Reply To: 64 Quick Points to Consider

#3109
Mark Nasmith
Participant

Part 2

Erin;

My anticipated ‘billing’ method. I decided to go with flat fees (in a tiered, package model for each product). All products will require different amounts of time and effort. If I stick to hourly, this will be difficult to judge in advance for a quote/estimate and risks over/under-projecting time, effort, and cost. Over projection of cost may risk losing a sale, and there is no clear benchmark for the customer to reflect on. No customer would know if they are paying too much, too little, compared to peer businesses.

My flat fee is based on:
– working backward to see how much I made in the CF, and using that as a benchmark hourly wage (too high to use directly, but it gives me a starting point)
– I forecast how much time each product will take. So far, with two fully realized prototypes, my estimates were low, and very low
– knowing an average time for products (updated for/with future products as well, I’m tracking all effort and times), I know the flat fee that will reflect my desired profit for time expended (I was advised to multiply the fee with a 1.2 profit factor)
– knowing my audience. If a quote for a cottage association comes in at $900 for a product, they won’t buy it because no cottage association has $900 of discretionary funds. In this case I would have to maintain lower expectations or profit margins to make the sales…however…

Perhaps my largest advantage is that, generally speaking, emergency management best-practices, philosophies, processes, etc., are established. The creativity and value-added comes with applying those to unique small-business’ threats. Effectively, 1/2 of each product is ‘boilerplate’ to educate the customer on why I chose to recommend what I did, and to provide value-added to the document with additional helpful information.

Reusing that boilerplate portion for each product provides me wiggle-room or options for making my fees acceptable to businesses, organizations and associations with limited resources.

Mark

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