Do you offer network assessments for free?
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I think the thing that is misleading is that it feels like MSPs doing this lose out, but they don't. MSPs that do free assessments are the big winners. It's ethics, not money, that make us not do that.
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Here is an example....
My average consulting engagement involves lowering the spending of a company by around $20,000 USD per hour. That's the opposite of sales. It's almost never that I've been brought in and told people to spend more money. Not never, just very not often.
But I'm following behind "free recommendations" people who were selling crazy amounts of stuff.
If I was doing free work rather than paid for advice, I could easily be selling hundreds of thousands of dollars in consulting and equipment with most engagements. If we worked that way, we could be selling stuff like crazy. It's definitely an ethical disregard for huge profits keeping us from doing so.
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@scottalanmiller said:
if they are REALLY good they can make the most money doing assessments because there is way more money selling things that are not needed than in being the one doing the work."
When I say "good", I mean good for me, not good at making money by ripping people off.
But you could have a win-win situation with an assessment. Save the company money AND sell something. If you're saving $20k per hour, then you could do a one hour assessment here, do some work to achieve that, charge $10k, and we're both $10k better off. Where's the downside to that?
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@Carnival-Boy said:
@scottalanmiller said:
if they are REALLY good they can make the most money doing assessments because there is way more money selling things that are not needed than in being the one doing the work."
When I say "good", I mean good for me, not good at making money by ripping people off.
But you could have a win-win situation with an assessment. Save the company money AND sell something. If you're saving $20k per hour, then you could do a one hour assessment here, do some work to achieve that, charge $10k, and we're both $10k better off. Where's the downside to that?
That works great only if they commit to paying up front. Which they do, so it's a good situation. But companies getting free assessments are not normally happy paying a lot of money for consulting, especially after the fact and how many want to pay for ANY service if they find out that nothing more is needed?
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Let me put it another way. Let's say you do a 30 minute assessment that saves me $10k and then offer me a further 30 minute assessment that would save me another $10k, at a cost of $9k. I'm going to pay you. So you make $9k and I save $20k. Win-win.
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We do consultations on pay up front before hand. However if you choose to go with us beyond a consultation there is a percentage credit applied to project work based on the consultation.
We probably do as many if not more consultations only. Just other MSP's and single guy IT shops that want to pick our brains before they purchase or do anything.
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@Carnival-Boy said:
Let me put it another way. Let's say you do a 30 minute assessment that saves me $10k and then offer me a further 30 minute assessment that would save me another $10k, at a cost of $9k. I'm going to pay you. So you make $9k and I save $20k. Win-win.
Sure, that is a really weird situation, though. I'm intentionally only telling you part of the assessment? I'm holding information hostage and charging $10K? How do I break up your architecture planning in such a way that I can reliably save you money and be able to save you some and then sell you saving more? And what company would pay for a "possible" savings when I've just given them a real one?
I don't think that this makes sense, it sounds reasonable at a very high level, but if you were to demonstrate this in a real interaction I think that it would visibly not make sense from either side.
And what if it wasn't such a big number but something smaller where I could save money but could also make money on a sale?
Maybe one out of a thousand times this could work out, but in all my years consulting I can't think of any situation where this could have played out this way.
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@Carnival-Boy said:
So you make $9k and I save $20k. Win-win.
For that small of a savings, I know few companies that would be willing to have the conversation and zero that would pay up front knowing how little the savings would be.
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@scottalanmiller said:
Sure, that is a really weird situation, though. I'm intentionally only telling you part of the assessment? I'm holding information hostage and charging $10K?
Not at all. You've only done 30 minutes so have only saved us $10k. Neither of us know if another 30 minutes will save us another $10k. That is undiscovered until you actually do the assessment. But if you've just saved me $10k in 30 minutes, I'm going to be keen to employ you further to find out. It maybe you can't save me the additional $10k and I lose out, it may be you save me an additional $30k and I do really well. Let's not get literal with the figures, the point is we're developing a long term relationship where the profits to you are back-loaded. You make a loss in the short-term confident that you will make that back in the long term.
It's not weird. It's only like Netflix giving me my first 30 days for free.
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@Carnival-Boy said:
@scottalanmiller said:
Sure, that is a really weird situation, though. I'm intentionally only telling you part of the assessment? I'm holding information hostage and charging $10K?
Not at all. You've only done 30 minutes so have only saved us $10k. Neither of us know if another 30 minutes will save us another $10k. That is undiscovered until you actually do the assessment. But if you've just saved me $10k in 30 minutes, I'm going to be keen to employ you further to find out. It maybe you can't save me the additional $10k and I lose out, it may be you save me an additional $30k and I do really well. Let's not get literal with the figures, the point is we're developing a long term relationship where the profits to you are back-loaded. You make a loss in the short-term confident that you will make that back in the long term.
It's not weird. It's only like Netflix giving me my first 30 days for free.
Netflix gives you a service that you get addicted to. I do a couple of hours of work and save you years of cost. I can't keep doing it hour after hour. That's why there are only two ways for me to be paid: paid for the work or paid to sell to you.
Let's say I go into a company with a total budget of $100K. I might shave up to $40K in real numbers. But you would not keep paying me, my value is going to diminish very quickly. I can save that big money all on the first day (normally.)
The ongoing relationship cannot be back loaded. The value is all gone in the first hour. Almost all of it. The remaining value is providing ongoing services in a good, ethical partnership.
We are not a commodity service like Netflix, that's actually a great example of why those tactics can't apply. It's neither a commodity nor a consumable nor a luxury.
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And it doesn't work in a "do thirty minutes, save X, do thirty more, save more" way. It's a single thing. It takes X time to do an assessment and the results save (or don't ) Y money. There aren't separate parts to break up nor a time line of work to be followed. Unless the assessment is complete, I don't know if I have all of the information to save the money in the first place.
