I received an offer for professional services by a multinational company – one of the 10 biggest globally in its field in terms of turnover.
Here are the main terms of their proposal:
- My company will be charged on a time spent basis;
- On top of the above a 3% charge will be added to “cover stationary”;
- An additional 3% will be added to “cover expenses in relation to the investment made in technology for the better provision of [their] services.”
Guess who didn’t get the job.
Here’s how things should work in my mind:
You propose a fixed fee.
If you get the job, you do your best to deliver what was included in your scope.
The job may, or may not, end up being loss-making.
Next time the client approaches you, you make a higher proposal. BUT this time, the client will know what to expect from you (unless they are schizophrenic, the fact that they returned means that they did so because they were happy with your work in the previous project) so they will be more likely to accept paying a higher fee.
Needless to say, any reasonable expenses that aren’t included in the normal course of delivering your services, would be also charged to the client. We all know that these don’t include… stationery and IT.
I’m sorry, but global brands or not, these firms are ultimately managed by people. And every local managing partner should have the foresight on how such a charging structure would backfire on their business.