Planning with Potential Clients
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Those are marketing costs. Part of the process of finding clients.
They are part of the overhead of running a company. It is part of why any rate below something like $150/hour is silly.
There is also the cost of managing your LLC paperwork, taxes, accounting, invoicing, professional insurance, etc.
You have to balance things out.
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As always, the answer is "it depends". In our case, we wouldn't charge for the initial high level meetings or the initial proposal. But the proposal would only contain ball-part estimates of cost. We wouldn't know the exact cost until we did detailed analysis, which is always chargeable.
So after receiving ball-park estimates, the client could choose to proceed on a time and material basis, or, if they wanted an exact cost, pay for analysis meetings and a detailed design document. Having written, and been paid for, a design document, the price can be fixed - so if it ends up costing more because we've made a mistake in the design or underestimated the time required, then that would be on us.
This generally works fine other than clients often fail to appreciate the difference between "ballpark costs" and "quote". So if we estimate it will cost between $10k and $30k, in their head the quote is fixed at $10k and they get upset if it ends up costing more. Clients also fail to appreciate how much time it actually takes to write a decent design document.
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Carnival Boy is pretty much on target. Sell the sizzle, not the steak. In initial meetings we give high level assessments, and explain the devil is in the details. Like Carnival Boy, we give a ballpark range, and then if they want a hard static quote, we would charge for that analysis.
If it is an RFQ, we always put a disclaimer that if the actual environment is different then the RFQ there would be additional charges. Plus we always pad hard RFQ proposals with a buffer for the unknown.
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It depends on what you are. If you are a consultant, in the true meaning of the word, you would charge for every hour. If you on the other hand are bidding on jobs then the answer is no, you wouldn't charge for that. That's overhead costs.
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Right, think of this with "hats". If you are providing consulting, then wear your consulting hat and charge for every hour. If you are selling consulting, then that is sales and you don't charge, but you also don't provide anything of value.
What the sales team provides should not be useful to the customer other than to decide to do business with you.
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You said meetings with potential clients. That sums it up, you're trying to sell them something, so you don't bill for that.
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@marcinozga said in Planning with Potential Clients:
You said meetings with potential clients. That sums it up, you're trying to sell them something, so you don't bill for that.
You also don't give away any consulting or "answers".
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@marcinozga said in Planning with Potential Clients:
You said meetings with potential clients. That sums it up, you're trying to sell them something, so you don't bill for that.
True. The answers in the thread confirmed my thoughts on how to think about the cost of the time with potential clients: That cost is part of the overhead of the business, which is separate from the technical work to be done, and where the revenue earned from the technical work compensates you for the time spent with the overhead.
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@scottalanmiller said in Planning with Potential Clients:
@marcinozga said in Planning with Potential Clients:
You said meetings with potential clients. That sums it up, you're trying to sell them something, so you don't bill for that.
You also don't give away any consulting or "answers".
That's something I, or anyone else, would have to take care to avoid. I could see someone getting carried away and end up trying to design a solution before an agreement is reached.
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@EddieJennings said in Planning with Potential Clients:
@scottalanmiller said in Planning with Potential Clients:
@marcinozga said in Planning with Potential Clients:
You said meetings with potential clients. That sums it up, you're trying to sell them something, so you don't bill for that.
You also don't give away any consulting or "answers".
That's something I, or anyone else, would have to take care to avoid. I could see someone getting carried away and end up trying to design a solution before an agreement is reached.
Correct. Happens often actually.
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If I'm not getting paid for the consulting, they'd get a ballpark figure and maybe one or two high level details.
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@EddieJennings said in Planning with Potential Clients:
@scottalanmiller said in Planning with Potential Clients:
@marcinozga said in Planning with Potential Clients:
You said meetings with potential clients. That sums it up, you're trying to sell them something, so you don't bill for that.
You also don't give away any consulting or "answers".
That's something I, or anyone else, would have to take care to avoid. I could see someone getting carried away and end up trying to design a solution before an agreement is reached.
I've seen that happen a lot. Even people implementing the solution for free. With nothing whatsoever left to pay for at the end.
