EG149: how much
The most important question in sales
Getting a customer to sign a new contract is the essence of the sales profession.
Whether the title on the business card is sales or not (it could be owner, managing director, delivery manager, growth manager or any other), the very existence of tech services companies relies on sales doing their job well.
The one question that sales always needs to answer? How much.
How much does it cost?
How much do I have to pay?
How much do you charge?
And on and on.
There are many variations to this question and all of them start with “how much”.
But here is something you haven’t thought about enough.
The mirror answer.
How much are you, as a vendor, helping the customer make?
In a B2B context, companies buy services from other companies to make more money.
That can happen in one of three ways: higher revenues, lower costs or managed risks.
How much you are able to charge is proportional to how much you are helping them make by choosing you and not someone else.
A few days ago I looked at the pricing projects I did over the past 4 years and tried to quantify the impact I had through my interventions. These are some of the results:
+288.000 EUR on one contract
A .NET services team implemented my recommendations. Daily rate negotiated with their client is 50 EUR/day higher than the price the supplier wanted to charge.
Context: Sales process and contract negotiation with a new client.
win with 20% higher rates
Context: pricing optimization project.
New contract with a daily rate significantly higher than the price charged by the supplier on previous contracts.
“The client chose us, even though our competition was 20% cheaper (similar agency from Poland).”
+25% on existing contract value
A software development company working with large enterprise clients re-negotiated an existing contract, increasing its value from 1.75M USD to 2.19M USD per year, while keeping the same team size.
Daily rates +54% in one contract negotiation
Context: existing contract renegotiation.
Successfully increased rates for a long-term client.
Price increase for existing customer, double the percentage that was expected by the vendor (from 11% to 22%)
Daily rates increased with 34% for a team of 7 FTEs (blended percentage).
Context: Existing contract renegotiation
Successfully increased rates for a long-term client.
“I have already managed to increase the rates for new projects by 30%. I understood what value-based pricing is and how it can help us.”
1 clause in the financial proposal brought extra revenues of 38.000 EUR per year, without any costs
Context: New contract negotiation
They signed a contract for a very high rate for a vendor from Romania.
领英推荐
100% billability rate
Context: transitioned from time & materials contracts to sprint-based billing.?
A software development team working for startups.
10.500 EUR for a maintenance contract with an existing customer when the team would have been happy to get 1.500 EUR (starting from no maintenance contract).
60% win rate on new projects
I worked with a team that was having trouble closing new deals. After my intervention they signed 3 of the 5 deals in their pipeline.
Increased profit margins and a 50.000 EUR contract out of nothing.
“Manu succeeded in doubling the price of our services in 18 months”
For a company doing IT outsourcing.
If you look into your past projects, can you quantify the economic value you have created for your clients?
How much of it did you capture back through your pricing?
From this perspective, you are much luckier than I am.
My clients don’t allow me to use their names for these case studies, because they don’t want their clients to know they have used pricing techniques to charge more.
You don’t have this problem.
You already have public case studies.
You only need to add a number to each. The quantified impact of your work.
Here is a template you can use quickly.
Go back to your team and check if all your case studies have all these details documented and communicated in your marketing and sales materials.
If you need help with quantifying the economic value of your work, I would be happy to help.
Just choose one of the 4 plans from our offer:?
Explore, Accelerate, Optimize or Transform.
PS.
Speaking of luck, if you go back to count the number of examples I have on the list, you’ll find there are 13 of them.
The only luck (or bad luck) I believe in, is the one from Seneca’s definition:
“Luck is what happens when preparation meets opportunity”
PS2.
New series of webinars:
10 key pricing questions for tech leaders [weekly webinars]
From Sep.5th to Oct. 31st I will be online on Zoom
every Thursday at 12pm CET for 30 minutes,?
discussing the 10 key pricing questions.
TO REGISTER
Sign up here:
I will then send you a calendar invitation with a weekly recurrence.
Drop in when it works for you, no commitment required.