@coliver said in pricing on websites:
@mike-davis said in pricing on websites:
The second one says he really doesn't know how long it's going to take, but to trust him that he won't overbill me and he's going to do the best job he can. He tells me that if I pay for hours up front I'll get a better rate, but he can't really tell me how many hours he anticipates using.
This is called "time and materials" and is very common for most contractors and construction projects.
So is bidding on jobs...
@dashrender said in pricing on websites:
That said, it's still completely possible that you could run into an issue that takes you 10+ hours to resolve. Assuming you had only 1 hour of sluff time baked in, you (your company) just lost 9 hours of billing. The customer in this case is taking advantage of you.
You're absolutely right. It has happened and I'm sure it will happen again. I just can't let it happen more often than not. 
In my experience when I have quote a flat rate job the customer has never been upset about the bill at the end of the job. On hourly work, I've had to "have a sit down" to explain all the hours. This is after detailed invoices.
@dashrender said in pricing on websites:
So here's an experiment for ya Mike - track hours of your workers, and a normal billing rate for their time. Don't forget to include the amount of time for making these flat rate quotes are part of those projects. Now, when it's all said and done, take the flat rate you quoted, divided by the number of actual spent hours, is it higher or lower than the normal rate asked about above (in my post)?
According to Scott - it will more often than not be higher, but not just higher, significantly higher. This shows that your customers overpaid, and you made money at the expense of your customer. Now - of course, this is good for you, but it's not good for your customer.
Did that the other night. It's call staying in business.
Even if I'm making money it doesn't necessarily mean it's bad for my customer. I have one customer where I'm doing the job for slightly more than half of what a competitor quoted them. I would say that's good for my customer. I can do this because of my geographical location and I know their environment really well and scripted a lot of common tasks. I have incentives to be efficient.
If you're dealing with the guy that has all the answers, you can approach him with the next issue ahead of time so he owns the outcome. Let's say he's complaining about the workstations you're using. Before you buy a new one, ask him where the best value is and to show you some numbers on how the video card with a boat load of RAM makes sense for all your users. If he really is savvy it may save you some time and create some buy in. If he's just arm chair IT, he'll take it down a notch.
@scottalanmiller said in pricing on websites:
The discussion shoudl be something like this....
Hourly: Quick estimate is ~12 hours at X rate.
Flat: We need 2 hours for the estimate, plus 2 hours to cover any mistakes in scoping or unknowns, so the price is 16 hours at X rate.
Which do you think that they will take? They'll ask where the extra hours come from. You'll explain that two hours are for the cost of you making the quote. And the other two hours are to buffer against any mistakes on your part or things you could not anticipate.
For the client where they can afford the flat fee, but can't afford the project to cost twice as much, they go with the flat fee.
I do all you can eat MSP pricing. Customers would rather have that than hourly pricing. It's because of predictability. You could also add arguments about the incentives for me to be proactive, but at the end of the day, most of the businesses/agencies I work for have a budget and they can't afford to go over it. With a yearly contract in place they can meet their business goals.
I'll ask some of my clients if they would rather have me quote the job as a flat fee or as an estimate.
Go back to the PBX, If Jared quoted me a fixed price, would you do the job for an hourly rate, with a not to exceed his price?
If I want a barn, I can't afford to run out of money. If the second guy will do it at an hourly rate, with a not to exceed the first guys rate, then great, I know I'll save money. If he won't agree to a not to exceed, he has no incentive to be efficient.
I can make a business decision on the first one because the costs are known.
How can you make a business case for a project if you don't know the cost? For the client at a certain cost the project makes sense. If it goes over that, they can't make a business case for the project.
Let's say I want a FreePBX system. If Jared tells me he'll stand up a PBX for a fixed price, and you tell me you'll build one and you don't really know how many hours it will take, why would I pick you? Because I trust you? Because I might save money? I don't really care that Jared has scripted it out and it only takes him a few minutes. You could be building a one off by hand. You are honest with your hours, but at the end of the day it cost me way more. It has nothing to do with trust or saving money.
