PauseOnError: Stand Tall While Talking Money

talking money

At PauseOnError (May 7-8, 2018 in New Orleans), I lead a discussion called, “Stand Tall While Talking Money”. Pause is a different kind of conference – an unconference if you will. (Read more about the conference.) You aren’t a “speaker” and you don’t “present”. You lead a discussion with the attendees and this topic inspired some great participation.

Capturing the spirit of the conversation is a challenge, but I’m going to do my best to summarize the input and share the content of the session. The slides are purposely sparse to inspire input.

What makes money talk scary?

Talking money has been a taboo for some of us from an early age. “Don’t ask that man how much money he makes, kiddo!” And some of us have brought that concern into our professional world.

Surprising the client after the work has already been done is another reason talking money can create fear. You spent his money before you asked for it. (This is a big no-no!)

Not believing in the value you provide or create for your client was the group’s main reason that money talk is scary, and often the toughest to overcome. While being confident can be a challenge, you do have skills that others don’t have. And, they are coming to you for help. So, stand tall, believe in yourself and never, ever apologize for your prices.

Can I get a ballpark price?

Ever get this question before you even have an idea of what the client wants? Sometimes even when they have called you out of the blue? The discussion was about how to answer without the client believing you’ve provided a firm price (which is usually what ends up happening). Suggestions were:

Provide a ridiculous price range: “We’ve done projects like yours (as I currently understand it) for $2,500 up to $25,000. If we can talk about it more, I can firm that price up for you.” (Of course, the client hears “$2,500.) But, with this range approach, you might be able to learn what the client’s budget is if he balks at $25,000 and is totally cool with $2,500.

If you bill by the hour, you can provide your hourly rate, but without a context of the number of hours, it is a meaningless number to the client. In fact, they might go compare your rate to someone who is slower than you and think your rate is out of line.

In general, we all agreed that trying to avoid giving the ballpark price is better. Trying to schedule a call with them to learn more about their project and, even then, scheduling a time to get back to them so you have time to think about it, was the leading solution for talking money.

Proposal Pricing

My method is to walk through the proposal (rather than “presenting” or sending it off via email and hoping you hear back). At the end, you share pricing proudly and without apology, and provide clear payment terms. Even if your client is not nearby, you can do this via screen share with programs like Zoom. For some of my other tips, you can also read Proposal Structure Leads to Project Success.

We talked about how a good proposal was the first step with good project management, but also in getting paid. And that getting paid upfront, if possible, to avoid chasing payments down in the middle of a project was preferred.

We all agreed that when you stopped getting paid, you stopped working. There was a question about how long you should wait to get paid if you are subcontracting. The room agreed that subcontractors are not supposed to finance another developer’s business. In fact, the room burst into applause when that was stated.) So, payment terms need to be met or you should stop working in that case too.

There was a disagreement about tying terms to milestones. My advice was not to lose your leverage by tying payment terms to hitting specific milestones in your project. David Knight, however, has had very good experience with that approach. I softened my position on that to be that you shouldn’t tie terms to milestones – unless you have very good project management.

Negotiation

Getting a proposal accepted without negotiation is great. However, remember that if it is accepted immediately without thinking about it at all, your next price should be higher!

Talking money can get tough when the client wants to negotiate. The room agreed that you don’t just reduce your price because the client asked for a discount, because it sets a precedent.

Sometimes changes come up during the walkthrough of a proposal, and it is OK to rework the proposal (and the price!) based on those changes.

But, negotiation isn’t all wrong. You can reduce the price, but be sure to remove deliverables, extend timing (or tighten it, whichever works better for you), or have them pay upfront. There are other options in negotiations as well, but the client can’t get everything he asked for and get a lower price. He has to give some too.

Managing Money/Budget

This area really gets into a much deeper topic of project management. But I wanted to include how to bring it up to the client. Because the inevitable changes that arise during a project can make talking money difficult.

Talk about money early and often. It is not and should not be an emotional conversation if you are discussing it at the right times. Plus, the more you bring it up, the easier it is. Make sure you put the client in charge of spending his money. Don’t spend it for him without his consent. There should be no surprises.

And, it shouldn’t be a challenge for the client to understand that changes cost money. The scope is the scope, as defined in the proposal. The budget and timing reflect that scope. And, if one changes, the others need to as well.

We also discussed suggestions like adding a contingency budget, allowing a certain amount of time for bug fixes, and providing opportunities to postpone requested changes. Those changes can always be done later when a budget is refreshed after the project is finished.

Overall, it was a lively discussion, which I very much enjoyed leading. One audience member said she was going to change how she did her proposals based on what she learned.

About Susan Fennema

Susan helps you gain control of your business through process development, organization, and structure of your business operations and projects. From developing processes to coaching project managers, she can help you get beyond the chaos.
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