My company does custom web application development. We build applications based on the needs of the client, so our projects really vary in terms of requirements. We typically meet with a client, get requirements, and then give a quote. At this point all our clients came from referrals or word of mouth so this model of pricing worked out well.
I have recently embarked on trying to hire a sales rep (they will be building their own leads). A few of the sales reps we are considering hiring suggest I build out a pricing package to better position a sale. Unfortunately this line of work is hard to package. What would you suggest I try?
Currently I am thinking of setting up a pricing sheet that lists out the most common applications we build along with line item pricing for each feature. This way the rep at least has some guide lines. I do not expect the sales rep to give a direct quote to the prospect. I am expecting the sales rep to get the prospect on a conference call with either myself or my business partner (we will function as the 'sales engineer'). And after we get their rough requirements we give a rough quote. Though during the process I highly anticipate that the prospect will want some type of price range before they agree to a conference call.
Should I try to get the sales rep to not event mention price until after we have a conference call? Any suggestions? Ideas?
In my opinion, the sales rep need to convince the potential customer to do business with you.
Giving out example prices will give you a lot of issues because most time a sales rep is trying to get a client on board and not always honest about prices. Or in their enthusiasm they could give the potential customer the idea that your company is the cheapest out there etc.
Then when that customer get on the phone with you and hears an other price, you're most time screwed. (And the trust is gone)
A sales-rep needs a good portfolio of already completed projects.
A sales-rep needs to know what he/she's talking about.
As you say in your question: you do "custom web development", and sales-reps giving a price
for a custom project can't be any good.
Just my 0.02
In all honesty, if you don't feel you can come up with a proximate price until you have more information, then don't do it.
Most people/companies that are hiring for this type of work should expect a few more steps in the sales process for custom applications and there are a lot of variables in pricing depending on the scope of the project. Larger projects tend to have a lower per/hour rate; it's like buying in bulk.
If a customer won't have the conference call without a price, that could be a warning sign. They may be stalling because it is not a high priority (middle manager still trying to convince those with purchasing power) or they are overly-price conscious and may be difficult to work with.
In addition to basic company, industry, and basic project requirements, the sales person should find out:
Lots to talk about before price.
The type of pricing that you can do though is the labor unit cost per hour for the different activities and experience level. Price this on the higher end (in releation to hourly amounts for a project) but within the market. You can also offer price discounts for an x length of hours committed. All of these pieces should be already known by you prior to doing any pricing on a project by project basis which it sound like is your normal business. What you gain by this type of pricing is you are communicating what is the maximum price that something would come in for a project if a client has a good idea of hours for the different type of IT roles, the skill set and experience level of your talent. Also by communicating the "right" hourly pricing you are signaling a level of experience to the prospect. This is only one signal a prospect looks at as well as a portfolio of success, the rapport with the salesman etc…
Obviously you can't price a project through a price sheet and its not possible to price a project without specifications that get agreed to. A price per project is where the sales can help get the customer in, get some specifications worked out and get it priced at the office.
So I'm of the opinion that you should have some pricing available now and that it would help a prospect feel comfortable about what a possible project would cost. They can do some basic filtering and feel that they have some known. Also on the price sheet make sure you have a good till date.