Today, Lee W. writes in with a question about pricing and project rates:
How do I overcome the “what are your rates?” or “how much do you cost?” question? I understand telling them that I can’t possibly know what that is before understanding x, y, and z. I also have said before, “first we define you objectives, metrics, values..”. But those initial answers are somewhat hollow (though legitimate) in my view.
When you encounter this question, flip it back to the prospect or client. Ask them what they’re looking to invest in this project.
Lee is correct that it’s impossible to know what the cost of (or investment for) the project will be before you define the objectives, metrics, values, and outcomes.
But that still leaves you facing down the question. So what do you say?
Here’s my favorite script to use in this situation. When asked what the cost is, I ask what the client is looking to invest.
What are you looking to invest in this project to achieve the outcomes you’re looking for?
Like Lee pointed out, it’s challenging to answer their question without knowing their budget. So, ask them.
Are they looking for a $10 solution or a $10,000 solution? Until you know, you won’t be able to recommend anything more specific than a general range (e.g., it’ll cost somewhere between $10 and $10,000…).
Think about walking into a store to buy a new phone. You could ask the salesperson, “Hey, I need a new phone. It needs to be fast, have a lot of storage, and have a good camera. What’s it going to cost?”
But until you share what you’re looking to invest, the salesperson won’t be able to answer with more than a general guess or a range.
What they recommend will change depending on what you’re looking to invest. $250? Buy the Moto G Power. $1500? Get the iPhone 12 Pro Max (and a fancy case).
But it all starts by you flipping their question around and asking:
“What are you looking to invest?”
And if they’re unable to answer? If they don’t know what they’re looking to invest?
Then you should recommend they invest in a fixed-price paid discovery or roadmapping engagement (https://kaidavis.com/roadmapping/).
In that engagement, you’ll work collaboratively with them and their team to define and clarify the project’s goals, objectives, and value. Then, you’ll identify and propose a range of solutions (for different budgets).
(What’s that engagement cost? Well, ideally, you’re selling it as a fixed-price productized service so you can quote them a price immediately, e.g., $2,500. You can learn more about how to sell, price, and deliver roadmapping engagements with Quick Start Roadmapping https://kaidavis.com/roadmapping/)