So I'm looking at having a pole barn built. I call a couple of contractors and the first one tells me exactly what I have to pay him and when.
The second one says he really doesn't know how long it's going to take, but to trust him that he won't overbill me and he's going to do the best job he can. He tells me that if I pay for hours up front I'll get a better rate, but he can't really tell me how many hours he anticipates using.
I'm going with the first guy.
@scottalanmiller said in pricing on websites:
Nope, it's the best possible thing for them. Let's them determine their needs, get the best pricing, and not get burned by bad estimates or scope changes. From a customer side, it's literally the best thing I could imagine. Without it, they'd be stuck either paying as they go (which would force everyone into higher prices) or into the scoping disaster. It's the best form of customer protection we could think of.
Don't you have to estimate the hours to figure out how many hours they need to buy?
Why does paying as you go force higher prices?
I've set up Axis and Ubiquiti. I think Axis come in at 4x the cost by the time you add a license to the NVR.
I think the real struggle is going to be not running wires. Chris at Crosstalk solutions did a project where he tried to run a wifi access point via solar power. You would need even more power for the camera. I have no idea how you could do any of that without mounting it...
I was troubleshooting this sync error in one of my tenants, and then the the email came in.
In case you missed it, Microsoft just issued this:
https://docs.microsoft.com/en-gb/security-updates/securityadvisories/2017/4056318
Executive Summary
Microsoft is releasing this security advisory to provide information regarding security settings for the AD DS (Active Directory Domain Services) account used by Azure AD Connect for directory synchronization. This advisory also provides guidance on what on-premises AD administrators can do to ensure that the account is properly secured.
@scottalanmiller said in pricing on websites:
No matter how good I get at doing this, it doesn't change that the worst case is what gets passed on to the customer. As I improve my ability to scope, the customer wins regardless of which one of us is left "holding the dice." If the customer holds the dice, they only have to pay what it actually costs. If I'm left holding the dice, the customer has to pay for the worst outcome of the dice PLUS the cost of determining that worst outcome.
No matter how you look at it, scoping and project pricing either results in the vendor losing money by absorbing costs that are not their fault, or the customer losing because they have to pay a premium for not taking on their own risk.
Think of it like insurance. Who wins from warranties and insurance? The insurance companies. Who loses? The customers.
Isn't selling bocks of hours up front pretty much bad for the customer as well?
@scottalanmiller said in pricing on websites:
It doesn't protect them, it pretty much just guarantees the worst case scenario.
I wouldn't say that. I'm sure some of you have done enough of one thing that you get better than others at it. You quote the customer a better price than others can, but you still make out well because you have become really efficient at it.
Consider a wifi proposal from someone that is not using Ubiquiti vs one of us that has a controller already built.
@scottalanmiller said in pricing on websites:
How is it rolling the dice, though? You have to roll the dice in the other case, and therefore must charge them enough to cover for that. Plus you have to charge them for figuring that stuff all out (scoping.)
It doesn't protect them, it pretty much just guarantees the worst case scenario.
I guess it changes who is rolling the dice.
@dashrender said in pricing on websites:
But really, should an O365 migration be a project price and not hourly? You'd have to make the project price significantly more than the anticipated hourly to cover your bases in case there are issues.
As @dafyre said, customers demand it - and for good reason. They have to make a business case for the project. They would rather have a set fee than roll the dice that everything works the way it should and it might cost them a little less.
The second reason is you can't put a price on a project like an Office 365 migration. At least I can't afford to without knowing a lot of details about the environment.
@dashrender said in pricing on websites:
@mike-davis said in pricing on websites:
@dashrender said in pricing on websites:
Why and to what end?
I don't have my hourly rate on there. The reason for that is I have a different hourly rate for different clients.
So you list the highest rate on the site, and if you get a new customer, you can offer a discount based upon a contract, etc.
and then you run the risk of scaring people off...