Meeting with a potential customer and need advice

[steppinthrax]

I have a small IT company that I just started and I'm in need of new customers. My wife met a friend who knew the owner of a store/warehouse that sales to large companies (dollar stores etc). It's a medium size company (maybe 1 - 4 employees). Pretty much the guy (president) is not computer savvy and needs someone to run some of the IT side of things. My wife did some general discussion with him (I was not there), he wants to start someone on a trial basis (few months) to perform some website maintenance and to potentially get into selling much of his products on ebay as well as some facebook work. I will be meeting him tomorrow (for the first time). Here is the deal.

1. Website Maintenance: He mentioned he had someone there that he was paying for around $15.00/hr full time. My wife mentioned a monthly figure of around 3-400 a month initially. I know this may be a low figure (he even indicated), he said he's willing to pay more accordingly. However, since my company is new I'm more interested in establishing a good customer base. I'm not sure of the breath of the work he needs done, but from viewing his site it appears to be a lot of products where he will need price changes, image changes, updates on a weekly (maybe daily) basis. What is typically charged for this? Is there a general rate, I was reading 60 - 75 an hour? Also what type of documentation should I prepare for him to sign for this.

2. Ebay Store: He used to have a ebay store online, but due to mismanagement (previous employees), there was a problem and products didn't make it to customers, as a result the account was suspended!!! I've been with ebay for over 15 years buying/selling. I have experience with this, based on what my wife told him this is what I'm thinking (1) His english is not good, so description of products, title, images etc and communication with customer (2) Management of online store etc. (3) Communication of products being sold (to him) to set aside etc... My thinking, is I need to get his ebay account re-activated so that I would pretty much manage his store through his account. Should I just go ahead and use my ebay account, problem is if it's over 10K, then I will get a tax form. How is this whole area of business usually "priced out", If I were to sell for him, how much should I charge etc? What type of "documented agreement" needs to be made.

[vangogh]

$60-$75 an hour seems reasonable for the website work, however…


since my company is new I'm more interested in establishing a good customer base

Your description doesn't sound like you're building a good customer base. It sounds like you're establishing a customer base that doesn't pay anything close to the value of the work. That will lead to similar customers in the future. As far as documentation I would write something that explicitly mentions the type of work you'll do and at what price.

With the eBay account I wouldn't use your own account for your customer's account. It's best not to tie the two together. Keep them separate even if it means a little more work for you.

[Harold Mansfield]

To add to what VG said, yes $60hr.+ is average, however that rarely works on projects, or long term engagements that have no end period. You may want to consider putting together flat rate packages for services, blocks of hours, or flat rate pricing for projects that have set parameters, deliverables and time to completion.

I also WOULD NOT use your own eBay account for clients. That's a disaster waiting to happen. If they can't repair their own or get a new one, don't let them take yours down too. That's a problem that they need to handle of find another way to sell. As far as I'm concerned there are no exceptions. I don't mix my personal or business accounts with clients.

[MosheC]

I agree with Harold. You should have some kind of package deals for clients like this. The hour base would work for clients that understand what your doing, that doesn't sound the case here. Try going over the work and explain the your clients what you will be able to do and how much it would cost. For example: if a 5 hour job will allow you to add another 40 items to his ebay store. Just divide the $300 to 40 items, and tell him you charge $7.5 an item. It's also important to add what you will do for that item, if not he will keep asking you to add information in the future and expect it to be free.

[Brian Altenhofel]

1. Website Maintenance: He mentioned he had someone there that he was paying for around $15.00/hr full time. My wife mentioned a monthly figure of around 3-400 a month initially. I know this may be a low figure (he even indicated), he said he's willing to pay more accordingly. However, since my company is new I'm more interested in establishing a good customer base. I'm not sure of the breath of the work he needs done, but from viewing his site it appears to be a lot of products where he will need price changes, image changes, updates on a weekly (maybe daily) basis. What is typically charged for this? Is there a general rate, I was reading 60 - 75 an hour? Also what type of documentation should I prepare for him to sign for this.

His real cost for that employee is probably between $25 and $40 per hour depending on industry, and the cost is likely more per productive hour if they actually track that. Your advantage is they only use you when they need you.

As others have said, you don't want to charge too little for the sake of establishing a customer base because all you will end up doing to yourself is establishing a customer base at that rate. It's not a sustainable model, and when you reach that point of unsustainability your customers will notice and will have a negative perception of you. Most business owners understand that you need to charge certain rates to help ensure that you will remain in business for the long term.

One thing you don't want to do is put yourself in a situation where they expect changes to be implemented immediately on demand. As you get more customers, it will cause more stress for you and more frustration for them. What I personally do is set the expectation of completion as within 5 business days (if a small job that takes less than a half day) unless the request is considered urgent. Urgent requests cost more and have <24 hour deadlines.

You could put together support packages that have a flat monthly rate with either X hours or Y tasks per month prepaid. The customer gets the benefit of a known expense amount each month and the peace of mind that you will have availability for them, and you get a recurring revenue stream. If your packages are designed right, most customers will not use 100% of what is available to them.