Why Making Assumptions Can Cost Your MSP Big
As the owner of an IT Solution Provider or Managed Service Provider (MSP) business, have you ever felt anxious about delivering a proposal or sales pitch to a client, squirming because you “just knew” that they’d find it too expensive?
It’s not that the solution you’re presenting in your proposal isn’t the one the client needs - you’re sharing with them *exactly* what they need.
Nor is it that you’ve added a large margin to the proposal to boost your profits. In reality, worried about the cost of the proposal you’ve probably reduced your margin to make the whole job more palatable to the client.
So the solution is what the client needs, and it’s priced very reasonably - so why are you worried about presenting the proposal to the client?
Could it be because you’re making assumptions over their budget or desires?
Why do we make assumptions?
As human beings, we all regularly make assumptions on how others will behave. For anyone who has been an employee asking for a raise, we assume that our boss will be upset at us asking for more money. Why do we make these assumptions? Because we believe the other person will act in the way we know best - how we might act in their position.
The thing to remember is, we are all very different! While you may be concerned about approaching your boss to ask for a raise, you don’t know how your boss is thinking! He might be concerned about you, as a good employee, leaving the business - and so is more than happy to give you a raise if you ask for it.
The same logic holds true for putting proposals to clients. If the solution is right and our pricing is keen, then we shouldn’t make assumptions over what a client can or can’t afford, or what a client does or does not want to spend.
Don’t assume budget
Of course, all of these assumptions - and indeed the whole length of the sales cycle - could be reduced or avoided by asking the clients budget up front.
The client might be reluctant to share their budget, or they may simply offer up “I don’t know” - and in these scenarios it’s worthwhile offering up some ballpark figures based on similar work you’ve done for other clients in the past. You’ll soon learn - either from the clients body language or them outright telling you - whether they are comfortable with the figure you’ve suggested, or not!
Based on this feedback, you can at least set the clients expectations over what to expect. If the clients budget expectations are wildly out of sync with the actual costs, then you should be upfront and honest and tell them that. You’ll be saving your time and theres.
Even then, where the clients budget doesn’t match your costs, don’t assume the deal is dead!
My own MSP was faced with a situation where the solution the client needed was vastly more expensive than their suggested budget. The client told us that they “didn’t have a lot of money”. We could have given up, but we gently advised the client that the solution they needed would cost this much - and to our surprise the client came back and gave us the green light to go ahead with the work!
When putting together a proposal for a service or solution for a client, don’t make assumptions over what they can and can’t afford. You should also avoid making assumptions over the clients desires and motivations.
Instead, gather as much information as possible - including budget - and speak openly and honestly with the client about their expectations. You may still receive a “we can’t afford that” statement, but at least you won’t be second guessing what the client is thinking and give yourself a good opportunity to explore whether you are a good fit to work together or not - and not just assume the clients answer!
Richard Tubb works with MSP's to help them focus on what is important, free up their time and make more money. You don't have to do it alone any more!