Getting Paid What Youre Worth: How to Set Fees, Write Effective Proposals, and Negotiate Deals Patrick Kirchner – President AGIS

Getting Paid What Youre Worth: How to Set Fees, Write Effective Proposals, and Negotiate Deals Agenda Business and Marketing Strategy Understanding customers and markets Branding strategies Go to Market strategies Product / Service Differentiation Expertise Value added solutions Partnering and alliances

Getting Paid What Youre Worth: How to Set Fees, Write Effective Proposals, and Negotiate Deals Proposals and Negotiations Proposal/Sales order styles and content

Understanding Customers and Markets Customer interviews and focus groups WHO ARE YOU SELLING TO? WHO IS YOUR TARGET CUSTOMER? The most successful products have been developed from what the customer NEEDS, not what the company thinks the customer wants. iPhone/iPod – Listen to the customers Vendor and partner interviews – Establish a need with people who know your business

Getting Paid What Youre Worth: How to Set Fees, Write Effective Proposals, and Negotiate Deals Competitive Analysis PRE-GO-TO-Market RESEARCH RESEARCH, RESEARCH, RESEARCH Cost analysis – Proper Pricing can make or break your business Market analysis/price tolerance POST GO-TO-MARKET RESEARCH ADJUSTMENTS, PROFIT, VOLUME Be Realistic, not optimistic – Entrepreneurs are dreamers Key when raising money – Investors can see right through the optimism

Branding strategies Branding Definition - The American Marketing Association (AMA) defines a brand as a "name, term, sign, symbol or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of other sellers Reputation behind your companys name and logo Coca-Cola - #1 Recognized Brand in the world – Coca-Cola adjusts the taste of Coke throughout the world, listening to the customer, consistent marketing campaign – cutting edge

Company image and market positioning Have a plan prior to beginning any branding strategies Who are you? How do you want to be branded? Financial arena – Stable, consistent, trustworthy Tech Company – cutting edge, make technology easy Retail – trendy/low cost/exclusive Service Business – Customer Service/Value Added Proposition

Value proposition Elevator Speech - WHY ARE YOU DIFFERENT? What makes sense as a value-add as opposed to a fee

Business and Marketing Strategy Go to Market Strategies Pricing and market positioning Low cost provider Better mousetrap, lower cost You Have to make a living Why are you the low cost provider Examples – WalMart, Hyundai, High quality provider Are you actually providing high quality to justify the pricing strategy Lexus, Rolex

Pricing alternatives Cost plus – Direct cost + indirect costs + fixed costs + profit margin = Cost plus pricing (usually a per unit cost) Discount off list/published rates Volume pricing/price breaks – less per unit profit margin, more volume. Value based pricing – Sets prices on the perceived value to the customer, rather than on the actual cost of the product. Ex. Lawyers

Product / Service Differentiation Examples: Lexus, BMW, Ritz Carlton, AMEX - Platinum How will you differentiate your business, product, service Are your clients going to perceive your value

Expertise Technical/technology expertise Industry expertise Business process/functional expertise Methodology/approach Intellectual property (IP) Most successful entrepreneurs look within their industry and develop innovative ideas or products to make their industry better Sam Walton/Wal-Mart, Henry Ford – Ford Motor Company, Michael Dell – Dell Computers

Value Added Solutions Differentiate by combining products and services – AGIS – my company – offer COBRA Services for Free, Voluntary Products, Compliance issues, Service Model Productize service offerings – Google, Apple Create recurring revenue offerings – Microsoft Software – consistently delivering upgrades to current clients Avoid commodity type offerings – Crocs Provide guarantees – Tommy Boy - warranties Create win/win relationships with customers

Partnering Leverage your combined strengths with strategic and complementary partners to be bigger than you are all by yourself, get larger, more lucrative client engagements. AGIS - Property & Casualty, 401ks, CPA firms Land major customers in new markets/industries Expand your product offerings

Proposal /Sales Order Styles and Content Content Understanding of business problem/need KEY POINT – Never underestimate the power of listening to your client Solution/approach to solving problem/need Clear scope and assumptions Differentiators, client references, skills/experience - Short and to the point

Input from Multiple Parties Sales Delivery/operations/subject matter experts Industry experts Customer feedback – real people, real results

Formal vs. Informal Styles Know your customer and those who will be reviewing/approving Dont wear a tank top into Raymond James Dont wear an Armani Jump Suit into a manufacturing plant Your presentation should fit the client, like your attire Consistent Templates and Formats Legal Terms and Conditions

Negotiating the Deal Be confident about pricing and value proposition The only way you have confidence is if all the work has been done Dont negotiate with yourself Set your parameters prior to the meeting, how far are you willing to bend Dont give up anything in a negotiation without getting something in exchange (create a win/win negotiation) Resist the need to respond immediately to every negotiation point If you are not an experienced negotiator, you do not need to give every answer THAT SECOND. TAKE TIME, FEEL GOOD ABOUT what you have negotiated

Negotiating the Deal Be willing to walk away Make sure this is a profitable client Be careful about setting a precedent for future work Manage expectations If you do not know the answer to a question – admit it Dont BS a BSer

Getting Paid What Youre Worth: How to Set Fees, Write Effective Proposals, and Negotiate Deals Questions? Patrick Kirchner AGIS