Building A Pricing Backbone, Part 2
Editor’s Note: In August 2007, Ira kicked off his series of educational columns. This month, he continues his instruction on Building Pricing Backbone, which incorporates several staples from his earlier columns.
Last month we discussed the importance of establishing Backbone systems—these are standardized systems you can refer to when Ballparking.
Ballparking Is Not an Estimating Exercise; It’s a Selling Exercise
Let’s review the Ballparking process. First, you Ballpark after you’ve developed a Performance List with your prospect. The Ballpark number is thrown out to establish a value for the project. As discussed earlier, the Performance List is a well-established story you and the prospect have developed to describe the functionality, performance and aesthetic criteria of the project.
You’re able to Ballpark quickly because you’ve done your homework. You have a list of Backbone systems, and a good idea of popular add-ons. To review: a Backbone system is an offering you have established that is 90 percent standard (the gear, the performance levels, the estimated labor) and 10 percent customized by your client (placement, aesthetic concerns, interface issues). You build a Ballpark price by starting with a Backbone system and modifying it to match the Performance List.
There’s a good chance your Ballpark price is higher than a quote your prospect may have received from a competitor. So what!
Most likely, your competitor did not develop an exhaustive Performance List and has left out valuable parts of the system. Your prospect should know this because the system they developed with you, with their own Performance List, most likely, is functionally different than the one the competitor quoted.
Let’s say you’re talking with your client in her den, and you throw out a $30k Ballpark for the bedroom surround system you’ve been discussing. Her face pales. She looks you in the eye and says, “That sounds high. I got a quote from another company, and it was a lot lower.” Don’t panic. That’s your cue to answer like this: