiting, you can do other stuff.

I don't see how this is a bad thing. If you disagree, then maybe it's not for you, but in my experience you usually do have to wait for a client, and if I'm not also waiting for money because of it, I tend not to care, and I never have just one client at a time, so it gives me more time to work on my business, do some marketing, catch up on my blogs, and maybe finish that book I've been working on. There's always things you can do to work on your business in that downtime, whether it's billable, or marketing for yourself, or whatever.

All I can tell you is that the only times I've ever gotten stressed about waiting for a client when I was billing by the hour, and they were blocking me, and that meant that I wasn't going to have my Christmas money, but if they're paying you upfront, you've got the money, and if you're smart, you'll budget it out, and you can do other stuff. That time when you're not working is not wasted, there's always something else you could do, either grow your business, or work with another customer, or something else.

All right, hopefully that answers everything. We are a little bit over time, I hope that's okay. It looks like there's still quite a few people in here. All right, if there are no more questions, we'll call it a day, and you're welcome Kevin. I'll send out an email with the links to the slides, and this recording, and the template if you don't already have that. All right folks, thanks for coming.