10 tips for paying the right price for your service

By Laura Chevrier

Thursday 20 October 2022

When you need to use an external service provider, it is not always clear whether the quoted prices are justified, especially when dealing with a new supplier for the first time. Whether for graphic design or IT development, the problem remains the same: quantifying an expert’s deliverables is always more complicated than setting a price for goods. To help you see things more clearly, our specialists are here to give 10 tips from their experience.

#1 – Researching the market

To pay the right price for the right skill, you must conduct external studies and analyse the service provider’s market. Seniority and the rareness of the skill offered at the time should also be remembered. With these three criteria in mind, you should be able to define a range for the Average Daily Rate (ADR).

#2 – Play on the availability of expertise

One of the best ways to get reasonable prices is to ensure that as many suppliers as possible are aware of your search. To open up your search, you can send a call for tender to the providers already listed and broaden your possibilities by opening up to a marketplace of skills – i.e., companies that are not listed because they are intermediates.

#3 – Avoid the subcontracting cascade

To prevent your provider’s ARPU from rising, it is important to avoid intermediaries as much as possible. The more intermediaries you have, the higher the final price. This subcontracting cascade can be avoided using service companies such as LittleBig Connection, which guarantees maximum transparency on price.

#4 – Fostering the local fabric

Using a local service provider can save you a lot of money if you are located in a regional area. Whether you use a freelancer or a service company, it will always be cheaper to use a service provider based nearby rather than on the other side of the country, as you will avoid the travel costs included in their ADR.

#5 – Offer long assignments

Remember that the longer the project, the more competitive your ADR will be when writing your offer. Some service providers are more inclined to favour long-term assignments that promise stability, even if it means cutting back on their prices a little.

#6 – Trusting the youth

Don’t be afraid to entrust your projects to junior profiles, especially if the skills required are not so specialised. While an experienced profile can inspire confidence, it is also much more expensive than a younger profile and can be more demanding daily. Accepting to work with junior profiles opens up more attractive ADRs, but you also get a refreshing look at your projects.

#7 – Establish a skill development system

If your assignment requires specific skills that your budget does not allow, you can call on a junior profile with an attractive ADR and train them. To do this, you can start the assignment with the junior profile you are interested in and an experienced profile to share their knowledge with them – this is possible if the talent is a freelancer or part of a service company. Once the junior contractor is comfortable with the scope, the experienced profile can leave them to finish the assignment alone.

#8 – Negotiate free days

If the service provider is unwilling to reduce the ADR, you can still negotiate free days. For example, if training is required at the beginning of the assignment, you can set up a free day scheme to cover this period of “non-productivity”, which delays the first day of payment.

#9 – Sourcing from abroad

When you are looking for a specialised skill, but your budget is tight, it may be a good idea to look internationally. Many countries offer a pool of talent with sought-after know-how and, above all, at a lower cost. With its Global Connect offer, LittleBig Connection allows you to connect with talent worldwide to find the best provider.

#10 – Establishing good relationships with service providers

Once you have found your hidden gem, do not neglect the relational aspects. As with any transaction, the human element plays an important role in setting the price for a service, which should not be overlooked if you wish to renew your collaboration. Many service providers maintain close relationships with their clients.

Remember that paying your contractors the right price is essential, whichever method you choose. Don’t drag their ADR down too much, as you will expose yourself to higher project turnover, which is counterproductive. And if you’re still confused about what the ADR should be on the assignment you’re proposing, don’t hesitate to call on the services of LittleBig Connection. As an expert in the IT & Digital sector, this Marketplace of expertise has excellent visibility on the prices charged for each skill and will be able to support you with all your projects.