Salesforce Project Rates: How to Incent Better Outcomes for Client and Consultant
Clients naturally want to see significant returns on their Salesforce investment. And consultants want to be fairly compensated. But we don’t often explore the nature of pricing models and how they drive the work. I want to share a way of improving the model that is a win for both sides.
If you’re looking for (or working with) a Salesforce partner, knowing this model will help you ask the right questions and find a consultant who builds your best interests into their price.
For the longest time, I held the belief that the billable hour was a fair way to charge for Salesforce professional services work. If it takes an hour to do the work, you pay for an hour. I now realize that belief was wrong. Hours are a poor metric to use for project price because they emphasize the wrong goal. Hours are just an input into the process. They don’t reflect the outcomes of the work, which is what everyone cares about. So, what’s the alternative?
One solution is called value pricing. With this model, instead of being incentivized to bill the most hours, consultants are rewarded for achieving your business goals (i.e. creating business value).
Blair Enns, author and entrepreneur, explains that the end-goal of value pricing is “to create an organization that is intently focused on creating extraordinary customer value.”
Examples of value creation for your organization include:
- Making more revenue.
- Saving staff time.
- Improving how your organization serves customers.
- Mitigating risk, including the risk of downtime and data quality issues.
- Empowering your organization to evolve the system with internal expertise.
- For nonprofit organizations (my company’s clients), value includes improved mission and outcome management.
This value pricing model allows both you and the consultant to focus on solving problems and achieving goals without tracking every minute. It allows us to collaborate more — talking through approaches and challenges — without worrying about the cost per hour of several people working together. As I’ll explain in the next sections, it also gives the client control to build lean and to say “this is good enough.”
How does this work in practice?
As with many professional services firms, we start with a discovery phase and a project roadmap, then move into an agile implementation process. Implementation is broken down into two-week sprints or cycles. Each sprint has a value-based goal. Instead of billing for hours spent in each sprint, we bill a fixed price for each sprint. For project estimates, we provide the estimate as a range of sprints (i.e. eight to ten sprints).
The price per sprint is determined by the goals and outcomes we can reasonably accomplish in an average sprint. Drawing from our project roadmap, we factor in the overall average of story points per sprint and the pace that your organization can support.
By focusing on the sprint goal rather than every individual user story, this model allows a team to adjust the scope of the sprint to best achieve the goal. Your team works collaboratively with your consultants to focus on the most valuable needs for your money. Your organization is actively involved in setting the goal for the sprint and signing on to support the project work for that sprint.
Why a range of sprints and not a price for the entire project?
An estimate for a range of two-week sprints gives you control to say when you’ve achieved enough value from the project. This encourages building lean and saying no to marginal needs. You can evaluate a planned sprint goal and make a decision around value and ROI for your organization. Let’s take a look at the details of why this works…
We develop the project roadmap based on discovery with clients and split it into a range of the above-mentioned two-week sprints (e.g. eight to ten sprints of work). Each sprint has a desired client outcome and/or sprint goal, that is made up of a set of user stories. By design, we include the least critical needs in the final sprints. During the project, you can repeatedly assess what’s important for each sprint, and move forward (or not) in two-week increments.
By the end of the project, your team understands Salesforce and you’ve been trained to improve your system. Often you discover that the final sprint or two is not necessary. This chunk of features can then easily be dropped from the project… and the price!
For example, we completed two implementation projects that were each around $65,000. The first was priced and billed hourly over ten months. The second was a value-based project, priced per sprint, that lasted four and a half months. This value-based project was completed in a shorter amount of time with a consistent project cadence and an ongoing goal-oriented focus.
What client and consultant benefits have we seen from adopting this pricing change?
- Incentivizes focus on problem-solving and creating value for your business, not on tracking time spent. Consultant energy all goes to the desired goals and outcomes. There’s no nagging billable hours goal working at cross-purposes with your needs.
- Allows the introduction of additional consulting expertise without time concerns. The best work is done collaboratively, but several consultants in meetings add up in the hourly model. Our team can now spend more time solving your organization’s challenges rather than calculating utilization.
- Removes client fear of engaging in deep dialogue around needs. With hourly billing, your organization can have valid concerns that “all this time costs us money.” The new pricing model encourages conversation and discussion to build a shared understanding of where the most value is.
- Prioritizes work in larger chunks to facilitate better decision-making. In the value pricing model, your team must actively decide at each sprint whether to do another or end the project. These decisions incentivize lean thinking, building a minimum viable product (MVP), and the Salesforce admin taking on more work. All of these actions help improve project success. The model discourages a long tail of small tasks and features that provide diminishing or minimal value.
- Captures the value of deep expertise in a firm’s specialization. Often you can receive substantial value in a short time from an experienced firm. In our case, we bring experience partnering with a broad range of human services and affordable housing organizations along with internal resources (i.e. templates, design patterns, architecture reuse, code reuse, etc.).
- Ensures a mutual commitment of staff time and focus. A sprint goal isn’t met unless the combined client and consulting team delivers on their commitments. As a result, team members on both sides commit to what they can reasonably accomplish in a sprint and follow through on those commitments.
- Provides predictable cost for clients (it’s safe to say most clients like projects that provide high value without budget surprises) and predictable revenue for consultants (we like to stay in business to serve you and other clients).
We are one year into the move to value pricing and are still working through a few challenges but are committed to it because we’ve seen significant benefits.
Value pricing sets your projects up for success because it prices based on business goals and outcomes, not time. It dodges the pitfalls associated with hourly billing and benefits all involved.