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How do I Price this?

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_doin_my_best

New Contributor
Aug 15, 2018
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Hi all,

Thanks for letting me into the forum @MJ DeMarco DeMarco. Im looking forward to this forum and adding what I can where I can while learning a great deal. I've had a successful career in sales for over 20 years but venturing off on my own with an idea that we believe has legs.

My dilema... I believe the right pricing model I should use is value-based. The question is how much is an "industry" standard if there is such a thing. My calculations suggest I can save a client $1M a year for a particular program while significantly enhacing their program. In addition the solution alleviates significant internal resources to focus on other projects.

If I can save them $1M, increase employee engagement, and alleviate internal resources, what percent of the $1M do I charge?

Look forward to any and all feedback.
 

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Real Deal Denver

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Jan 13, 2018
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Hi all,

Thanks for letting me into the forum @MJ DeMarco DeMarco. Im looking forward to this forum and adding what I can where I can while learning a great deal. I've had a successful career in sales for over 20 years but venturing off on my own with an idea that we believe has legs.

My dilema... I believe the right pricing model I should use is value-based. The question is how much is an "industry" standard if there is such a thing. My calculations suggest I can save a client $1M a year for a particular program while significantly enhacing their program. In addition the solution alleviates significant internal resources to focus on other projects.

If I can save them $1M, increase employee engagement, and alleviate internal resources, what percent of the $1M do I charge?

Look forward to any and all feedback.

I would approach this as a lawyer on contingency would. Or, for another example, Howard Stern's deal on satellite radio. Lawyers only get paid if they win, and Howard Stern got a huge bonus based on performance stats, which he met, by the way.

Both of these deals have one thing in common. They set up goals, and then paid a set amount when those goals were reached. If there are no results, there is no cost to the client/customer.

This is a win win for everyone. Lawyers usually take 1/3 as a rule of thumb. And when they win, the payout for them is big. What customer/client could turn that deal down? No risk for them - and no cost if there are no results.

You have to make them a deal they can't refuse. If you draw this up correctly, everyone should be happy with the deal. And then, the NEXT one you can really make money on...
 

_doin_my_best

New Contributor
Aug 15, 2018
3
1
13
I would approach this as a lawyer on contingency would. Or, for another example, Howard Stern's deal on satellite radio. Lawyers only get paid if they win, and Howard Stern got a huge bonus based on performance stats, which he met, by the way.

Both of these deals have one thing in common. They set up goals, and then paid a set amount when those goals were reached. If there are no results, there is no cost to the client/customer.

This is a win win for everyone. Lawyers usually take 1/3 as a rule of thumb. And when they win, the payout for them is big. What customer/client could turn that deal down? No risk for them - and no cost if there are no results.

You have to make them a deal they can't refuse. If you draw this up correctly, everyone should be happy with the deal. And then, the NEXT one you can really make money on...

Thanks RDD! I appreciate your insight and perspective. I have thought about that approach but I already know the outcome (more or less and will be confirmed prior to pricing) from a savings perspective and equally comfortable with my expected costs (+some).

The difference I see in the examples you suggest is there are unknowns in each scenario where in my case the outcome is (would be) definitive before launch. That is why I'm struggling. Does that entitle me to a bigger slice or a smaller slice?

Thanks again!
 

_doin_my_best

New Contributor
Aug 15, 2018
3
1
13
Thanks RDD! I appreciate your insight and perspective. I have thought about that approach but I already know the outcome (more or less and will be confirmed prior to pricing) from a savings perspective and equally comfortable with my expected costs (+some).

The difference I see in the examples you suggest is there are unknowns in each scenario where in my case the outcome is (would be) definitive before launch. That is why I'm struggling. Does that entitle me to a bigger slice or a smaller slice?

Thanks again!

PS.... Go Buffs!
 

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