How to Share a Price

Talking about budget and timeline are two of the most difficult topics when working with clients in an agency setting. In my opinion, budget is generally the more difficult to address since many folks innocently have no idea the level of effort required to execute on their vision.

It’s extremely common for potential clients to share a few high-level requirements and a timeline and say “So, how much is this going to cost?” Part of me is flattered that they believe I have enough understanding of their project after 30 minutes to confidently give them a price range. Another part of me is terrified that they think I have enough to confidently give them a price range that quickly 🙂 I mean, 30 minutes parsing information that has likely taken months for them to consider is…not a long time.

So, what do you do? Bullshit a price range and pray to every god of every religion that you’re right?

Don’t bullshit a price range unless you would bet your life on it being 100% accurate.

In psychology there is an idea called “serial position effect.” In short, that means people tend to remember what you say at the beginning and end. Anecdotally, setting pricing expectations when clients ask “So, what’s it gonna cost?” suffers primarily from the “primacy effect” or the tendency for people to remember what you say first.

That means if you bullshit a price range and say “Well, it will be somewhere between $50k and $300k” (intentionally broad range for effect), clients are going to remember $50k. Period. You can never take it back as long as you live. You will have to fight that expectation for the rest of the sales cycle. And if you’re way off, it will be like wiping spaghetti off a toddler’s face: you may succeed but there will be a ton of fucking crying and flailing. (Expect it will most likely be you doing the crying and flailing.)

Ok, how do you satisfy the customer’s need for having some level of price guidance and your need to not create a ton of problems for you, the client, and your team?

There are two strategies I prefer.

Strategy one is called the “Average Project Budget.” If you have even mediocre analytics on your projects you should have a range where your average project budgets fall. So you can say something like “While it’s hard to estimate a budget without a bit more review of your requirements, I can say that our average project falls between $_ and $_.”

The only thing I don’t like about “Average Project Budget” is that it still has a high potential to suffer from the primacy issue: you’re saying a number that may scare the shit out of the client or falsely make them feel like they’re about to get the bargain of the century.

The second strategy, the one I more typically employ, I call the “Truthfully Unique Flower.” So, I might say something like “It’s hard to say on an initial pass where your budget might fall and I’d be doing us both a disservice by guessing without further review. From our perspective, each project has a unique set of requirements that necessitate a deeper dive.”

After you explain that their project is unique and you need to look at it more in-depth, you actually have to do that. Look at the requirements, take an hour or two (or more) to create as accurate an estimate as possible, without rabbit holing. Have someone review it for sanity. Review it again after 12 hours of not thinking about it (if you have that luxury).

Other things to consider:

  • Stay in contact with the client and tell them when they should expect to receive the estimate.
  • Unless there are a ton of unknowns you have to call out or you need to explain two ends of the range, keep the communication with the quote brief. Don’t bury it with information, it won’t help.
  • If you send a pricing table, make it look nice.

Most important, be confident. Don’t tiptoe around the conclusions. There’s nothing worse than “well, uhh, it’s, ya know, a little, um, higher than, well, ya know, the other guy.” Sounding like a loser will create a self-fulfilling prophecy situation.

Happy selling 😉

Flop

I was on a call with a potential client the other day, made a “joke”, and it flopped. There wasn’t a chuckle or anything.

Just dead silence.

I don’t know whether that potential client will remember it or if they’ll forget it completely. It isn’t clear if that flop of a joke will lose the deal or have no effect at all.

But, I can’t stop thinking about it.

The harsh reality, however, is that allowing obsessive thoughts to consume brain resources is not an option. No matter one’s role or occupation, the best way forward is to learn from one’s interactions and not constantly beat yourself up over what could have been.

Also, unless you’re a professional comedian, probably best to let the jokes go. A quick way to ruin credibility is by sounding like a buffoon.

Now…onward!

Rejection

In a sales / account management position, rejection is something I face everyday, both internal and external. It’s convenient to brush rejection off as “only business” or some other platitude designed to soften the blow. But, repeating a businesspeak mantra like that ad nauseum doesn’t necessarily reassure me or make the feeling less real (even if self-inflicted).

