I'll be honest, when I set up this business over 15 years ago, we didn't have that many clients. 

Though we were fortunate enough to have a couple of large clients who kept us busy.  

Like any other service-based business, these big clients would brief us on a project and ask for a quote.

You could always tell when they expected the project to be quick and simple, when in fact, it never was.

 

Negotiating with a client you can't afford to lose

I remember one particular project where the client expected us to come in at around £8000 to complete it.

In actual fact, I knew that this project would end up being closer to £20,000 because - as with most projects - there were certain elements that were complicated and required a considerable amount of resource to be invested in to it.

So I found myself wondering: right, well how are we going to get past this? 

They were one of our biggest clients at the time, so I certainly didn't want to risk rubbing them up the wrong way.

But equally, I understood the importance of making a profit on the project.

So instead of caving, quoting the £8,000 that the client was expecting and making a whacking great loss; I opened up the Fee Estimator in CMAP.

The Fee Estimator tool in CMAP allows you to export a full cost breakdown  so you can communicate your job costing approach to clients

Cost Breakdowns

I've always used the Fee Estimator's Costing Breakdown feature in this type of situation because I need the client to see everything that's involved in completing the project.

So I use CMAP to generate my cost breakdown and then offer to sit down with clients to talk them through the fee.

9 times out of 10, this works.

Because when the client can actually visualise all of the things you need to do, the amount of time & resource you're investing in to the project and so forth, they understand how you've reached the figure you're presenting to them.

So, going back to my £8,000 vs £20,000 dilemma; I visited the client, sat down with them and talked them through the fee, providing them with a detailed cost breakdown for the project.

Straight away, they realised there was a lot more to the project than they'd originally thought. And guess what?

The project went ahead at £20,000; over double what they were expecting, without a grumble.

By communicating clearly with the client and offering some clarity in to how the numbers added up on my end, I managed to keep one of my largest clients happy and get the fee I needed to ensure that project made a profit.

 

More on this topic: How inconsistent project pricing could be costing your business

 

So the moral of the story is this:

Just sending across a number and it isn’t a good idea.

The client needs to know how you've arrived at that figure.

If you're quoting a steep (but justified) fee, and you know your client is expecting a cheaper rate, you don't need to crumble at the first hurdle.

Instead:

  1. Be clear about what they're getting
  2. Communicate what you’re doing to deliver that service and
  3. Explain how you've arrived at the figure you're quoting via a detailed breakdown.

You'll be amazed at the difference this simple change can make.

If you'd like to dig deeper into project profitability, download yourself a copy of our free guide below:

Click here to download the 5 Step Plan for Improving Project Profitability