I have to disagree on this one. If you price your services too low the
clients will not see it as a bargain but will instead question the quality
of the services. When I was starting out I had jobs that I won by being
priced higher than my competition and in one case I subcontracted to the
consultant that lost the bid for what he was charging. I kept the
difference and was responsible to the client but had the other consultant
do the work for much less than what I would have wanted and we both still
got what we wanted. He lost the job and the client as a long term customer
simply because he was too cheap in the clients mind and the client had no
confidence he could do the job at that rate.

Larry

At 01:17 AM 6/18/02 +1000, you wrote:
>John Dammeyer wrote:
> >
> > So remove yourself from the personal issues of being a good guy or
> > developing a reputation so you sell yourself short.  The only reputation
> > you may get is that you are someone who works cheap while others reap
> > the benefits.
>
> > > -----Original Message-----
>
> > > Well I have a client who wants a bid for a project.  The design is
> > > straightforward, it is half-clone & half-modernization/update of an
> > > existing product that I'm very familiar with.  Sorry for the vagueness
> > > but there is an NDA involved.
> > >
> > > Now he needs a revamp of this thing for use with other stuff in a
> > > "packaged kit" that he will sell.  This is a critical piece of the kit
> > > and there is no reasonable currently-existing alternative.  He has a
> > > small line of various products (that he doesn't manufacture, he's the
> > > retailer) into a niche market for years and knows his
> > > audience well.
>
>
>Hi Jesse, I will take the opposite stance to John above
>and suggest that since your consulting business is a
>start-up venture you should be working as cheap as possible
>(ie NO profit!) until the business has built some type of
>customer base.
>
>I completely disagree with the advice to charge the "full"
>rate with any startup business. When you start a business
>you should be fully prepared to run the business at a LOSS
>for the first 12 months minimum, with very low prices to
>establish a customer base and assure future income. When you
>get to the point when you have TOO MUCH incoming work, then
>gradually increase prices etc until you reach the status
>quo you desire. And for that reason I suggest NOT giving up
>your day job, you will need some income over that first 12
>months while you get the business established.
>
>NEVER start a busines with the expectation of making money,
>at least not straight away. Always ask, "how many hours and
>how many $$ can I sink into this business over the first 12
>months??" and if the answer is less than 20 hours per week
>(while you are still working full time elesewhere) and less
>than $100 USD per week (the reason you are still working
>full time elsewhere) than you are destined to fail.
>
>So my suggestion, if you are really interested in making
>this new busines work, is quote very low (ie UN-profitable)
>and do the job while still working full-time. If you do a
>decent job you will reap rewards later when sales occur.
>Do the same for all jobs in the first 12 months. If you
>make it that far then consider giving up full time
>employment, provided you have saved a decent ($10G?)
>buffer. :o)
>-Roman
>
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Larry G. Nelson Sr.
mailto:L.Nelson@ieee.org
http://www.ultranet.com/~nr

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