Articles
Why are most auto mechanics sued over quality issues rather than the length of time required to complete the job, yet clients of attorneys dispute the length of time it took to perform a given job but rarely the quality of the work? The answer has to do with up-front pricing and change orders.
Say you have to take your car to a mechanic for a tune-up. Do you hand him a blank check and instruct him to fill it out when the job is done? Hardly. You get an up-front price quote.
Two hours later, when he phones to say that he noticed a fuel injection problem that needs immediate fixing, you ask for a price and get another quote, which allows you to decide whether or not he should continue with the additional work.
Set The Price When You Have Leverage
Mechanics don’t suffer from pricing disputes the way attorneys do because mechanics inform their customers about the price of additional services—those outside the scope of the original work estimate—before the work is done. In this way, customers are involved in the decision and gain ego investment on the marginal services.
Imagine what would happen if the mechanic went ahead and fixed the fuel injection problem without informing you up-front, and then attempted to receive the additional payment when you picked up the car. Not a very effective strategy to cross-sell additional services, is it? Yet law firms engage in this practice and then wonder why clients are unwilling to pay the additional price, or dispute the amount of time the additional work required.
Ideally, every engagement a firm performs should have a scope clause wherein the responsibilities of each party are clearly delineated. This will give the partner the opportunity to discuss the scope creep with the client, and allows the client to give input on how to rectify the problem. Perhaps the firm needs more time, or is understaffed; perhaps the client would be willing to pay the firm to complete the additional work.
Remember, firms possess price leverage only before the work begins. Once additional work is completed, firms lose all of their pricing leverage to their clients, and chances are, they won’t be paid. Think about it: who has leverage when your mechanic first calls to inform you of the fuel injection problem? He does, because your car is already on the lift, and unless you are a skilled mechanic you will authorize him to fix the other problem(s).
Thinking psychologically, always set your price when you possess the leverage and when the client is in complete control of authorizing the additional service. This is a true win-win deal for both sides, which is precisely why the change order is one of the most sophisticated pricing strategies you will ever find.
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