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web_t




msg:780616
 8:12 am on Mar 31, 2001 (gmt 0)

I am sure this questions have been raised in the past, but I believe I have missed it and was wondering someone would be able to help me out.

What criteria do you people use, in how much to charge to a client.[beside their bank balance]. I mean, even though on the website, I have few fixed price, but 95% of my clients wants me to create custom build a package for them and the rates are as much as 2-4 times more, then what is mentioned on the website. Well, they are paying not a problem, but I am able to get only 5 clients out of every 10 inquries. I believe that if I learn from you guys than I might be able to increase my success ratio. Suppose for example one of my client is involved in "Plastic Bag" business, and I am charging US$ 450.00 per month for 2 year contract, do you think that this is a good price? or shall I charge him more?

And one more questions, how about installment plan. Allmost all my clients whoes fees is less than US$ 1500.00, I ask them to pay all upfront, but I have started breaking down fees in 2 installments, when the charge is more than US$ 1500.00. If you people don't mind discussing, can you tell me what method do you use?

Thanks.

 

Woz




msg:780617
 8:21 am on Mar 31, 2001 (gmt 0)

Hi Web_t,

from experience, I will not start a job without a deposit, usually 50%. That is for my peace of mind.

I then leave the balance as payable upon completion. That is for their peace of mind.

Seems to have worked so far. As to rates and quotes, that is a toughy, especially if you are living in a country where the local currency is falling continually as I am. I will leave that question to the others.

Onya
Woz

tedster




msg:780618
 9:35 am on Mar 31, 2001 (gmt 0)

First, let me say that getting 5 clients for every 10 inquiries is a very successful closing ratio. Nice going.

Our business discovered that many inquiries are not truly prospects, they're just sort of poking around, learning the territory. They are really trying for free consultations, although they don't understand it that way, because they don't understand the technology and they underestimate the knowledge required. This can often be a drain of time and resources, so we've developed ways to avoid that wastefulness.

We often propose a non-refundable consultation fee early in the process. We call this a fee for a project feasibility study. It can be applied against the final contract fees, if they sign with us. Otherwise, they have a valuable study to guide them in whatever they do.

This allows us to get into a business relationship without requiring outrageous commitments on either side, and without the risk of giving away our time and knowledge for free. In addition, we can enter into a kind of "client education phase", where the prospect now has a vested interest in making things happen and we feel comfortable spending time bringing them up to speed on what is required to make their idea a reality.

The feasibility study often details the project in a very useful way, and then our contracts are developed around whatever stages the project requires.

Even for small jobs, we always require a non-refundable amount (usually 50%). But in larger jobs, several project stages and several more payments usually makes more sense. We write the contract so that either side can opt out at the end of any phase.

The issues that come up vary so much from project to project (things like original art production, database connectivity, tie in to the back office systems, what degree of SEO, etc.) that our rates must be tailored to the job. Until a project is clarified in a somewhat detailed fashion, we often ask for an hourly fee ($80 to $120 per hour) or as I explained above, a fixed price for a feasibility study.

chiyo




msg:780619
 10:27 am on Mar 31, 2001 (gmt 0)

That's great advice from Tedster, and yes a 50% closing rate is brilliant.

To add to this, for email enquiries we ask them to fax us the request on their letterhead or to provide a Web site address where we can check credentials, before we do anything more than spend 30 minutes with them. This is not being rude, it only helps us give better service to genuine prospects and existing clients.

We also charge a small fee to cover our consulting time, to do the first overview, which is deductable from the final quote. We also insist on a personal telephone call, even if they are overseas.

Many, many people don't reply after that, but we count these as a win in saving wasted time quoting to competitors and students. We really don't think we lose much genuine business. However the conversion rate of those who agree, is around 95%.

As far as the cost you should be quoting. Very rough rule of thumb we use for consulting, it should be around 30/30/30. 30% for salaries and expenses, 30% for overheads, 30% for profit. Caution this is very rough as expenses vary a lot depending on the nature of the job.

Don't ask me about the other 10%!

Of course this dosent take into account competitive pricing, but you should know your relative worth the more you know your industry and niche - and that should be reflected in what your designers/consultants etc are paid, so it comes together there..

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