Are we getting hung up on the "charging monthly" thing??

30 replies
Hi Guys

Just a thought....obviously being able to charge a monthly figure for our services is great because you always know you have that money coming in each month, it's a bit of security. However, I think it is fair(?) to say that is makes the sale more difficult because people are always more cautious about signing up for any type of monthly retainer.

Now, if we look at what large consultant companies do, like Deloitte for example, they will generally come in, look at what the business is currently doing, give advice on what they need to change to make their operations more efficient, pick up a cheque/check for a whopping amount of money...and then p1ss off.

An idea that came to me from John (the sales guy) in this offline forum, is where you demonstrate how much money your ideas can make them over a period of a year, say $50,00 for example, and then charge $6000 which of course sounds like a good deal for them, and a nice little earner for you. I mean...how many a month would you really need to do to make an awesome income, and you are not tied to the fact you have to monitor them month in, month out.

I appreciate this isn't an easy thing to do, and would be hard to get started, although you could do the first few for free, and then work off referrals.

Well, most of you know more about the reality of this business than me, so as ever, I would lovvvvvvvvvvvve to hear your thoughts. Am I talking bollocks or is this viable?

Beers to you
Phil
#charging monthly #hung #thing
  • Profile picture of the author jimbo13
    It doesn't matter which model you go for but it should make sense depending on the service you are offering.

    If you design websites then just charge.

    If you provide ongoing consulting then charge ongoing fee.

    One isn't better than the other despite what you read here.

    BT charge ongoing as they provide an ongoing phone line. You pay you keep the line and they look after it. Stop paying and they disconnect you.

    ie A straightforward transaction.

    BMW charge you one off for the car. Maybe you will buy another one maybe not, but that too is a straightforward transaction.

    So what do you wish to offer?

    Dan
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    • Profile picture of the author phil.wheatley
      Originally Posted by jimbo13 View Post

      It doesn't matter which model you go for but it should make sense depending on the service you are offering.

      If you design websites then just charge.

      If you provide ongoing consulting then charge ongoing fee.

      One isn't better than the other despite what you read here.
      Hey Dan

      Cheers for the feedback, I totally agree with you. I'm just wondering whether I'm making it harder on myself by trying to get caught up with getting clients into a monthly program.

      One slight concern is many clients might learn what they need to do from a marketing point of view but then not take any action on it, due to lack of time or just don't have the drive.

      However, as an example, where I work we are having a problem getting screen capture software to work properly. We're not sure if it is due to the browser we are using, or the version of the software or the general IT infrastructure...so the company is paying for a consultant to come in and basically tell us what path we should take to fix the problem. Note, he's not going to hang around and help us implement it, just tell us what we need to do....for a pretty hefty price!

      Cheers
      Phil
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      • Profile picture of the author jimbo13
        Phil

        That is because he is not doing anything on going, he is doing a Specific Project that has a price.

        No different from fixing a leaky tap although a plumber would fix it.

        If your company wanted him to fix it that would still be Project Specific. He would charge more and either do it himself or get his team to do it.

        Your company believes it has the skill set to implement the solution once diagnosed.

        The Consultant probably agrees.

        Personally, and this is just me, I would not pay for never ending Marketing Consultancy.

        If I want a Marketing Consultant to help formulate a Plan I would pay for that specific plan.

        Whether I action it or not is not relevant to the Consultant.

        If I wanted it implemented by him/her I would pay for that to be implemented.

        Now either this is a one off fee which I pay or it is for a specific time period that I would pay.

        Dan
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        • Profile picture of the author phil.wheatley
          Originally Posted by jimbo13 View Post


          Personally, and this is just me, I would not pay for never ending Marketing Consultancy.

          If I want a Marketing Consultant to help formulate a Plan I would pay for that specific plan.
          Ahhhhh, now this is the bit that is interesting to me. See, I'm starting to think I would prefer to give a marketing plan as a one off thing (possibly with a back end sale or two), rather than worrying about implementing it and keeping on top of making the client enough extra profit to cover my monthly fee.

          Dan, out of interest, what would you be prepared to pay for something like that (I'm not pitching to you by the way lol).

