Create Certainty in Client Pricing

Am I leaving money on the table? What is the client willing to pay? Am I losing money?

Certainty is elusive when an ad agency pitches the price on web development and SaaS projects. There’s no way to exactly foresee every comeuppance. The number of pages might grow… the provided data could have inaccuracies… the images may arrive on time but are all the wrong resolution… etc.

There are a lot of wild cards, including the fact that the whole thing is done in code, so what a developer sees is not always what a developer gets.

It’s an art, not a science. It takes time.

So, how should the agency price it?

The rush to answer an RFP or beat out the competition, or close the deal before clients change their minds can all result in a race to make a mistake with the do-re-mi.

Or, maybe the price is fine, but the “not knowing” can be just about as aggravating because if one doesn’t know that all’s well, how can one enjoy it when it is?

Ness Labs and Certainty

According to Anne-Laure Le Cunff, cognitive neuroscientist and founder of Ness Labs, a popular online learning community, the mind is at conflict when it is uncertain, which causes interruptions to routine actions.

She illustrates that there are knowns that help create certainty, and there are unknowns that help create uncertainty. But there are also combinations of those, such as known-unknowns and unknown-unknowns, that make the gray areas even grayer.

Collectively, these interruptions are what prevent clients and consumers from making confident, informed buying decisions. Or that prevents manufacturers and merchants from making informed decisions about marketplace positioning, for example.

Harvard and Certainty

The Harvard Business School explains a case study regarding a high-end wine refrigerator used by vintners, purveyors, and collectors, a brand that is clearly the gem of the industry.

The manufacturer decides to also market it to consumers who have an elevated appreciation of fine wine. The premise is that a refined level of quality has been built right in, so end users with a refined level of taste will also appreciate that.

But even if those consumers are connoisseurs, they simply buy a reasonable number of bottles at a time and enjoy them within a couple of weeks or so. Then, restock and do it again. The need for high-end, long-term storage is not as strong. They are not willing to pay for something that is definitely higher quality because it is not necessary.

A cheaper fridge will do.

Now, this may seem like an obvious case, but Harvard underscores the point: 
We make things better so that they are better, and so customers will be attracted to them.

Nothing wrong with that.

But, it’s all about being certain the right product is in front of the right audience…. a.k.a., positioning.

So in this example, the consumers were informed and knew what they wanted, but the seller was not.

Scope and Certainty

LeCunff, as well as Harvard, include several examples of how businesses and individuals can turn uncertainties into certainties. And although that can get involved, there are commonalities across the  theories and techniques: research, knowledge, and information.

In the case of an ad agency sales contract, that translates to “scope”.

If the scope is nailed down, everyone (ad agency owners, clients, partners) can be waaaaay more confident. Way more willing to deliver. Way more willing to pay.

An effective outsource web-dev partner for the agency will be there at the get-go, asking the right questions, doing the due diligence, and creating the paperwork so the right project can be effectively priced as well as produced.

Look for these three certainties from an outsource partner:

1. Scope Refinement
2. Clarified Expectations

3. Value Opportunities.

SCOPE REFINEMENT
The right outsource partner is thorough, providing subject matter experts, finding the hidden skeletons, refining the scope… creating sales contracts, specs, workflow… it’s all put in writing.

CLARIFIED EXPECTATIONS
Calendars and schedules are created by the outsource. Costs are nailed down. The mile markers are clear on what happens when, and it is mandatory that the agency and end client are on board.

VALUE OPPORTUNITIES
A strategic partner enables the margin in every project… delivering a rich development plan at a wholesale cost, the agency can resell at a premium… one resource, almost no overhead.

The Power of Certainty

We can say with certainty that the Earth is not flat because if it was cats would have tossed everything off the edge already.

—Source: Seen on a T-shirt