How to set flat fees for a marketing plan

I recently started doing marketing plans on a full time basis. I am new at
this, and I wanted to pose a question to the NG concerning the length of a
project.

My dilemma is that at the onset of a project, I do not know how long it will
take to research, say, what is statistically significant in terms of market
share of a given product. Or who is the competition. Hence, it becomes
difficult to provide an accurate measurement in my quote, especially if I
have very little existing information from the client. At issue are cases
of market entry of a product that is "unique" whose biggest competition is a
lesser-valued substitute.

What do you suggest? Perhaps quote the project in phases?

Thanks.

Extrus wrote:
> Hence, it becomes difficult to provide an accurate
> measurement in my quote, especially if I have very
> little existing information from the client.

For open-ended work, hourly billing is the better option, but if you
need to assume more risk to close the deal, then phases are the best
alternative.

* Offer an overall plan, showing non-binding estimates and listing the
deliverables for each phase.
* Contract for only the first phase; make it fixed-fee.
* Structure the contract so it's easy to add phases with little delay.
* Contract the next phase as its scope becomes clear.

The plan outlines the approach and the deliverables. The proposals for
each phase provide binding detail on what'll be delivered.

Depending on the approach, you'll want to propose the next phase of work
at/before completion of the deliverables for a phase, to ensure
continuity of work.

Phased proposals are a middle-ground, when the customer won't do hourly
billing and you can't commit to a complete bid. They run some risks,
since each new phase has to be approved.

HTH,
Richard

Extrus wrote:
> Hence, it becomes difficult to provide an accurate
> measurement in my quote, especially if I have very
> little existing information from the client.

For open-ended work, hourly billing is the better option, but if you
need to assume more risk to close the deal, then phases are the best
alternative.

* Offer an overall plan, showing non-binding estimates and listing the
deliverables for each phase.
* Contract for only the first phase; make it fixed-fee.
* Structure the contract so it's easy to add phases with little delay.
* Contract the next phase as its scope becomes clear.

The plan outlines the approach and the deliverables. The proposals for
each phase provide binding detail on what'll be delivered.

Depending on the approach, you'll want to propose the next phase of work
at/before completion of the deliverables for a phase, to ensure
continuity of work.

Phased proposals are a middle-ground, when the customer won't do hourly
billing and you can't commit to a complete bid. They run some risks,
since each new phase has to be approved.

HTH,
Richard

"Richard" <rh86@azglobal.com> wrote in message
news:bhp3t802vkc@enews1.newsguy.com...
>

Richard - thanks for your response.

> * Structure the contract so it's easy to add phases with little delay.

How would I do that on the contract, since it calls for only one particular
phase? How do I establish a "connection" between phases when I am
quoting/contracting one phase?

> The plan outlines the approach and the deliverables. The proposals for
> each phase provide binding detail on what'll be delivered.

The proposal being the contract?

> ... to ensure
> continuity of work.

I really like the idea of continuity here. At the same time, the client
does not feel as pressured.

>
> Phased proposals are a middle-ground, when the customer won't do hourly
> billing and you can't commit to a complete bid. They run some risks,
> since each new phase has to be approved.

Perhpas other phases do not necessarily need to be fixed-fee, once the bulk
of the research is accomplished.

Do you have any samples of contracts structured in the fashion that you
describe?

Are these contracts nominally called "business consultant agreements"?

Thanks again.

Extrus

Extrus wrote:
> > * Structure the contract so it's easy to add
> > phases with little delay.
>
> How would I do that on the contract, since it calls
> for only one particular phase? How do I establish
> a "connection" between phases when I am
> quoting/contracting one phase?

Have a separate Master Services Agreement (MSA) that covers general
terms & conditions for business between the firms (payment terms,
liabilities, intellectual property rights, etc.). Let the lawyers hash
it out once, then it perpetuates.

All projects are then structured as addenda to the MSA, or include its
terms by reference. The MSA outlines who's authorized to execute
project schedules, which makes the T&C's very simple for the individual
projects - they become more focused on deliverables, milestones, payment
schedules, and assumptions. Ideally, you run your standard MSA through
their lawyers while you and your buyer are negotiating the project
scope.


> The proposal being the contract?

The proposal becomes a contract when both parties sign it, but the
legalese is mostly in the MSA.


> > ... to ensure continuity of work.
>
> I really like the idea of continuity here. At the
> same time, the client does not feel as pressured.

Continuity of work is key to profitability in services. The trick is to
propose follow-on work early enough to gain approvals in time, but the
customer must be comfortable with proceeding (trust your work) and
compelled to act (looming deadline, etc.). (Incidentally, you should do
the same between projects by identifying follow-on opportunities while
working the current project.)


> > Phased proposals are a middle-ground, when the
> > customer won't do hourly billing and you can't
> > commit to a complete bid. They run some risks,
> > since each new phase has to be approved.
>
> Perhpas other phases do not necessarily need to be
> fixed-fee, once the bulk of the research is
> accomplished.

Again, it's a balancing act. Fixed fee can be your best friend if
you're very good at defining / controlling the scope, since the customer
pays for results instead of time - if you can deliver faster, you make
more profit. But it requires more effort to define scope up-front, and
diplomatically control the scope creep. It works best for "known
quantities" where you've refined your process.


> Do you have any samples of contracts structured in
> the fashion that you describe?

Unfortunately, not that I can share. Here's a rough sketch of what
you'd put into the proposal:

Exec. Summary - quick synopsis of the business need and the proposed
solution. Focus on what they get, not how you'll do it (unless they
need to be convinced your processes are sound).

Scope - what the project includes (and implicitly what it does not). If
appropriate, the sequence of actions to be taken.

Deliverables - what they get; report, presentation, analysis, X
prototype products, whatever. Detail what will be included. These
become the proof point (if necessary) for getting paid. Include
checkpoints / milestones as appropriate so the customer knows when to
expect what.

Fees - a brief table of the pricing and payment schedule. If you're
billing on milestones or deliverables, note it here. (e.g., $25,000 when
X is delivered, $53,000 when Y is delivered, for a project total of
$78,000)

Assumptions - are you dependent on them providing good info, access to
staff, resources, their office space / network, etc.


As you can see, the proposal (statement of work) is very specific to the
project at-hand. In contrast, the MSA has no project-specific content,
and governs the formal terms of business.

We use the same approach for a wide range of proposals, which are
typically between 8 and 15 pages.

Hope this helps.

"Richard" <rh86@azglobal.com> wrote in message
news:bhsbse015r9@enews1.newsguy.com...

>
> Hope this helps.

You have been very helpful. Thanks.