          I guess if I targeted bigger companies, they would have people in the team that would be implementing the plan anyway.

          Cheers
          Phil
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          • Profile picture of the author jimbo13
            I'm off out.

            You would need to know what I did first.

            So what if I said it was £1m per week gross?

            Or if I was a plumber making £600 per week.

            I'll either get back to this thread or pm you as you seem confused about what to offer to whom in my opinion. (If I'm allowed one )

            Dan
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  • Profile picture of the author trader909
    Banned
    1 off sales is a hard way to do business.

    let's say you land 4 clients a year

    module 1; $20k fee one off = $80,000

    module 2 $5k month = $240,000 per year

    yer 2

    module 1 starts from 0

    module 2 starts t $240k

    module 2 could acrually top "hunting new clients" aftr 2-3 years...

    module 1 never can.

    just an example.

    Quality trump quantity these days..people are sick to death of scammers and b8ers....

    real people off the net anyway.
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    • Profile picture of the author jimbo13
      Originally Posted by trader909 View Post

      1 off sales is a hard way to do business.
      Not really.

      Your figures are just an example to suit your argument but they are made up nevertheless.

      Almost everything you own and eat is technically a one off sale.

      The fact that you may go back is a bonus if they can get you to be a repeat customer.

      Life cycle will be different.

      If you want to charge an ongoing fee then you need to provide an ongoing service and hope I don't stop it after a certain time.

      Some people here will which to do that, others will prefer to sell specific projects and get back end sales off of that.

      In both instances, providing what you say you will provide and making me satisfied is what determines whether I stay with you, not your pricing policy.

      But one is not necessarily easier than the other.

      Look at the FTSE 100 companies to see there is no clear cut one or the other.

      Companies like Deloitte do both depending on what service are bought.

      Dan
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    • Profile picture of the author phil.wheatley
      Originally Posted by trader909 View Post

      1 off sales is a hard way to do business.

      let's say you land 4 clients a year

      module 1; $20k fee one off = $80,000

      module 2 $5k month = $240,000 per year

      yer 2

      module 1 starts from 0

      module 2 starts t $240k

      module 2 could acrually top "hunting new clients" aftr 2-3 years...

      module 1 never can.

      just an example.

      Quality trump quantity these days..people are sick to death of scammers and b8ers....

      real people off the net anyway.
      Hey Trader

      Thanks for your input...and don't take Dan the wrong way, I think he's a straight shooter but actually, I prefer that rather than something skirting around the issue.

      If I look at your example breakdown, I totally agree with you that the monthly plan is more attractive and profitable, but the problem I have is getting people onto that program is the difficult part. There are many 'gurus' who sell the idea of doing this as an easy thing to achieve, there has to be a lot of ground work done before it can be done.

      Also, my issue is not so much getting them as a monthly client, but whether I want that on going responsibility.

      Cheers
      Phil
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  • Profile picture of the author trader909
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    Thx for your "opinion" Dan.

    Not really.

    Your figures are just an example to suit your argument but they are made up nevertheless.

    Almost everything you own and eat is technically a one off sale.

    The fact that you may go back is a bonus if they can get you to be a repeat customer.

    Life cycle will be different.

    If you want to charge an ongoing fee then you need to provide an ongoing service and hope I don't stop it after a certain time.

    Some people here will which to do that, others will prefer to sell specific projects and get back end sales off of that.

    In both instances, providing what you say you will provide and making me satisfied is what determines whether I stay with you, not your pricing policy.

    But one is not necessarily easier than the other.

    Look at the FTSE 100 companies to see there is no clear cut one or the other.

    Companies like Deloitte do both depending on what service are bought.

    Dan
    So ..you'e right, end of?

    thx
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    • Profile picture of the author jimbo13
      Right about what?

      There is no right or wrong.

      Tell BT they should charge one off they'll think you are an idiot.

      Tell BMW to charge residual they will think the same.

      Depends on what you decide to sell.

