Charging for out-of-town client visit?

[Ruby Slippers]

I have a prospect who said he's ready to hire me. He asked if I would visit and tour his office if he pays for my travel expenses. They produce medical equipment for sports therapy.

 

My normal pricing is just enough to cover the cost of providing our services. His office is a 1-hour flight / 5-hour drive away. I could probably fly up in the morning and fly back that evening, or maybe spend one night in his city.

 

This will be my first out-of-town trip for business. Realistically, it's going to wipe out a full day's work for me.

 

I think my options are to require that he commit to a minimum agreement with a defined cost, or add on a charge for my time in office. What's the best way to charge for this?

[salparadise]

I'm not sure what business model you're talking about exactly. Are you an independent contractor and he's talking about a small, short-term contract, or is this a larger, long-term contract? And when you say your normal fee is barely enough to cover the cost of providing services, are you saying there's no profit after salaries and expenses get paid?

 

Based on my experience, you can't bill for a sales call, and even if the potential client is willing to pay travel expenses, they probably aren't going to like the idea of paying your regular fee for this time.

 

How do you resolve this? Well, you have to include sales and the cost of obtaining new business in the fee structure... and then plan to make a profit on top of that. If your fee is only enough to cover salaries and expenses then you're doing the work at cost, and you can't grow a business working at cost.

 

If this new business doesn't have the potential/probability to pay you many times over for a day's lost billable hours then it may not be worth pursuing. But based on the way you're talking about it, I can't get a clear picture of who's pursuing whom and whether this is a huge chunk of business or such a small piece that it's not worth devoting a day to explore.

Edited November 22, 2015 by salparadise

[Ruby Slippers]

You make a good point. My profit margin is low, and this is typical in my industry. I charge more than any competitor of a similar size (usually at least 5 times more), because our quality is pretty much the best in this league and we show measurable results. Even with that, profit margin is low.

 

The reason I'm kind of stuck where I am is that the only way I can grow is to charge considerably more, or do a much higher volume. I can't justify charging more or handle a much larger volume without a decent staff to back me up and boost the level of service and reporting on positive results.

 

So I guess the way to handle this is to require a certain minimum commitment on his part, with an upfront investment that makes it worth my while. We almost always start with a small agreement, then expand if both sides are happy. Sometimes it's just not a fit, so I've learned to start with a modest agreement, then expand if both sides are happy.

[lucy_in_disguise]

Im a consultant. In my experience, you dont charge for sales/ marketing visits. You will need to make an educated guess re: whether getting this guy's business is worth it and proceed accordingly.

 

If you have concerns about economy of scale you can communicate that you have minimum requirements.

[salparadise]

So I guess the way to handle this is to require a certain minimum commitment on his part, with an upfront investment that makes it worth my while.

 

Yes. It sounds like he's already sold since he's willing to pay you to travel, so asking him to complete a fee for services agreement under which he pays for all time and expenses as well as enough actual work to make it worth your while would be appropriate. You could write it such that it automatically renews.

 

This also has the advantage of saying, "it's time to sh*t or get off the pot" for those fence-sitting darlings who like to be woo'd indefinitely and keep coming up with excuses to avoid making a decision.

 

This is appropriate for smallish clients that have limited potential to begin with, or larger clients that have have everything they need to make a decision and still haven't committed. The only time I would think this is not in your best interest is with a larger client that is legitimately not at the decision point yet and you need more face time to win them. In that case, I think you should be willing to invest your time on your dime and just look at it as an opportunity that is worth what it costs.

[Ruby Slippers]

Thanks for your input. I just accepted a full-time job offer and will be starting in a week. So I let this prospect know that I would only be available for a visit on the weekend, and I would require a minimum commitment with deposit before visiting.

 

We've already talked on the phone several times and exchanged many e-mails over the past few months. He said that he's sold and ready to begin the project. So it's not really a sales visit, but a research visit, the first step in doing the research and planning for his project.

 

If he's cool with a Saturday visit, and making the deposit for a modest agreement, I'll soon be planning a small business trip. If not, no worries, because I'm about to start getting a STEADY, STABLE, decently sized paycheck again. This seems so novel right now