The Three Dollar Steak

Years ago, while working as the director of strategic partnerships for Mastery Charter Schools in Philadelphia, we were presented with an opportunity to partner with a subset of Detroit Public Schools. My manager, seeing this an incredible opportunity to make a difference for their schools and students, coached me to do whatever it took to secure the deal. That coaching included slashing prices in our proposal and getting it to a point where she felt they’d have no choice but to say yes.

One example of this, was when I wrote up the travel portion of the proposal, and she told me it was too high. You see, I’d included in my estimates, direct flights from Philly to Detroit (and back). I’d done some work with those schools in Detroit previously and as the direct flights were twice as expensive as the flights with layovers, my manager would ask me to take the flights with layovers instead.

This meant I’d fly from Philly to Chicago (which is past Detroit), wait in the airport for an hour or two and then fly back east to get to DTW. On the way home, I’d fly past Philadelphia and have a layover in Washington DC. On one occasion, their was a mechanical issue on the plane headed from DC to Philly, and after a half-dozen or so delays, the flight was ultimately cancelled. It was too late for Amtrak or to rent a car at that point, so I “slept” in the airport and was back on a 6am flight home.

As you can imagine, these layovers were a colossal pain in the butt, but it didn’t matter. We needed to cut costs.

The initial proposal was about $250,000, but that was too high according to my manager. So I cut it down it every way I could think of and got it to $140,000. Again, this was still to high. I removed supports, charged way less than our rate, and removed travel entirely. What we ultimately proposed was about $85,000.

They said yes.

On my first trip out after we’d agreed on cost, the assistant superintendent gathered me and three other people in a room. The other three were the representatives of three other orgs they were also partnering with for that year.

After the intros, the assistant superintendent expressed his excitement about the work we were about to engage in, and then told us, “We’re investing millions of dollars in your four organizations. This has to work.”

Millions of dollars?!? And we were only getting $85,000?!

As the partnership progressed, it was revealed to me that one group, consisting of two people, both of whom were employed by another consulting company months earlier and who started their company solely for this contract, we’re paid $1.6 million dollars for one year of coaching.

And, whenever I proposed anything - uniform systems across the schools, training for principals around goal-setting, a teacher coaching model - I was told we needed to run it by that other team first. They were the big dogs. I wasn’t.

On one occasion, I flew to Detroit to deliver a training to their hundreds of teachers and arrived to an empty room. While I confirmed with my contact that the training was on, the message never made it to the teachers. Leadership was mortified and decided, at 5pm, to send a robocall to all their teachers telling them they needed to come to this central location ninety-minutes before their usual start time the next morning to receive the training. Yes, they were going to let teachers know at 5 o’clock that they had to be at a training at 6am the next day.

Of course, this was the worst idea in the history of the world, so I nixed it, went to the airport, and flew home. Well, I flew to DC, got delayed four hours, then flew home.

Here’s the point.

Because of how comparatively little we charged, we weren’t their priority. The other team was. We/I weren’t taken as seriously as they were. So much so, that they even forgot I was coming to run a training for them!

There are a lot of entrepreneurs on this list. Sometimes it can be tempting, especially when you’re starting out, to charge less. After all, ten thousand dollars is better than no dollars, right? But sometimes it’s not. Especially when the people on the other side have an expectation of what the work should cost.

Think about it like this: if you walked into a steakhouse and the filet mignon cost three dollars, which is an incredible deal, would you eat it? Or would you think, these people have no idea what they’re doing, and I’m skeptical of anyone who would charge so little? Would you take clients to that restaurant? What about your partner on an anniversary?

Likely, you’d take that place much less seriously than the place down the block that charges fifty dollars for the filet. Which is what you know it should cost.

Don’t overcharge people. Don’t cheat people. Ever. But charge what you’re worth. Charge what it costs. This goes for anyone who’s working for someone else too. Get what you’re worth.

Don’t be the three dollar steak.