      Dan
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  • Profile picture of the author Claude Whitacre
    Originally Posted by phil.wheatley View Post

    An idea that came to me from John (the sales guy) in this offline forum, is where you demonstrate how much money your ideas can make them over a period of a year, say $50,00 for example, and then charge $6000 which of course sounds like a good deal for them, and a nice little earner for you. I mean...how many a month would you really need to do to make an awesome income, and you are not tied to the fact you have to monitor them month in, month out.
    I've sold several clients that way. I still charge a $200 monthly fee, just because my service has ongoing expenses, but they can cancel that at any time with no penalty.
    I would pitch them at 30% of increased earnings over the next 3 years. They would come up with the figures. Then I'd back off from a huge amount to a much smaller one time fee. Then I'd even finance the fee. It's a great way to sell because;

    At first, the pitch would be for no money until they made more money. Cementing the idea that there was going to be an increase in net profit for them.

    They would see that this could amount to a lot of money. $50,000-$100,000 typically.

    Then I'd explain that I have up front expenses, and if they help me, I'll help them (and make it sound like an isolated case).

    For $6,000 (or whatever it was), they wouldn't have to pay me the 30% for 3 years. Just $200 a month for hosting, monthly addition of content, link building, etc.

    I can't remember anyone saying "No" to that, although I may have had one at some point.

    What I do not want..is that 30%. It's fictitious, and collecting will be a major hassle.
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    • Profile picture of the author phil.wheatley
      Originally Posted by Claude Whitacre View Post

      I've sold several clients that way. I still charge a $200 monthly fee, just because my service has ongoing expenses, but they can cancel that at any time with no penalty.
      I would pitch them at 30% of increased earnings over the next 3 years. They would come up with the figures. Then I'd back off from a huge amount to a much smaller one time fee. Then I'd even finance the fee. It's a great way to sell because;

      At first, the pitch would be for no money until they made more money. Cementing the idea that there was going to be an increase in net profit for them.

      They would see that this could amount to a lot of money. $50,000-$100,000 typically.

      Then I'd explain that I have up front expenses, and if they help me, I'll help them (and make it sound like an isolated case).

      For $6,000 (or whatever it was), they wouldn't have to pay me the 30% for 3 years. Just $200 a month for hosting, monthly addition of content, link building, etc.

      I can't remember anyone saying "No" to that, although I may have had one at some point.

      What I do not want..is that 30%. It's fictitious, and collecting will be a major hassle.
      Hi Claude

      Firstly, I'm halfway through your book "one call closing", oh my goodness it is amazing!!!! So, now when your name pops up on the forum, I sit up and take note!!!!

      Ok, so I can get this right in my brain (I'm from a very rural part of the country lol), you would tell them that you would be charging 30% of the extra money you will make them over 3 years....but then you help them by charging $6K (for example) as a one off fee. Then, on top of that, you charge 200 bucks a month for ongoing expenses that they can then cancel?

      If so, 1) How do you get from the bit about saying you won't charge them until they make money to then getting a check for 6 grand? 2) Do you actually make any money from the $200 a month as I assume you have to pay somebody else for link building services, or content creation etc?

      ....sorry, it's like I'm just asking you to give me your entire business model Actually, you've already been very generous.

      THANKS
      Phil
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      • Profile picture of the author Claude Whitacre
        Originally Posted by phil.wheatley View Post

        Hi Claude

        Firstly, I'm halfway through your book "one call closing", oh my goodness it is amazing!!!! So, now when your name pops up on the forum, I sit up and take note!!!!

        Ok, so I can get this right in my brain (I'm from a very rural part of the country lol), you would tell them that you would be charging 30% of the extra money you will make them over 3 years....but then you help them by charging $6K (for example) as a one off fee. Then, on top of that, you charge 200 bucks a month for ongoing expenses that they can then cancel?
        That's right. And thank you for the compliment.


        Originally Posted by phil.wheatley View Post

        If so, 1) How do you get from the bit about saying you won't charge them until they make money to then getting a check for 6 grand? 2) Do you actually make any money from the $200 a month as I assume you have to pay somebody else for link building services, or content creation etc?
        It's very important that you have them give you all the figures. They estimate how much you'll make them. And then you lower it a little, so the figures will be absolutely credible. You'll still get at least tens of thousands of dollars as estimate additional earnings.

