Easy Money
July 21st, 2009 | Published in pricing
Messing around with my iPhone the other night I came across this youtube video.
I can recognise the gag. As a jobbing programmer I came up against this type of scenario all the time. Client expectation is hard to meet for development projects. They are difficult to estimate and by and large there is a huge skill in managing the process. At the same time, in a shrinking world, defending on price is also difficult. I don’t think its because I’m bad at what I do. Plently of other professionals run up against the same challenges.
So why isn’t development/accountancy/design etc easy money?
My answer if FEAR.
There is not much uncertainty when buying a DVD or a meal out. You have probably done it before hundreds of times. The same is not true for most consultancy services. You only move house every so often in your life and god help us – you hopefully don’t pay to develop too many software projects.
The other variable is price. Contracting a professional normally involves a fairly hefty fee. This also ads to the fear.
So our strategy for the last few years has been to reduce the fear in my clients by reducing the price. However, I’m starting to think I’ve missed a trick. Reducing the prices does help (400 people paying €25 a month instead of 2 paying €60,000 for the year). What really makes a difference is clearly defining an output. The client must exactly in advance what they are going to receive. This is very hard to do in plain old consultancy. Creating a tangible or well-known and predictable result reduces client anxiety and therefore makes the money you get for the service much easier.
The video does still irk me a little. If you are in the services industry – you have to expect these problems. Either that or get into a business where the deliverable is clearly defined in advance. You may even be able to charge up front for it like record stores do.