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Andy Brice
Successful Software

Doug Nebeker ("Doug")

Jonathan Matthews
Creator of DeepTrawl, CloudTrawl, and LeapDoc

Nicholas Hebb
BreezeTree Software

Bob Walsh
host, Startup Success Podcast author of The Web Startup Success Guide and Micro-ISV: From Vision To Reality

Patrick McKenzie
Bingo Card Creator

Pricing "Consolidation" - what does that mean?

Scenario (B2B): A budget council rejected a project that we proposed which was roughly 50k; 10k being services and the rest on s/w license + 1yr maintenance.

They said they'd present again in a few weeks for approval "but [if you can provide] any pricing consolidation it might make the  process easier".

They already received a 20% one-time-only discount on the total package.

What in Sam's hill is "pricing consolidation" - are they just asking for a discount? 

Should I:

1) Ask what the budget ceiling is for the project
2) Present more ROI cases/man-hours /dolalrs saved analysis
3) Discount  ? "Consolidate" ?
4) ??

BI Baracus Send private email
Wednesday, June 26, 2013
We could make guesses but if you have at least one champion on the inside trying to help make the process easier, then pick up the phone and ask them.

Reluctantlyregistered Send private email
Wednesday, June 26, 2013
My guess, they really meant 'breakdown' as in the opposite of consolidation. They want to know if you are ripping them off for 1 hour x $10,000, or giving them a great deal for 1000 hours x $10.
GregT Send private email
Wednesday, June 26, 2013
I think it was a typo and that it was supposed to be "consideration". 

Anyway, I'm just going to reiterate the value being offered and ask if they feel pricing aligns with that, and if not, why and what they'd expect to pay.  They're (mostly) straightforwad.

Bonus question:  Is it too point-blank to say:

"We'll offer another 10% discount for  website logo usage and periodic references" or is the wording otherwise unprofessional?
BI Baracus Send private email
Wednesday, June 26, 2013
By council does that mean this is some sort of city government thing where they are required by law to put things out for bidding?
Scott Send private email
Wednesday, June 26, 2013
I would not say the "we'll offer" thing you mention. You do need to find out what they mean by consolidation.

It's OK to let them go with the other guy and have the project melt down.
Scott Send private email
Wednesday, June 26, 2013
"I think it was a typo"
You are in the best position to make that determination, but if it helps, I think you are right.  Due diligence on their part is to look like tough negotiators.  You've already given a price break, for goodness sake don't give them another.

The language that you are quoting suggests that they have no idea what a fair price is, or completely understand (and accept) your value proposition/argument.  Ideally, when you stand your ground, they will believe they have made a fair deal for their constituents.  Worse case scenario, they decide to make an example of you and go elsewhere.  Either way, there aren't a lot of things you can do at this point to influence that outcome.

Bonus answer:
Absolutely don't offer another discount in return for a testimonial/sponsorship.  Outsiders will automatically discount such marketing, and assume you obtained it with unwritten, under the table considerations.  And as I mentioned above, offering a second discount only encourages the council to engage you in another round of negotiating.
Howard Ness Send private email
Wednesday, June 26, 2013
I agree you've already compromised and discounted a lot but a quick tip - don't offer percentage discounts for the value of not using your logo or links.

If you offer that as an option put a firm price on it, which could be $499 + VAT, or $12 or whatever but a fixed price. It gives it both value and fairness, becoming a menu item they can buy.

You can potentially use that in final negotiations, such as "..and we'll throw in the logo removal for half price!"  Half price or 50% or whatever sounds better than $250 but the main point is it sounds fair.

They, and everyone else that uses your product, pay $499. That's the price. It's a thing and it has a carefully-considered value.

Make it a % discount and it all seems a bit wishy-washy if not outright weasely, like you're plucking numbers out your ass.

Reluctantlyregistered Send private email
Thursday, June 27, 2013
"...it might make the  process easier."

I suspect "price consolidation" means they want to roll-up some of the costs into the main items. So, for example, if it was $30k for software licenses, $10k for support and $10 for services, they'd want support and/or services to be included in the $30k they're spending on the software licenses.

They may have budget for a one-off purchase, but not recurring costs, or vice versa, or maybe not quite enough budget to stretch to what you want.
Scorpio Send private email
Thursday, June 27, 2013
I suspect it is a euphemism for 'bigger discount'. I would probably ask them what their budget is and negotiate from there.
Andy Brice Send private email
Thursday, June 27, 2013
Great feedback as always - thanks.

So, in haste (i.e. panic) and before I'd allow them to marinate themselves in datasheets from any other potential vendors (speculation - no proof that they were or had planned to) I decided to preempt further communications and fire off what now officially looks like a Totally Desperate Measure:

"I've enjoyed the collaborative spirit in which we've both worked over the last few months.  To further demonstrate our' commitment to your project's success, we'd like to absorb the cost of the services component of the contract - something I feel will provide  additional fiscal ease during the approval process.  "

This morning they made a promise to purchase with a "Thanks for thinking of  us". 

So yea, part of me feels like I just pissed away several K, but I suppose I should be pleased that its moving forward.

(and yes, I understand that a 'promise' in only that; it could go south although in this case, I doubt it - although it's happened more than once that we go through vendor registration + contracts and somewhere down the chain someone goes "huh? WHAT? WHY are we even LOOKING at these guys?" and then it all goes to hell, but maybe that/those stories are for another post!)
BI Baracus Send private email
Thursday, June 27, 2013
This is a win. Forget about what you gave up. Maybe that would have lost the whole deal. At least this way you get a customer with a nice chunk of revenue. Treat them well and you might get more business down the line.

See the positives here and forget about the money you "gave up", as that was never yours in the first place.
Scorpio Send private email
Friday, June 28, 2013

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