        Then I say "We can do it this way, or I have a program I just started that really cuts down on all the accounting and just makes it easier for both of us. If you'll just pay (whatever) up front, there will be no additional payout. You'll save a whole lot of money, and it makes my book keeping soo much easier."

        If they are sold on the $50,000 (or whatever it is), they will jump at the lower figure. I mention the $200 a month as maintenance. It's for hosting, the domain name, and additional work during the month. Again, they can stop it any time they like. I'll just stop working.

        I've never had anyone not want the $200 a month maintenance program, but I'd sell my service without it. But their rankings would start slipping pretty quick.

        The $200 is nearly all profit. It takes us maybe 20 minutes to check their websites, videos, add views to the videos, add an article to their website, add a few links. I have an employee do that every month.

        But there really is a benefit to that monthly work. It keeps their website and videos ranked at the top of Google.
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        • Profile picture of the author phil.wheatley
          Originally Posted by Claude Whitacre View Post


          The $200 is nearly all profit. It takes us maybe 20 minutes to check their websites, videos, add views to the videos, add an article to their website, add a few links. I have an employee do that every month.

          But there really is a benefit to that monthly work. It keeps their website and videos ranked at the top of Google.
          Claude, thanks again for your advice on this. By the way, something very key you said was about the fact the benefit is it keeps their site ranked well in Google...in other words, you are thinking more about the benefit for them rather than you......which I'm sure in turn benefits you :-) I bet you have a lot of happy clients :-)

          Cheers
          Phil
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  • Profile picture of the author trader909
    Banned
    agreed...

    Hey Trader

    Thanks for your input...and don't take Dan the wrong way, I think he's a straight shooter but actually, I prefer that rather than something skirting around the issue.
    Everything is our belief, no right or wrong.

    No offence taken......really.
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  • Profile picture of the author trader909
    Banned
    Not once did i say it as easy.......

    Setting up some service for $5k month....that's the real meat of it all

    buy $7 w.s.o. and obviously it's done or you..:-0
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  • Profile picture of the author trader909
    Banned
    Also, my issue is not so much getting them as a monthly client, but whether I want that on going responsibility.

    Cheers
    Phil
    You better decide then.
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  • Profile picture of the author amcg
    I think offering as many payment plans or methods as possible can only be a good thing. I guess it's one more reason to buy from your vs a competitor at the end of the day despite you incurring extra cost to facilitate.
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  • Profile picture of the author mjbmedia
    paying £6k for ideas that might make £50 k profits doesn't sound like a great deal to me, sorry but I or my business would then have to learn how to implement all those ideas, implement them, manage them, develop them, respond to the results Im getting presuming I understand them , so that would likely need minimum one staff member @ £15k basic and that's cheap , plus all the costs of implementing everything, ends up your ideas will actually cost me over £25 k to implement then more to develop and track etc , suddenly your deal isn't so sweet , Id be better off paying someone a set up and monthly to implement and develop it .

    Winners spend money to save time, you can always create more income/profits, you can never create more time (not at time of typing anyway)
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    Mike

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  • Profile picture of the author iAmNameLess
    Too many variables to give an answer. Price points? Method of how you generated that lead? What industry?

    With website packages, we've always had the website cost + mandatory hosting/maintenance which they pay yearly. This is all up front. Lowest sale would be $1199. You call a business or a business calls you, some won't flinch at the price, however, single crew guys in different industries can't afford to pay that.

    When you lower the price, you can gain volume. Volume helps when you have a monthly fee.

    You can lower prices to make more money. Take the $1199 example.... now lets change that to $689 + $50/mo. You end up making almost $100 more per customer over the course of the year, but you can also expect about a 30-40% increase in conversions (theoretically).
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  • Profile picture of the author Michael Nguyen
    For me its all about cash flow. My business would fail if it wasn't for the residual income. The web builds and one off projects are good for topping up the income but they can come and go.
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  • Profile picture of the author BillyParadise
    I've been doing various business models for the last twenty years, and all have had a recurring payment element to them. Why? Contracts (ie revenue streams) are sellable. If all hell breaks loose, at least you have a remainder that you can either live off or sell off.

