On our daily interactions with new Galant users, we always come to a discussion that most of the times gets started with a:
“How should we price our services?” / “Can you help us determine how much to price for our services?” / “How much should I charge for a logo?” and so on.
The short response to these questions is a “YES we can” and we can thank Algorithmic quote pricing for that.
Algorithmic quote pricing is the result of the analysis of data generated within your company to recommend prices for your services that help accomplish the following objectives:
- Maximize the chance of clients accepting your quote.
- Maximize the amount of money you make after subtracting your costs.
The end-objective is to price correctly.
In our experience, if you have a running business with clients coming in, you’ve already accomplished the most important part: Selling something that adds value to your market.
Now, when you determining the price of your services for your clients, you decide based, most probably, on one of the following:
— Benchmark price… you know how much your friends / competitors / the market prices for the same services as you.
— Cost based price… you know how much your operation costs and you know how much resources you will use.
— Experience based price… the more clients and experience, thus, less time you have, the higher you price.
No matter which one you choose, you’ve probably ended up with the following thought after getting your quote accepted at one point in your career:
Am I selling my services for a lower price that what my clients value me for? If I raise my prices, based on the experience I have, will they still buy my services?
Algorithmic quote pricing takes into account the three points mentioned above to suggest (yes you can still decide on your own) a price for your services.
— Galant allows you to set base prices for your services so you will never quote below those.
— The system analyzes the history of the hours you’ve put into the services you sold for the type of client within the city the client is at to determine how much of your time and costs a service for a similar client will cost you.
— Finally, in order for the system to maximize the margin for your company projects, it must consider how you are doing based on your available billing hours and how far away you are from getting to that ugly point in the month when you have to pay all the bills that determine the margin you will have.
As soon as your billable hours start getting used up on tasks on the calendar and the system starts seeing that you are accumulating sales and income, it will start to recommend higher prices so that anything that comes in will have better margins.
If those higher-priced quotes get rejected, at least you’ve made it to the end of the month and now Galant will have extra information to consider next time it recommends a price for a client with similar characteristics.
How does the process look like using Galant?
The following steps require you to have an account at Galant. You can set one up at the following link: www.galant.com, its free for the first 30 days.
Create a client.
The first step into getting things set-up for Algorithmic Quote Pricing consists in creating a client.
Clients help us add important classification information to our algorithm. Each client comes from a different city, has a different business size and complexity.
This is an important part of our algorithm and can be done in a simple step:
You should now be redirected to the client’s dashboard where you can add a quote.
Add a quote.
Quotes help you communicate your offerings to your client and allow you to know exactly what you should be delivering.
Within Galant, the quote components, can be linked to a project allowing you and your team to know exactly what was promised and what should be delivered. It also allows us to know what incomes are linked to a project. Let’s add a quote now:
Galant will price the quote according to the historical information it has about you. The more you use the system, the more information it will have from you. It will also know how things have changed through time.
Create a project.
Once your client approves one of your quotes, the quote will be available for you to link to a project. In order for you to link a quote to a project, you must first create a project:
Now let’s link the approved quote to the project! This can be done within the project’s dashboard. After linking a quote to your project, the quoted elements will be added to the project as deliverables.
Linking quotes to a project allows Galant to facilitate connecting the hours you’ve worked on each quoted element with the project, and thus, it knows how much each element has cost you.
Add tasks and link them to the project.
Adding tasks on the calendar and linking them to the project in order to reflect the time and direct costs you’ve added to the project is easy:
If we head back to our project’s dashboard and click on the financials tab, we will be able to see the direct costs that the task that we’ve just added represents on our project.
Also, each project deliverable contains information of its individual margin so you can know what things you are spending more resources on.
With quotes linked to a project, any income linked to a quote will be directly linked to the project and Galant will know how much money you’ve earned for each project.
Add income and link it to the quote.
Let’s add some income now. On the project’s dashboard, on the financials tab you can register an income.
The most important part of this step is to make sure you link the income to the project by selecting the project’s quote.
Once that income is marked as paid, you will be able to start seeing interesting statistics on the project as it advances with tasks, income and expenses.
Ok, what happens after this?
You’re all set up. The main benefit of using Galant is its ability to run all of the time-consuming number-crunching for you while you do what you probably are already doing on your own: Determining prices, assigning tasks to your team, tracking hours, income and expenses… we’ll do all thats behind for you to help you make better business decisions while you focus on doing what you know best: Delivering your services to your clients.
