Does this sound strangely familiar?

by Volker Weber

Comments

I want to show that to most of my customers.

Paul Mooney, 2009-05-30

Go ahead. :-)

Volker Weber, 2009-05-30

I found it funny, but it rubbed me a bit the wrong way. And it's comparing apples and pears.

I don't see the restaurant owner or the dvd vendor asking a yearly maintenance fee of 30% for what they just ate/bought. Nor resell the same thing to another customer claiming they custom developed it just for them.

Maybe vendors of computer services could charge more reasonable prices ?

Alex Boschmans, 2009-05-30

@Alex. From my perspective, this nailed it. You get what you pay for.

I think it is quite similar. A (good) services company typically charges a higher rate. I'm not on about the IBM's or the monster services companies - I'm on about small/medium skilled service companies that are very depedant on their reputation. I have seen people pay over 2K Euro per day for a (insert large company name here) consultant that has only a few months experience, because of the (insert large company name here) company they work for.

Small/medium skilled companies have high salary costs to cover to keep their small amount of skilled staff but offer quality of service and usually a lot of experience, direct phone numbers and people that "know" the customer's site.

Then some customers constantly try to nail them to get as much as they can, argue at every front and compare their services to cheaper solution/services, instead of trying to work with them at a business level. Or try to hold contract carrots. I have know a site that constantly tells the skilled consultants that they "will squeeze every penny out of them". This achieves nothing but pissing off the consultant.

As for reasonable prices, most consultants/contractors I know were earning a higher daily rate 10 years ago. The events of the past eight months have driven those rates down further.

Again, I am on about skilled people here, not bluffers.

Paul Mooney, 2009-05-30

OMG - it does.
"Sir we're not the taco stand." I really know this sentence.

Martin Hiegl, 2009-05-31

Welcome to the oriental way of doing things (tongue-in-cheek-please!). Enter any bazaar and you will have these discussions. At the end the purchasing department needs to justify their existence. And who would expect them to distinguish a commodity line item from a hight qualified service. To an accountant all line items are the same and the price is always too high.

Stephan H. Wissel, 2009-05-31

@Paul, I see you feel strongly about this. If I comment on this, it's from my experience working for a large company and sometimes dealing with consultants. My view may be skewed because of that, and certainly only represents my limited personal experience on this. I'm no big decision maker, I've just participated in a few rounds with consultants for different projects.

Actually, I would argue 'You usually DON'T get what you pay for' - with large companies. You pay more to get less, and the only way why this is accepted is that a consultant company provides an outside view that usually states some basic facts that need to be done or be accepted that everybody on the workfloor knows but the management is too politically strung up about to admit.

One way or another, when we write out an RFP it's only the integrators/large consultant companies that respond. Most small companies either aren't willing to fight the battle alone or are only hired by an integrator 'behind the scenes' and as such walk around as being 'this' or 'that' large consultant. Usually the requirements are such that a small company would have to be betting the bank on getting the job done for us, as we will suck up all their resources. And that's a risk for us as well, as we will be depending on a small company that might or might not deliver what we asked, and consequently has a bigger chance to fail than a big company.

On the other hand, we might actually get what we asked for :-)

Quite a few years ago I participated in a consultant process where they would help us point our noses in the right strategic direction. There were a lot of high-priced consultants walking everywhere for 2 months. After that they delivered a document with the telling name 'A Guide to the Visioning Light'. It was drivel.

Then recently I've worked on a project with a smallish company, who have 'bet the bank' and I must state that I'm very happy with their willingness to adapt, change and help us out. They were considerably cheaper than the other solution, which conversely was a much larger organization. But one key developer walking out in the small company means potentially a big impact (and it has happened on projects) ! The advantage for them is that via us they are entering a whole new market, so it brings them benefits as well.

I'm not really sure only the client is to blame, rather all the bluffer consultants out there giving clients the conviction that *all* consultants are out to get them, charging exorbitant prices for average work.

And the good ones suffer for the sins of the bad ones...


Alex Boschmans, 2009-05-31

@Alex: The RFP process to to expensive for a small consultancy. (One reason for the higher fees of the "big boys" is their need to recover all these expenses for RFP and tender participations). You easily spend 20% of a contract value on a RFP to get 1 out of 5 (presuming you typically encounter 4 competitors). And your consultants are either good in delivery or in (RFP) slideware. To successfully work with smaller consultants get them in on a project that is below your RFP threshold and extend their contract. Once they deliver management will find a way to give them access to bigger jobs without the prohibitive cost.

Stephan H. Wissel, 2009-06-01

I'm lucky in that my overhead is low, so I do through my clients a few bones. But on the other hand, my clients pay me what I bill them for and don't complain. Because my overhead is low I can afford to be picky about who I choose to keep as a client, an I don't have an issue telling someone when they're being unreasonable and that perhaps they should find someone else. There's no use in working your way into the poor house for someone that doesn't truely appreciate your value to them.

Mark Holtrop, 2009-06-01

Classic Wimpy - "I'll gladly pay you Tuesday for a hamburger today"

Karen Hobert, 2009-06-01

Haha, sehr deja-vue!

Kristof Doffing, 2009-06-02

I think what this shows is the simple fact that there are a good number of customers out there who want the top notch product but aren't ever willing to compensate for it.

Be it a product or a service. And complaining about it after you've consumed the product/service....classic.

Negotiating on a deal is entirely valid, that's not the issue. However, we all know there are "pump & dump" vendors out there willing to go in at a very low price for the product when they provide zero value to the customer, and that's fine with the customer because they just want a cost of a fraction of what it should be.

Fair is fair, but the "scamming" goes on both sides of the coin. There are vendors that do it, but there are customers who do the same thing.

At the end of the day you get nothing for nothing...or should at least. Fair price for services rendered, fair use of the resource paid for.

It's never ending. When you have a relationship that's solid on both sides and aren't dealing with this stuff, consider yourself lucky.

Kevin Mort, 2009-06-02

Almost daily business - thanks :)!

Ingo Seifert, 2009-06-02

That was fun.

Another good one I had to fight for was "Listen, you have listed 'testing' as part of your offer, and that is a big chunk of money, so we will do the testing instead." Sound familiar?

To be fair, customers (especially end-users) have very little possibility of judging the quality of software work (mostly they go by how pretty are the pixels, as far as I can see), and I find that the "quality" premium is only ever paid by "burnt" customers, i.e. customers who went for the cheap solution, and then discovered in production that what they had bought was not secure or did not scale correctly.

Andrew Magerman, 2009-06-03

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I explain difficult concepts in simple ways. For free, and for money. Clue procurement and bullshit detection.

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