    I'm working on a side project now that will be transactional not recurring. It's scaring the crap out of me.
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  • Profile picture of the author AndrewCavanagh
    Originally Posted by phil.wheatley View Post


    Just a thought....obviously being able to charge a monthly figure for our services is great because you always know you have that money coming in each month, it's a bit of security.
    It goes way beyond just security. A business that has regular
    paying clients has a higher value.

    You're also taking a lot of the sales pressure off yourself.

    One huge problem with going from single contract to single contract
    is you tend to have feast/famine cycles.

    When you're working with a high paying client it takes your focus off
    getting new clients.

    Then when the work with that client is over you no longer have
    income coming in and it can take some time to get another paying
    client.

    Charging monthly fees gives you income stability.



    Originally Posted by phil.wheatley View Post

    However, I think it is fair(?) to say that is makes the sale more difficult because people are always more cautious about signing up for any type of monthly retainer.

    Not really. In many cases it can make the sale easier because
    your client has to pay less upfront.

    Put another way say you charge a client $4,000 for a single
    project.

    That's a fair amount of money to get upfront.

    Compare that to charging $1,000 a month (which is $12,000
    a year).

    It's a lot easier to get that initial $1,000 and if you deliver
    the business owner knows he's going to make more in profits
    than what he's paying you each month so it's a good deal
    for him.


    Originally Posted by phil.wheatley View Post

    Now, if we look at what large consultant companies do, like Deloitte for example, they will generally come in, look at what the business is currently doing, give advice on what they need to change to make their operations more efficient, pick up a cheque/check for a whopping amount of money...and then p1ss off.
    Actually most business consultants charge ongoing monthly or annual retainers
    as well as project fees.

    They also have a whole pile of different services they offer a client.




    Originally Posted by phil.wheatley View Post

    An idea that came to me from John (the sales guy) in this offline forum, is where you demonstrate how much money your ideas can make them over a period of a year, say $50,000 for example, and then charge $6000 which of course sounds like a good deal for them, and a nice little earner for you. I mean...how many a month would you really need to do to make an awesome income, and you are not tied to the fact you have to monitor them month in, month out.

    There's some truth to this.

    For a long time I worked with clients charging quite high
    project fees.

    Being tied to a client really sucks if they're a crappy client.

    But then you can always dump the client or pass them onto
    someone else.

    What really sucks is working with a great client and then
    having that work (and the money) stop.


    The concept of establishing the potential dollar value of your
    service to a prospect is vitally important.

    If you don't learn to do that effectively you're never going
    to get high paying clients. for single projects or for monthly
    fees.


    Originally Posted by phil.wheatley View Post

    I appreciate this isn't an easy thing to do, and would be hard to get started, although you could do the first few for free, and then work off referrals.
    No, no no no no no no no no no no.

    Don't work free.

    It devalues your work and the clients you work with
    won't appreciate your time or your expertise.

    Clients you work for free or at discount prices are the
    clients you'll have the most trouble with.

    Charge them a substantial amount of money upfront
    and go through the process of establishing the potential
    dollar value of your service to them.

    Then the clients you get will respect your time and the
    value you're bringing them.


    One final word.

    It's not an either/or proposition.

    The best clients are those who are willing to pay a substantial
    upfront fee AND substantial ongoing monthly fees.

    Kindest regards,
    Andrew Cavanagh
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    • Profile picture of the author phil.wheatley
      Originally Posted by AndrewCavanagh View Post

      One final word.

      It's not an either/or proposition.

      The best clients are those who are willing to pay a substantial
      upfront fee AND substantial ongoing monthly fees.

      Kindest regards,
      Andrew Cavanagh
      Hey Andrew

      As a student of yours (I was in your membership for quite some time, a wealth of info there!), I agree with what you say. I think you hit the nail on the head when you say it is best to have a combination of both models, rather than one or the other.

      Regarding not working for free, I've had many people tell me that in the past, and I totally understand the reasons behind it. With that said, what has worked out well for me is working on a short term basis for free in return for a great testimonial, the amount of information I found out about the niche/market was worth doing it for that alone.

