One Startup A Week Keeps The Doctor Away. And Discounts Will Kill You. #robertsrants
(Almost weekly) Tongue in cheek take on business, tech and brand.
by Robert Leinders-Krog
Learning #1: If You Discount Now You May As Well Start Digging
Received any emails lately? 50% off, 70%off, one week supersale, special discounts… not surprisingly most retailers are trying to lure the three remaining customers into buying their stock at lowerthanusual prices. Fair enough, everyone has to try and keep business running somehow.
However, a new trend is on the horizon. Discounted rates for design work, lawyers, engineers, consultants. Suddenly it seems legit to ask for large discounts and slashed hourly rates.
I have had talks with owners and leaders of both engineering specialists, strategy consultants, even lawyers and almost all of them are facing clients that want to change existing contracts and look for saving cash on running projects and services. For now, it seems that only (most of) the IT consultants are somewhat saved from this new trend.
Pricing strategy is obviously a subject that can be discussed at length and with more scientific thoughts than a weekly review but one key observation or advice I can give is that reducing your “thought rates” may kill you faster than anything else you will encounter this year.
Business will not thrive in 2020 / 2021 if we start reducing rates now.
Reducing rates — aka earning less per project delivered — means less markup, less profit, less opportunities to focus on development, reduction of quality, little to no possibilities to help clients “out of scope” and above all, the damning acceptance that competence value depreciates in crisis. Supply and demand obviously plays a factor, but flying empty airplanes, or building brands on fumes has not worked 8 weeks ago. And it won´t work now.
I truly hope that both sides of the table see that rate reductions, project discounts and quick fixes will not enable tomorrow’s brands. Simply because suppliers earn less, and purchasers will get mediocre deliveries. And no great things have ever come from that.
I am also sure that we can collectively find new, better ways to do things, create better processes, faster outcomes, and possibly leaner budgets — it just needs to be done under the umbrella of efficiency and transformation. Not discounts.
Learning #2: You Can Create A Brand And Get Your First Customers. In. One. Week.
Running a boutique consultancy on the side of building startup brands is a fun world to be in. You get to learn from different businesses, understand market niches better, and can see what drives behaviour — both customers’ and management. This works well until you get a Black Swan event that shows you the volatility of the business you are in. (I wrote a few weeks ago what to do then) Most clients take a Carlos-Sainz sr-worthy handbrake turn on all projects, and investor money suddenly dries up faster than ice cubes on the surface of the sun.
I like to quote an old Mexican street musician that patiently listened to a certain problem and merely shrugged…
”friend, whatcha gon´do? Roll up ‘n die..?”
Having people around you that really want to make stuff happen helps. And being able to play on everyones abilities to squeeze every last minute out of a deadline motivates.
Key Learning is that the notion of perfection goes out the door early, and that the first clients are essentially MVP testers. And that that´s totally OK. A bit like customers of Tesla :).. and it shows what you can do if you put your mind to it. Regardless of lockdowns and weird home office situations. And the result?
A full scale National Psychology Help- and Conversation Service (nion.no) was launched within the course of a week. Free until this Corona-thing blows over, and the best part? People love it and the concept is receiving a very high amount of bookings every day since its inception.
And the media liked it, too:
Lanserer gratis samtaletjeneste før tiden: Skal hjelpe brakkesjuke nordmenn
Den web-baserte samtaletjenesten Nion skal hjelpe vanlige folk i ekstra tunge tider. Bak den digitale tjenesten står…
- Terskelen for å oppsøke en psykolog er ofte høy
Psykiske helseproblemer er økende, både her til lands og internasjonalt. I disse pandemiske tidene blir neppe trenden…
So it can be done. Pretty beta and maybe a bit buggy. But. It. Is. Done. :)
Fingers crossed & have a nice weekend everybody. #letsdothis
Robert is an Oslo-based advisor & growth hacker for next generation global brands. A brand management expert and entrepreneur at the core, he is the CEO of XY01 and a keen writer and keynote speaker. European at heart, Scandinavian by trade.