*Originally published on CommercialIntegrator.com
AV integration companies and live events pros need to think differently about pricing and proposals now that customers have different expectations.
Just about everything is different in the business world than it was nine months ago—and that means AV integration pros and live events pros are doing things they’ve never done before for their customers and they probably aren’t quite sure how much to charge for these new types of work.
After years and decades of handing potential customers a proposal that’s based off an internal spreadsheet focused on what it costs for materials and labor, it’s time to completely ditch that model in an era when service is the primary commodity you’re offering, says business consultant Tom Stimson.
“A lot of us don’t know how to price things that don’t have line items attached to them,” said Stimson in the latest installment of his Intentional Success webinar series.
“If we present it to the customer the way we think about it, no wonder we scare them. A lot of things that are included in the job can’t be part of the quote and you need to be able to justify the math,” he said.
Stimson compared the new pricing model to a trip to the mechanic, noting mechanics have rack rates for known problems and also factor in add-on services including diagnostic tests when quoting how much it’ll cost to fix that “sound” you’ve been hearing that you just can’t locate.
“(In the old pricing model), you’re not solving the problem,” said Stimson. “You’re just telling them what it costs for the tools you need to fix it. That needs to change so the customer knows you’re fixing their problem and they aren’t thinking as much about the price.
“Learning how to manage scope creep and learning on the job will help. How long it will take you to do the job is not the customer’s problem. Your job in pricing is to eliminate as many unneeded variables as possible,” he said.
“How you arrived at your price is your secret sauce,” said Stimson. “How you present it to your customer is your superpower.”
The Perfect Proposal
To put together the perfect proposal in this era, start with the scope, move on to the elements you’ll need to achieve the ultimate goal of client satisfaction, determine what it’ll cost you to deliver those elements, figure out the price you should charge for that to bring you a profit and press “send.”
Scope should consider what you’ll deliver to the customer, what is assumed by both sides, what the customer is responsible for and what the customer gets to keep at the end of the process.
“You have to define what ‘finished’ looks like,” said Stimson. “Your enemy in all of this is unnecessary customization. The more you can define, the better.”
AV integration pros and live events pros should build a price book, capture supplier quotes for future reference, ask for three variations from content and media creators and price based on actual replacement cost rather than the cheapest option. Those steps will lead to more profitable proposals, said Stimson.
“Your proposal reflects the work you are going to do,” he said. “Don’t let a spreadsheet define you. Sell the end result, not the plan.”