3min chapter

2Bobs—with David C. Baker and Blair Enns cover image

Prostitutes and Scope Creep

2Bobs—with David C. Baker and Blair Enns

CHAPTER

Why You Shouldn't Price High to Protect Yourself From Scope Crawl

Extra margin built into the job gives you a tool with which to improve client loyalty. Some firms intentionally underbid something, and they pretty much know, or assume, that they're going to have to make some changes. It's a terrible way to get this work, because it sets up a bad relationship with a client that's not likely to continue very well.

00:00
Speaker 1
So
Speaker 2
it gives you a buffer to work with, but you're still working with loosely defined scope. So you're not fully protected, right? Unless you just go like an order of magnitude higher multiples, a superhi. Yes,
Speaker 1
maybe tis historically to say, listen, similar clients that we come across like this, we've taken a bath, a 20 % bath. We're just going to have to add that. But it's all just guess work. And all that guess work, to the degree that you're protecting yourself is not in the client's best interest, because they are potentially paying weigh more than they need to, just because you have to protect yourself.
Speaker 2
And we've talked about this before, but extra margin built into the job gives
Speaker 3
you
Speaker 2
a tool with which to improve client loyalty. Because a problem arises, and whether it's of your doing or not, you have the wherewithal the margin to go ahead and fix the problem, right? So there's lots of reasons to price high. So you're saying you protect yourself from scope creep by shooting really high in the price. If the client is demanding a price from you, you say, ok, i got a price. It's really big. Here it is x. Right? What's option numbr two? Option
Speaker 1
number two is sort of the opposite reaction. You have the exact same scenario, but instead of shooting really high to protect yourself, you shoot really ow because you want to get the job. And you're just kicking the can down the road because you don't know the specifics, but you know you have underpriced this thing because you want to get the job. And you're already setting yourself up for many difficult conversations down the road where you have to come back and say, well, listen, like you're goin t have to nit pick them on everything related to scope creep and it's going to really pist them off. You could be doing it with a sort of right heart, but some firms are just deceitful about this. They just intentionally underbid something, and they pretty much know, or assume, that they're going to have to make some changes. But at that point, the client is already too far into the relationship. They can't just switch to another horse. So they kid of feel like their hands are tied, and they resent it. It's a terrible way to get this work, because it sets up a bad relationship with a client that's not likely to continue very well. So the first one, shoot high to protect yourself. The second one, shoot low to get the job, knowing you're going to screw them later. And that is the actual motus operandi of some firms. And i just think it's wrong.

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