| Clients occasionally have cost issues, sometimes for reasons within your control and sometimes because someone in purchasing had the bright idea "Hey, if we email 500 people and ask for 5% off, 100 of them are going to be unsavvy enough to say 'Yes' and we just saved ourselves a million bucks a year for the price of an email." Venting on the Internet or at the bar has its time and place, but in terms of mutually agreeable resolution for clients, let's see what we can do here: a) Tell the client that you hear and empathize with the goal to reduce the size of your invoices. b) Offer the client ways of achieving that goal which are a mutual win. For example, if a client sent me something like this, I might say: Hiya Bob, Thanks for the email. I understand that the telecom sector is a dynamic industry and, as a result, you're concerned about making sure our relationship continues on providing provable ROI which you can demonstrate to the other stakeholders at $COMPANY. I want to help you do that. 1) My most recent invoice covered projects A, B, and C. B was very successful and resulted in an increase in customer lifetime revenue of $REALLY_BIG_NUMBER as per the calculation outlined by Dave in our email thread of March 17th. This results in an ROI to $COMPANY of $DIVISION_IS_MAGIC just based on that one component of the engagement. I look forward to continuing to find $DIVISION_IS_MAGIC and above wins for you and $COMPANY. 2) If you would like a more formal report on ROI suitable for presenting to internal stakeholders, I estimate that we can prepare one given one week's time. Would you like me to reprioritize the schedule for our next engagement to include this? 3) Given that the telecom sector is a dynamic industry, our current arrangement might not have the flexibility that $COMPANY needs to arrange your projects at the lowest possible costs. Currently, $COMPANY and I work on a time-and-materials basis for N weeks every $PERIOD. If $COMPANY would like to decrease invoiced amounts, we could: a) Delay the delivery of D or E from $PERIOD(X) to $PERIOD(X+1), resulting in $INVOICE(X) coming in at $SUBSTANTIAL less, for a cost reduction that you can book in the current quarter. b) $COMPANY currently purchases availability for work within $PERIOD at times mutually agreeable to $COMPANY and myself at the beginning of $PERIOD. If $COMPANY is willing to be flexible on the scheduling such that work will be delivered at any time during $PERIOD, I would be happy to grant $COMPANY a per-invoice line item discount of $DOLLAR_AMOUNT_CALCULATED_TO_BE_ROUGHLY_5%_OF_MOST_RECENT_INVOICE. (You may want to run this by Jill as her project will block if our next project does not get done as per the current schedule.) You can continue humming bars in that direction. If you routinely get emails like this, though, firm handshake and recommend a provider more appropriate to their needs. Anyone who does not wish to pay the price of butter has to cut down on butter consumption right now, because it is a seller's market. |
one extension requested -- MOST contractors for $BIG_COMPANY are not in a position where they have had sufficient ownership of a project to be able to attribute specific company bottom line gains to their work.
For example, if you're in the practice of doing conversion optimization work, split testing landing pages, or doing SEO work, you might be able to measure conversion or added traffic and make claims about how that impacts the bottom line, which puts you in a MUCH stronger negotiating position.
Do you have specific advice for contractors who might be part of a team or contributing in less measurable ways (writing internal code, building a new feature)?