Somewhat recently, I had an experience where I felt a deep, deep sense of rejection. It was such an intense feeling that I really began questioning my value not only as a professional but generally as a citizen of the web. Am I adding value? Is something wrong or off with me? Should I just take all my computer shit out back, toss it in a hole, and work at a bourbon distillery? Spoiler: I didn’t do that and I likely never will 😛

Looking back on it, I was being incredibly hyperbolic. Borderline ridiculous, actually. But, in the moment I was devastated. I consider myself someone who rebounds quickly from hyper-emotion, but it took me a week to really shake the feeling and remind myself that sometimes shit. just. happens.

My wife has always said “things happen for a reason.” Though I believe she means that in a very deterministic way, I still like the aphorism even if I interpret it differently. There is a reason that things happen: someone(s) made a choice or series of choices that led to that moment or event. In my case, I had no visibility into the choices that were made leading to that moment, but I could guess at least a few of them.

However, trying to work the problem backwards was causing even more frustration. The truth is, I’ll never know the series of events that transpired; at best I’ll be able to guess and at worst it’s just a blackbox. Accepting that fact has been part of the “road to recovery”, so to speak.

On the bright side of this experience, I’ve had my value reassured a number of times both by members of my work team, my family, and myself. Self-criticism is typically not productive and hyperbolic reactions have never, in the history of time, solved anything. There’s a huge difference between constructively criticizing oneself and overreacting to an outcome simply because there was some level of deeper emotional interest.

In the end, it’s pretty fucked up to say, but it likely really is “only business.”

Monetary Policy and the Great Recession

One of my favorite podcasts (or really, favorite audio show period) is Econtalk. It’s the perfect blend of deeply intellectual conversations about complex economics and down to earth simplicity. Russ Roberts, the host, is a personal idol of mine; a champion of free market principles and common sense government policies.

Recently, I listened to a great episode on the actions of the Federal Reserve around the time of the Great Recession, how bailouts created moral hazard within the banking industry, how the Federal Reserve (wrongly) prioritized target interest rates, and a number of other topics in the ~1 hour long episode. This is a provocative episode since it suggests that Ben Bernanke and The Fed conducted monetary policy that will have long term negative effects on the (world) economy.

As a final aside, I love how Russ digs at Ben Bernanke calling Bernanke’s book “Courage to Act” the “Courage to Fantasize.” Russ cracks me up 🙂

Follow Ups

I spend a ton of time day to day writing and reading emails, setting up and participating in meetings of all types, and collaborating with a large group of people (both internal and external). The number of connections I face in a day can be staggering; just looking at my schedule for tomorrow (a light day) and I’ll cross paths with at least 30 different people for various reasons.

I’m sharing this because each interaction tends to produce some kind of thing that must happen after the interaction. Whether that thing needs to come from me or from someone else is irrelevant; I still need to create a follow up task and, ya know, actually do it.

Now, no one is perfect. People forget or get busy. Things fall through the cracks. Shit happens. Working around that reality is part of the game. However, setting follow up tasks is absolutely critical.

I’m always striving to improve, as we all should, but a clear way to improve quickly is by setting follow up tasks, spaced appropriately, quickly after you realize you need one.

Example: you get an email from a client who will be on vacation for 2 weeks but wants to chat when they get back. In this case I’d set a follow up task for when the client gets back, succinctly describe (1 sentence or so) what the follow up is about in a note to myself, and make sure there is some kind of nag to grab my attention.

Sounds straightforward, but imagine if every interaction you had day to day ended in setting clear follow ups. Very quickly you’d seem like you have a ninja memory and you’d never miss the “soft” deadlines created by smaller daily interactions.

Last thing: being better at follow ups is something everyone faces, every single day. People with decades of experience struggle or fall behind, just like greenhorns. It’s a very long term goal and something we can constantly challenge ourselves with.