      Cheers
      Phil
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  • Profile picture of the author Marta K
    It's easier to go monthly, because you don't need to repeat the research, presentation, getting to know each other stage, which is a huge time suck. You dont need to convince them they made a right decision hiring you. And a lot of people stays simply because it is a hassle to change contractors. So yes monthly is much, much easier. Saying that, repeat clients fall in the same category even though tthey don't order as frequently.
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  • Profile picture of the author DanielCart
    I agree that one of sales are easier to do - but long term sales still are more valuable to me.

    The idea of presenting to the customer about how much they will make, or will save, is still not good enough from me and my friend's private study - we found that people in general want results now, and if they know you are benefiting before they are, they are hesitant - that said, this may not apply to businesses because they think as a whole business, and not indvidual level... so arguble both ways.

    Good topic - made me think more about this.
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    • Profile picture of the author DaniMc
      This is such a personal issue - it really depends on you.

      There is a lot of nuance in this post, but here are a few things that I have picked up that work for me:

      1) I don't do open ended monthly agreements. I always do a fixed term. Like $2500/mo for 6 months. That gives you a contractual beginning and an end. If the contract is open ended, eventually the client wants to change the agreement, let you go, try the next shiny provider who comes along, or whatever else. I hate those awkward conversations.

      I also HATE being let go by the client. I prefer to fire them or make them ask to keep working with me. A much better position.

      2) I don't recommend charging monthly on an even basis. Get more money at the beginning. For example, if it is a 6 month contract, split the payments up into 4 monthly payments, and they get the last two "free." They feel good. You get your money faster, and if they flake out on you towards the end, it's no big deal. You got most or all of the money you needed.

      3) I don't like to pitch things as 6 months $2,500 per month. I pitch it as a $15,000 investment. I can then compare that cost to other things they buy. They probably spend $15k per month on rent and utilities. When they see it this way, it seems a minuscule investment to get business changing work for the next 6 months.

      I picked that up from this video last year:
      Actual Live Sales Call with Grant Cardone - YouTube

      In summary:

      If I have a product that I will do for 6 months and want $10,000 - I pitch them at 4 payments of $2,500 per month and two months free. The perceived value of the project is now $15,000 and you are making a deal. You get your money faster, and they feel good.

      One thing I learned from Dan Kennedy: They ALL go bad.

      I doubt you will EVER find a customer who will pay you forever. There is ALWAYS an end. It doesn't matter what product or service you sell, people eventually want to do something different. Humans need variety.

      Knowing this is true, I always have an end date to a contract. That puts me in the position of power and prevents me from ever being "fired." I despise being fired. Like any relationship, it's far better to be the one who left, than to be be the one who GOT left.

      I'm not a very good salesman, so you may put more weight on some of the other replies in this thread.

      .
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      • Profile picture of the author phil.wheatley
        Originally Posted by Dan McCoy View Post


        If I have a product that I will do for 6 months and want $10,000 - I pitch them at 4 payments of $2,500 per month and two months free. The perceived value of the project is now $15,000 and you are making a deal. You get your money faster, and they feel good.

        .
        This is really clever, such a good way to position the pricing. Talking of Grant Cardone, I only discovered him last month, it's hard NOT to find him as that guy puts out TONS of videos and content. He's a bit in your face, but I love his enthusiasm!

        Originally Posted by Dan McCoy View Post


        I'm not a very good salesman, so you may put more weight on some of the other replies in this thread.

        .
        Dan, I will be putting a LOT of weight on what you have said. Having a short term contract as solved my dilemma of whether to charge a one off fee or charge continuous payments, what you have outlined is basically the best of both worlds.

        Thanks very much and again, thanks to all for all your comments!!

        Cheers
        Phil
        Signature



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  • Profile picture of the author Mady1234
    I usually go for a one-time fee for first time clients. After that, most of my clients come to me for another service I provide at a monthly fee. I think it is much easier to charge people monthly after they have already become a client. Until now, I never had anyone saying no to paying monthly.
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  • Profile picture of the author Marta K
    I love the idea of 2 LAST months free!
    I'm definitely stealing it:-)
    It'ss so mmuch better than first month free - it gets commitment out of them:-)
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