What The Market Will Bear
Shortly after I started management consulting - in the days when the Earth was still cooling - a prominent attorney and I submitted in what we thought was a brilliant proposal to help a major university set up its EEO/Affirmative Action program.
When we didn't get the contract, I made some discreet calls to learn why. The answer: "The committee was very impressed but they thought your price was too low."
Since then, I have proceeded with the knowledge that pricing decisions may not be the most logical part of business. Strong arguments can be made for being the highest priced competitor and yet "pricing yourself out of the market" also takes place.
That's why you need to study your market and know what can bend and what cannot. With some products and services, people want a "reasonably good" and a low price. [Sometimes, all they want is "anything that resembles the product/service and a low price" so they can check an item off of their "to do" list. They aren't concerned about the quality.]
Often, price is the least of the factors. I've turned down projects where the parameters set by the prospect would sabotage quality, all the while knowing they would eventually find someone out there who would do anything for the gig. That is not an easy decision if they are offering a respectable amount of money for a disreputable level of service.
What this gets down to is that there is no easy formula other than asking a lot of questions to determine just what the prospect wants and then listen carefully for what is truly meant. What they say they want may not be what they really want. You may hear:
- "Get this off of my desk."
- "If it can be done under this figure I won't be picky as to content."
- "I want some state-of-the-art product that will be a showcase."
- ""I want this problem fixed once and for all and am not really concerned about price."
- "Anything that is done by this date will be fine."
- "My status is everything."
- "I want this handled so I have minimal stress."
- "I don't want to be embarrassed."
- "This is foreign territory and I need a guide."
- "I want you to handle this but I want to tell you what to do."
- "I'll give you a lot of running room but I don't want to be surprised."
- "I want you to agree to take on the project and then I'll tell you about the monsters in the closet."
- "I want you here but my staff will do everything they can to sabotage your success."
- "I want a scapegoat."
- "I want insight."
- "Just tell me if I'm missing anything."
- "I want to be able to vent to someone who understands what I'm going through and who will tell me the truth."