The CEO of a softare/systems consulting firm asked me: “I typically start with a quote/price for a specific service and then the original project goes out of scope – the client wants endless additional features and I end up charging hourly for the additions – which often end up being more than the original project itself.
Can IMPACT Based Pricng work for us?”
I love this question because it forces us to focus on what “scope” is.
Is scope the list of inputs, such as tasks and time? Features? Bells and whistles?
Or is scope the list of IMPACTs delivered to the client?
What is Scope?
As the pricing strategist I am, the answer is the second:
SCOPE is the list of IMPACTs delivered to the client.
I define IMPACTs as the life changing differences delivered to the client.
The number of IMPACTs varies by engagement. Small projects have 2 or 3, large complex projects have many.
Most important is this: the IMPACTs or life changing differences are described by the client. The provider does not make them up!
When the client has articulated the IMPACTs they’re eager to get from the provider, the provider designs an engagement to deliver those IMPACTs.
But—don’t stop there, with one offer!
The Choice Framework
The Choice Framework requires three offers, each delivering specific IMPACTs for proportional fees.
About 70% of my client’s clients choose the IMPACT offer. About 15% choose the IMPACT PLUS offer, 12% choose the IMPACT Light offer, and 3% decline all.
The Choice Framework is the ultimate protection against scope creep.
When a client asks for out of scope services, you have one or two more expansive offers ready for them.
Client who chose IMPACT Light: “Hey, I just thought of something, can you add it to our project?”
Provider: “That’s a cool idea. It goes beyond the IMPACTs we’re delivering to you in the IMPACT Light project. We can move you up to IMPACT for the difference in fees, and then we can deliver that to you too.”
The client either agrees or not. No ambiguity, frustration, overworking while underpaid.
You cannot do this when the scope is a list of tasks. The tasks are on the list or not. Adding them means charging by the task or time, or being overworked and underpaid.
There’s plenty more detail and nuance to the dicussion about scope for professional and business services firms.
Have a question? Email me.