Discovery Contract: Charging for a quote & being serious about it

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A discovery contract is when you charge for a quote. Let’s say that your company sells a $200,000 software program that’s customized or they do some type of service or consulting like that.

Even if you don’t actually use the discovery contract per se, it’s one of the most useful concepts there is. I’ll just briefly describe it because this session today isn’t really about discovery contracts.

A really good approach – a good positioning or strategy for selling it – is when they call you up and they want a quotation or they’re entertaining buying from you.

You say, “I don’t do free quotations. I’m not going to come in here and give you a price. I don’t do that. What we do is discovery contracts. For $20,000 my team will come in. They’ll analyze your company for two days. Then they’ll come back a week later with a report of recommendations. That report and that set of recommendations will be valuable to you regardless of who you do business with.”

It’s really important that what they’re going to get from you – because you spent time with them – is valuable whether they ever buy from you or not. Why? Because it has objectivity.

Let’s say it’s the $200,000 software package. The number one problem with $200,000 software packages is that they never work the first time and they take three months longer to install and implement than they were supposed to and everybody’s mad.

What you can do is you can say, “We guarantee that after our discovery contract we’re going to quote you a price. The discovery contract will count as a credit towards your purchase. You spend the $20,000 and you get a $20,000 credit.

“We will quote you the software and we guarantee that if we came in here and did this discovery contract, if it’s not done when we said it would be done or it’s not done the way we said it would be, there’s some kind of penalty to us. We rebate 25% of the cost back to you.” There’s some kind of penalty. “We deliver a guarantee that this will be on time, on budget, everything.”

The discovery contract allows you to accurately quote the work because you find some cockroaches that the other vendors who did a free quotation didn’t find. Because they didn’t have the time, or the inclination, or spend enough time exploring the situation.

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The buyer can be very legitimately told, “If you buy my discovery contract and then go with a different vendor, my discovery contract will help you evaluate that vendor better.”

It gives you a really nice advantage because now they’ve already written you a check, you’re already in their system, and it weeds out tire kickers.

I want you to notice how that sets up the whole sales situation. It sets up the sales situation in two ways:

  • It establishes you as an authority because you’re promising to deliver value that goes beyond your product line that you sell.
  • It also positions you to eliminate customers you don’t want.

If you’re in any business of any kind and you think everybody’s your customer, you’re in the wrong business. You’re in a bad business. If everybody’s your customer, you need to do something else.

A discovery contract should always put you in a position of possibly saying, “You know what? I can’t help you. You should not buy this software from us.”

Let’s say somebody buys the software from you and they regret it three months later. Well, pretty much everybody regrets it. Everybody wishes that this thing had never gotten started. This positions this about disqualification.

Now you polarize the marketplace. You have some people who come towards you because you can help them and you can satisfy their guarantees. You have other people you repel away from you. “Oh, we do Windows and you guys are Mac. There’s no way we can help you. You guys should go to this vendor over here.”

One of the requirements of being an expert is the ability to say, “I’m not the ideal vendor for you. You should not buy from me. You should go over here instead,” where it’s obvious that it does not benefit you personally to have told them that.

This is one of the key credibility aspects of any real expert. The authentic expert is usually kind of nonchalant about whether particular person gives them money or not.

You want to be able to say, “I’m not your guy.” They go, “Wow! I’m really surprised!” That raises your credibility. When you demonstrate that you’re willing to say that to some people, it sends a signal to the others that when you say “I’m your man,” you mean business.

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About the Author

Perry Marshall has launched two revolutions in sales and marketing. In Pay-Per-Click advertising, he pioneered best practices and wrote the world's best selling book on Google advertising. And he's driven the 80/20 Principle deeper than any other author, creating a new movement in business.

He is referenced across the Internet and by Harvard Business Review, The New York Times, INC and Forbes Magazine.

3 Comments on “Discovery Contract: Charging for a quote & being serious about it”

  1. That’s a very useful process.
    Should be common industry practice. (maybe it’s already on the way to becoming that)

    However the numbers in your example should be higher.
    Sending a team of experts for two days should cost way more than $2000.
    After all a man-day for an expert already has a price tag of at least $1000. :-)
    And if there’s long distance travel and accommodation, sending one expert for two days will cost something like $5000 to $6000.
    Multiply by team size.

    To make the numbers work, the software should cost $100k or more.

  2. This is great. I was linked here from https://copymonk.com/discovery-calls/

    I am working as a consultant now and I’m ready to step up and start doing discovery calls. I understand the entire thing you have here. One thing I’m wondering is what you actually deliver to the client that is so valuable to them after having paid you initially? And how can they use it even if they don’t go with you?

    Is there a template or an example/sample of what is delivered? It would be great to see something like that.

    Any suggestions?

    1. You diagnose their problem in a way that nobody doing a free quote would be willing to do. You find where the bones are buried. Where are the surprises? What could go wrong that they have not anticipated?

      John Mendocha is doing a high-end advanced Discovery Contract seminar in Las Vegas October 16-19, covering this strategy in complete detail. Get on our email list for details or contact our sales team for advance details.

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