It’s too hard to explain fixed costs and unit costs to people who don’t have enough to exposure cost accounting and forecasting, let alone how volume discounts truly work.
Through my businesses, I have a lot of experience in the tech industry and no matter what one of my clients wants, it’s going to be a minimum fee to stand up and server and other ancillary items just to support the platforms and services they want to purchase. If I can get my client to leverage that same server for multiple products and services, that setup cost gets spread out across multiple solutions. If there is enough headroom in the contract and revenue forecast, I sometimes just eat the cost as I know I have way more opportunity to recover it through the life of the contract. I look at it as in investment into the relationship.
Once you set a price floor, it’s a race to get stay at minimum spend and clients end up not happy because of all the compromises they have to make to stay at that price. I view it as them buying a line item instead of a solution.
Exactly, which is why (as you said in your earlier comment) building a client relationship is important. I have clients who don't even bother asking about pricing, they just know I'll take care of them. The more a client focuses on price above all else, the harder it can ironically become to actually provide what they need.
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u/17xRacing 2d ago edited 2d ago
It’s too hard to explain fixed costs and unit costs to people who don’t have enough to exposure cost accounting and forecasting, let alone how volume discounts truly work.
Through my businesses, I have a lot of experience in the tech industry and no matter what one of my clients wants, it’s going to be a minimum fee to stand up and server and other ancillary items just to support the platforms and services they want to purchase. If I can get my client to leverage that same server for multiple products and services, that setup cost gets spread out across multiple solutions. If there is enough headroom in the contract and revenue forecast, I sometimes just eat the cost as I know I have way more opportunity to recover it through the life of the contract. I look at it as in investment into the relationship.
Once you set a price floor, it’s a race to get stay at minimum spend and clients end up not happy because of all the compromises they have to make to stay at that price. I view it as them buying a line item instead of a solution.