After hours spent networking, in meetings, listening, learning, and doing a little pro-bono consulting (“Have you thought about doing this…?”), sending an estimate is inarguably the most stressful part of your young relationship with a prospective client.
Should the prospect accept your estimate, your team is kept busy for a little while longer and you’ll walk away with five or six figures of new revenue. But if they decline, all that time was spent in vain.
When I ran my consulting firm, nothing bothered me more than having gotten so far only to be rejected. So I started thinking about why we were rejected, and what I could do to increase our conversion rates.
One thing quickly came to mind: our estimates were binary. It was either “accept what we’re proposing” or “reject it wholesale.” I asked myself: What if I could allow prospects to write their own estimates, and free us from throwing budgets over the wall and crossing our fingers?
Collaborative Estimates: Have Your Prospects Write Their Own Estimates
I’d like to introduce you to a process I like to call “collaborative estimating”. The idea is pretty straightforward:
- Capture each and every requirement your client has asked for, both needs and wants.
- Estimate the complexity of each of these requirements, and apply your rate to that estimate.
- Invite your client to work with you to reduce or reprioritize the scope of work until they’re comfortable with the estimated budget.
The big takeaway with this approach is that you’re flipping the tables and putting your prospect in control of coming up with their own budget. They’re competing against *themselves*, and internally weighing “Is so-and-so requirement worth $X to me?” A few customers of mine have reported that they’re closing 2-3x more projects after adopting collaborative estimating.
Let’s say you get ten qualified leads a month and you close a quarter of them. A 3x increase is the equivalent of you tripling the number of qualified leads you get, which is no simple task. Fortunately, how you estimate and win projects is something entirely in your control and something you can start applying to your business immediately.
When you’re ready to take that next step with a prospect, you’ll want to use your collaborative estimating process as a competitive advantage. “We don’t write traditional estimates. Instead, you’ll be in control of the project scope and the ultimate budget.”
After you and your team estimate the complexity of the project requirements, you’ll bring the prospect in to work with you on the scope of the project. Your goal should be to get your prospect to consider the underlying business value of each and every requirement, and assist them in helping them figure out if it makes sense to include it in the initial project scope. (This can be done using tried-and-true 3×5 notecards around a conference table, collaborative spreadsheets, or using a collaboration tool like Planscope.)
Once the prospect is satisfied with the scope and estimated budget, the likelihood that they’ll both understand the cost and be OK with it skyrockets. From here, it’s as simple as furnishing a contract, Statement of Work, and asking for a deposit payment.