By Noke Kiroyan, Chairman and Chief Consultant of Kiroyan Partners
JAKARTA, PRINDONESIA.CO – Pricing must be based on a fixed and clear reference, so that variations in contract prices are accountable. In terms of a long-term job and the nature of the job is relatively lack of variations, the form of the contract is generally retainer. This type of contract has a fixed amount and time of payment.
For example, media monitoring and issues management. For a non-repetitive and large-scale job, payment is made in terms. Advances are paid the job begins. Then, the payment is made while the job is in progress. The benchmark is the agreed milestone. Then the last payment is before or after the job is finished. Jobs like this are called project-based consulting, such as training, campaign, or advocacy.
For jobs that are difficult to determine at the beginning and also difficult to estimate the scale such as crisis management, the payment is usually set at a certain hourly rate. The billing is done weekly based on the hours spent. Consultants usually divided clients into two categories. For a new client whose reputation is not yet known, advance payment needs to be made. Conversely, if the client is well known and has a good reputation, prepayments can be ignored.
There are also jobs with a high level of complexity or a large scale. This job requires a variety of jobs. The contract can include several types of billing. Jobs like this are certainly coveted by consulting companies. The company considers that about 2/3 of revenue coming from retainer is in ideal condition. Fixed costs for running a company can be coveted from this post because of the fixed amount of income. While the costs are not fixed and profits are derived from payments for project-based and time-based consulting.
From a brief overview above, it is clear that projects that combine retainer and project-based consulting have the potential to give huge benefits. On the other hand, if the project ends, it will directly affect the company’s operation. What should we do? How to find reasons to extend the contract life so that income for the company continues to run?
Honest and Open
At the age of thirteen, Kiroyan Partners faced several such dilemmas. Even so, the decisions that we make always refer to business ethics. There was once a big project and for a quite long period of time. The retainer obtained from this client was a major component, about 30 percent of the company’s revenue during the duration of the project. We could have been looking for reasons to extend the contract. But at that time, we decided to remain honest and open with the client.
When sending the final bill to the client, we include a not that the assignment for the project has been completed. We also did not forget to express our gratitude and readiness to work together again in the future. Clients really value our ethical attitude. Our relations are still well established today.
On another occasion, a client provided additional work in the form of a research and training project. However, some of the recommendations we gave were not implemented. We believe that the company’s effort to improve its reputation must be preceded by a number of internal changes. When the contract is almost over, the client wants to extend the contract. While we know the steps that need to be taken have not yet been implemented by the company. In this case, the choice is very clear, we are not willing to extend the contract. We believe that consultancy will not succeed without change.
In the end, as a consultant who upholds ethics and principles, we must not hesitate in doing our work. If we believe that there are steps to be taken based on data collected we must not compromise with our principles, even if it will result in the loss of a contract. The company’s reputation and sustainability are at stake.