Sticker shock, finding out the price of something you want to buy, is something firms tend to avoid. That’s why hourly billing is so prevalent. It puts off the hard part of engaging an external partner.
One of the reasons I price upfront is to get the money part of the conversation out of the way, so we can get to work on doing amazing things.
By pricing upfront, sometimes there will be shock, because the reality is we often don’t know what something should cost, especially if it’s truly a unique investment. Pricing is psychological. But the good thing about this happening upfront, we get it over with upfront and it doesn’t distract us and potentially derail our focus. Or, we can find out upfront that the cost is simply too high. At that point we can scale back our approach with alternative options, or perhaps even decide not to proceed.
In discussing the price, we also have the opportunity to better understand what we value about the investment. Perhaps we haven’t quite put the correct objective in place to make the project not only successful, but worthwhile. Aligning to the proper objective (business outcome) is crucial to the success of any investment.
And in discussing the price upfront, we don’t have sticker shock after the work is completed, and only then find out it wasn’t worthwhile. Meaning either the customer pays for something that costs more than it’s worth, or the provider doesn’t get paid. That’s a lose-lose situation.
Have you thought about how sticker shock could actually help you and your customer be more successful?