Cost Management | By Adele Sommers, Ph.D | Read time minutes
Do you have difficulty engaging in budget discussions for new projects, particularly during initial client meetings when it can be tempting to make promises that will be challenging to carry out? If so, you're not alone! This article explores five ways to help you gracefully avoid backing yourself into a corner.
It All Begins Innocently Enough
Imagine that you're meeting with prospective clients for the first time. You're bubbling with anticipation about launching a mutually rewarding working relationship that will produce gratifying follow-on engagements.
You listen carefully as the clients explain the project that requires your attention. At the end of the discussion, you feel confident that you and your team can exceed their expectations. With delight, you describe your ideas to your clients, who appear thrilled with your concept and can't wait to get started.
But Moments Later, a Delicate Dance Begins
The clients announce that they have a very limited budget. So limited, in fact, that you have no idea whether you and your team can possibly complete the project within the financial constraints. Yet, on some level, you feel very committed to the outcome you had just described moments before because you truly want your actions to remain consistent with your words.
So, when the clients state that they just can't budge on their budget, something inside of you whispers, "Well, why not go for it anyway? If we know anything at all about what we're doing, we should try to deliver it within their price range!"
And, voila! With just those fleeting, partially conscious thoughts, you succeed in backing yourself into a corner!
Five Techniques for Reframing the "New Client" Scenario
To reduce the likelihood of unintentionally agreeing to an unrealistic arrangement, particularly when courting a new client, below are five approaches that you can mix and match to create a win-win situation. Having these ideas prepared before you meet can help you smoothly and gracefully handle these situations.
1. The "Introductory Package" Offer
Many businesses acquire new clients through introductory packages of their products or services. This means that they complete very specific chunks of work, such as designing a logo or setting up a blog, at specially discounted prices. Note that these discounts apply only to certain services, and not necessarily to an entire project.
Benefits: Once your new clients have experienced a good starting sample of your work and have come to know, like, and trust you, they may be much more inclined to request further assistance from you at your regular rates.
2. The "Test Sample" Technique
When it's really not clear how long an effort could take because there are too many unknowns, you can offer to produce a "test sample" of the work (such as editing one chapter of a complete manuscript) to see what it entails before committing to the entire project. To create the test sample, you could propose working to a not-to-exceed price (not necessarily at a discounted rate).
After reviewing the completed sample with your client, you'd be able to estimate the remainder of the project with much more accuracy. The client also can determine whether your style ideally suits the project.
Benefits: This approach is especially useful when the client's content, terminology, technology, and/or other factors are new, dynamic, or otherwise difficult to gauge without further exposure to the material.
3. The "Level of Effort" Approach
Sometimes a client might not have much funding up front, but could finance a greater expenditure over time, much like a recurring "monthly allowance." In this case, you could offer to do the work on a level-of-effort basis, not to exceed a target number of hours per billing period (say, 10 hours per week).
Benefits: This approach tends to eliminate the need to create a detailed estimate for each task to be performed. It also keeps the flow of work relatively steady for you and makes monthly expenses very predictable for your client.
4. The "Range of Options" Alternative
When describing a vision of how you can best serve your client's needs, offer to propose multiple ways of achieving the results. This communicates the message that you've anticipated the possibility of working within some kind of financial constraints.
In a subsequent presentation, spell out two or three ways of achieving the outcome you had described, each with a different price tag. In the least expensive approach, for example, you might deliver certain elements over time, with fewer features, or in a different format from the "high-end" version.
Benefits: The low-end option might be perfectly suitable for the client's needs, and yet the client could flexibly choose another option if more funding became available.
5. The "Share of Results" Method
If a working budget is practically nonexistent, consider whether accepting a share of the results (such as a percentage of sales) would make sense. If you strike such an agreement with your client, you can craft a written understanding that reflects this approach.
Benefits: This technique can be quite lucrative in situations where the shared results increase over time as your client's business prospers from your work. It's considered a type of "contingency financing" because the results are contingent on your efforts. If you can afford to offer your services this way, you all but eliminate the financial risk for your client, yet you reap the benefits when you do a good job.
In conclusion, it's not difficult to back ourselves into a corner with unrealistic budget arrangements when we're highly enthusiastic about a new client project. Using one or more of the five reframing techniques, you and your client can find an ideal approach that serves both sets of needs with grace, dignity, and mutual gain.
Adele Sommers, Ph.D. is the author of the award-winning "Straight Talk on Boosting Business Performance" programme. She helps people "discover and recover" the profits their businesses may be losing every day through overlooked performance potential. To sign up for more free tips, visit her site at LearnShareProsper.com