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I most definitely agree to not give away these kinds of services. The only thing I have to bill is my time. If I am giving that away our company will not be in business long.
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@scottalanmiller said:
The remaining value is providing ongoing services in a good, ethical partnership.
That's my point. A long-term partnership. But ok, that might not apply to the type of work you do, which is fine.
Let's look at Carnival Boy IT Solutions - we do assessments at 10 companies and find we can save money at only 1 of them. The ethical thing to do is to sell stuff to the one company that would benefit from it, and not try and sell to the other 9. That can still be a win-win situation. You seem to imply that you think I'd have to try and sell to all 10 - that doesn't have to be the case.
Anyway, I've never seen a real-life example of this that does work, which is why, having tried it once, I will never ever do it again. So I'll assume that in practice it's a flawed business model. I assume because a decent assessment takes a considerable amount of time and effort (and hence cost). I was only saying that in principal I can see how it might work.
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@Carnival-Boy your flaw is that you're going in thinking you're going to sell them something I don't sell people anything. I sell my time so I will come in I will do the assessment if there is more work I will say there is more work they can choose to hire me and they can choose to hire somebody else if they need new hardware I will recommend hardware but I will not sell it they will buy it from a standard var
Message dictated by Siri sorry about that
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In an altruistic and honest world, that might work. But we don't live there.
In your example of doing 10 companies worth of free assessments and only one of them needs any updates - you have to make enough money on that one paying customer to make the time spent at the other 9 not be a net loss. Assuming you're paying your employees while they are doing work at those 9, you're losing money.
What I don't understand is why this same principal doesn't apply to software? Why do so many companies give software away?
With something like Android - I can see why Google gives Android away - they make a killing on the Google Play Store. Without Android, the Play Store is a non starter. Frankly, that's why I think Amazon made the Fire line of devices - as a way to put the Amazon App Store in front of people as the majority will never bother to install the Amazon App Store because it basically lessens security on that device and adds prompts to the user who doesn't often understand what those prompts are, what they mean, so they more often just avoid them.
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@JaredBusch said:
@Carnival-Boy your flaw is that you're going in thinking you're going to sell them something I don't sell people anything. I sell my time so I will come in I will do the assessment if there is more work I will say there is more work they can choose to hire me and they can choose to hire somebody else if they need new hardware I will recommend hardware but I will not sell it they will buy it from a standard var
Message dictated by Siri sorry about that
We also do the same (for the most part we do resell a few things but very few). We make our money by providing that Consultation time and Design time. We never trust that to a lower level employee either, this type of work should be done by someone who really knows their stuff. Again we will provide a % off towards implementation of said consult. But the consult it's self is a good portion of the work.
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@Minion-Queen said:
@JaredBusch said:
@Carnival-Boy your flaw is that you're going in thinking you're going to sell them something I don't sell people anything. I sell my time so I will come in I will do the assessment if there is more work I will say there is more work they can choose to hire me and they can choose to hire somebody else if they need new hardware I will recommend hardware but I will not sell it they will buy it from a standard var
Message dictated by Siri sorry about that
We also do the same (for the most part we do resell a few things but very few). We make our money by providing that Consultation time and Design time. We never trust that to a lower level employee either, this type of work should be done by someone who really knows their stuff. Again we will provide a % off towards implementation of said consult. But the consult it's self is a good portion of the work.
By Providing a discount towards the implementation like that, that helps you build a relationship with the customer as well -- doubly so if your customer is happy with the consultation.
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@dafyre said:
@Minion-Queen said:
@JaredBusch said:
@Carnival-Boy your flaw is that you're going in thinking you're going to sell them something I don't sell people anything. I sell my time so I will come in I will do the assessment if there is more work I will say there is more work they can choose to hire me and they can choose to hire somebody else if they need new hardware I will recommend hardware but I will not sell it they will buy it from a standard var
Message dictated by Siri sorry about that
We also do the same (for the most part we do resell a few things but very few). We make our money by providing that Consultation time and Design time. We never trust that to a lower level employee either, this type of work should be done by someone who really knows their stuff. Again we will provide a % off towards implementation of said consult. But the consult it's self is a good portion of the work.
By Providing a discount towards the implementation like that, that helps you build a relationship with the customer as well -- doubly so if your customer is happy with the consultation.
Exactly.
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We did these at my last job (Think the last one I did was ~40K). Really I wanted the report to stand on its own and have enough value that we could walk away and do nothing more, but they would still have value.
Discounts against implementation create bad incentives (to spike the project costs enough that you can still maintain a P&L for the projects). I'd rather have simple, projects where the P&L for every interaction is fair pricing, clearly understood deliverables and value for every engagement, and everyone's value can clearly be understood. You also screw the P&L for your BA's if you do discounts like this (which lowers their book value to the company and generally means you'll end up paying them or the "shock troop" consultants who do the assessment less than they are worth).
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@John-Nicholson said:
We did these at my last job (Think the last one I did was ~40K). Really I wanted the report to stand on its own and have enough value that we could walk away and do nothing more, but they would still have value.
Discounts against implementation create bad incentives (to spike the project costs enough that you can still maintain a P&L for the projects). I'd rather have simple, projects where the P&L for every interaction is fair pricing, clearly understood deliverables and value for every engagement, and everyone's value can clearly be understood. You also screw the P&L for your BA's if you do discounts like this (which lowers their book value to the company and generally means you'll end up paying them or the "shock troop" consultants who do the assessment less than they are worth).
I agree, anything that isn't a direct transaction has bad alignment, somewhere. It's all pieces of a bad relationship. You can make them "better", but the "best" is so easy - pay for what you get.
