A Question on Pricing and Resource Planning

Some weeks ago I received the following email from Wayne Schulz:

A random thought on pricing that may be worth a mention because as projects grow in scope and typical staffing numbers shrink – load balancing of work is critical and I'm seeing clients get a quote for work in early summer, then the client delays it, then they want to pick it up in year end.

We already tell people to add 50% to the project if any part demands night / weekend work. I don't see why we should not have a similar surcharge for work that gets delayed into our busy season.

Just a quick thought that came to my mind as I struggle (as I'm sure most of you are) with prospects/clients who you proposed on back in March/April and maybe started some work in June - only to have the client back off because of any number of concerns (not ready, need further data fix-up, etc).

I have four prospects/clients whom I proposed on back in March/April and maybe started some work in June, only to have the customer back off because of any number of concerns (not ready, need further data fix-up, etc). They suddenly want to become active in what I feel is my prime season -- November through January 31.

Which leads me to my question – why the heck do I allow customers to be quoted on one price for work scheduled for our down time – and then the customer delays and comes back to us in peak season.

Anyone try booking a cruise in the months of March or May. They're dirt cheap. Why? It's off peak. Try booking again when school lets out. Completely different fare structure. Why? It's peak season.

Yet, I pretty regularly see this happening with my projects. I have one customer where I scheduled an upgrade for June 2010. They discovered out of balance items and rather than purge data they opted to create an adjusting entry (most of which I provided while I was there in June).

Fast forward to January 1 and suddenly they want to be live by January 15.

Ummm – ok so I'm not that fast on the uptake but it hit me this morning. These clients are being quoted during off-season and then moving their engagements into the peak season for no change in fare!

Just an observation – and I don't have a good solution other than to work into my options that pricing is only valid for engagement started by X and finished by Y.

My reply:

Wayne,

AMEN!!!

The price quoted should have a specific completion date associated with it. If the customer wants to change the completion date it is a change request which may or may not include a price change. In the cases you are describing they certainly would.

Some sample language might be:

• “I am sorry, but the original quote was for work done during off-peak operations for us. Now that we in our peak season, there is a fee increase. You, of course, have the option to delay this until next summer for the original price.”
• “I am sorry, but you lost your window. Our company is similar to an airport, we can only land so many planes at once.”
• “I understand you had to delay, it happens to many of our customer, but…”

I hope this helps.

What might you add?