Your Bill is HOW MUCH?!?

Whoa, this seems pretty steep. A thousand dollars for two days work?

I didn’t bother to correct Bill that it was actually $1,020 less a 10% discount. I was working as a small business consultant in the Tacoma, WA area. As a small business consultant I was essentially the IT department for my clients. Bill was a new client and the way our conversation was headed, was soon to be an ex-client.

Bill owned a Farmer’s Insurance office. He’d been referred to me by Steve, another Farmer’s agent. But, something got lost in the referral process. . .my rates. And it illustrated the problem with referrals. Don’t get me wrong, referrals are the lifeblood of any business. And I was really hoping that I could fix things with Bill. Because there are two types of referrals. Good ones are your lifeblood. Bad ones are poison.

I’d met Steve, when we’d moved to Spanaway, WA. We needed renters insurance and Steve was the first one to pick up the phone. As he came over to our house, he did an excellent job of figuring out our needs and designed both a renters policy and a million dollar indemnity policy for my business. Naturally, I asked him about his computer needs and just like that I had a new client.

I worked for Bill for several months doing things like installing anti-virus software, adding and deleting users, updating Microsoft Office. I always explained up front what I thought a job would entail and how much he could expect to pay for software and my time. My rates were $85 / hour. Steve was a great client.

Hey Rodney, I’ve got a friend who needs some computer help. Give him a call and tell him that you’ve been working in my office for a couple months.

Excellent. That’s the way it’s supposed to work. Your current happy customers refer you to their friends who hopefully also become happy customers.

My initial meeting with Bill was great.

I think we have some malware on a bunch of our computers. Steve said you helped him with that. And we’ve got a flaky printer.

Great. Should take a couple of days, but I’ll be installing anti-virus software on multiple computers at once. The printer thing might take a little longer, but I’ll know more when I look at it.

Did you notice anything missing from that conversation? Sure, in hindsight so do I. I never actually explained my rates. Since he’d talked to Steve I assumed that Steve had shared that with him.

Two days later, all the PC’s were malware and virus free, the printer was working. The USB cable had been run under one of those clear plastic carpet protectors and one of the spikes penetrated the wire.

I handed him my invoice:

12 hours
$85 / hour
Sub Total: $1,020
Less 10% for multiple days: $102
Total: $918

I tried to figure out where the miscommunication had come from.

Well, I didn’t ask about your rates since you’ve done work for Steve, I assumed they would be fine.

I had a decision to make. I could press him for the entire amount. But, the risk was potentially he wouldn’t pay it, and for sure he’d be really upset.

Instead I set out to salvage the account. Bill probably wouldn’t have me back, but I didn’t want him ruining my relationship with Steve or any other Farmer’s agents.

I apologize. I should have done a better job of letting you know what to expect up front, and made sure we were in agreement on how much the work would cost. Given the work that I’ve done, what do you think is a fair amount?

Well, my agents only make a couple hundred per day. I don’t really think I can justify more than $500 total.

That will be fine. And again, I apologize for not being more clear before I got started.

And that was that. Could I have gotten more than $500? Probably. I could have countered with $750 and eventually settled on $600. But, that extra $100 would have come at a high price. There was no way I was getting $918.

Instead, I accepted his number and counted it as a $418 dollar lesson in the danger of overplaying a recommendation.

I’ll stay with the consulting theme this week and mix in some Microsoft stories at the end of the week. Here’s the schedule.

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