How to Achieve 90% Margins: A Playbook for Software Houses

To achieve 90% margins, you don't need a new engine - you need a new mindset and a new set of plays.

Yeah, that was a nice opening, like yet another piece of coaching advice. However, this is a real story, and this playbook will give you actionable steps. You can check how Callstack grew with a staggering 30% EBITDA. You might think: How did they get there? Well, it isn't magic. It's math, mindset, and a repeatable process.

The numbers from BizRaport speak for themselves:

2023:
EBITDA: 41 657 294 PLN ÷ revenue 98 200 840 PLN ≈ 42.4 %

2024:
EBITDA: 47 375 337 PLN ÷ revenue 129 620 715 PLN ≈ 36.6 %

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) measures your operating profitability by excluding financing costs and non-cash charges. To hit a 40% EBITDA, you must sustain exceptionally high operating margins that both cover all expenses and still leave ample room for that level of earnings.

These aren't just impressive figures - they represent a systematic approach to building a highly profitable software business. While many software houses struggle to break 20% margins, companies like Callstack have consistently delivered exceptional profitability while scaling their revenue. This playbook will show you how they and others have done it, and more importantly, how you can apply these same principles to your software business.

8 Common Reasons Why Software Houses Fail to Achieve High Margins

Before we unpack the specific plays, I noticed one eye-opening pattern in most software houses that reached out to me for consulting. Their hourly rates are surprisingly low, effectively cutting themselves off from high-margin opportunities.

Why does this happen? Here are the 8 biggest culprits:

1. Local market: They started from the local market and couldn't find a good reason to ask for a premium price. They're afraid that when they propose a higher rate, they hear, "Well, I can hire such a person instead."

2. Body leasing: Since they only offered remote developers hired through their agency, they could add a small margin on their rate; bigger ones were hard to justify.

3. Purposely competing on price: Fearing they'll lose on price, they start low with their prices and never get to the best deals.

4. Fear of losing a deal: They would rather win a low-margin project to keep his long-lasting employee in the company, but forget about the maintenance cost and their operations capacity that is spread too thin on low-margin & high-risk projects.

5. Fear of rising rates: Same as above, but this time avoiding rising rates, although everything rose and inflation ate a huge chunk of their margin already.

6. Walking dead: Running a software house on low margins usually leads to a walking dead mode. You wake up in the morning running for pennies, and you close your laptop with more troubles. This mode leads to a poor decision-making process and a search for “growth hacks/quick wins” which leads the Software House into a limbo of unfinished initiatives.

7. Big client: Having one big client blinded them. They eat their margin, and suddenly, find themselve in an unpleasant place - be acquire-hired or start actually selling their services to others?

8. Fixed-price projects. Tey began with fixed-price projects to secure the deal. Unfortunately, in many cases, they misestimate the required effort and apply only slim margins to the final price. Note: Selling fixed-price projects can be an ideal way to achieve up to 90% margins—I’ll show you how.

The above reasons are blinding the software house founders. They feel they live in a bubble they can't escape. They have no arguments to win this battle. It is sometimes just too hard to watch how they struggle every day.

Fortunately, many software companies have strong reasons to charge more. They deliver great value to their clients, but they overlook that.

The "Build to Sell" Lesson - Focus Over Breadth

A great book about it, "Build to Sell" describes such drama in an agency business.

At first, the author's agency offered half a dozen services, including web development, print collateral and marketing strategy, each delivered at only average quality. Margins were razor-thin, clients found it hard to understand the agency's core strength, and staff turnover rose. In a particularly painful debrief, a lost client said, “You do everything but nothing really well.”

That wake-up call revealed the problem: being a generalist diluted their value. He chose to specialize in logo design, created a clear delivery process and focused on a specific audience. Within months, the agency had transformed into a premium logo design boutique.

This book offers a valuable lesson for any software agency owner wrestling with the jack of all trades trap. Keep in mind, however, that while logo design can serve as an effective appetizer, it typically lacks the deal size necessary for a custom software house to sustain its growth. I think it's also an excellent read for anyone who struggles in their software agency.

Playbook: Plays to Reach 90% Margins

This isn't about bullshit coaching. It's about fundamentally rethinking your value and then structuring your sales, services, and client management around it.

Play #1: The 90% Margin Litmus Test Helps in Defining New High-Value Services

Ask yourself:

"Can I architect a deal structure for a specific type of project where a 90% margin is feasible?"

It is not about cheating your clients to pay more; it's about identifying scenarios where your unique value, efficiency, or the client's alternatives make such a margin justifiable because the value delivered is immense. If the immediate answer is "no way," your current mindset is the first bottleneck.

Therefore you should use this question and reiterate with your business developers or yourself on what are the reasons you think this client will not pay so much for the service you provide. It might be that you simply can’t do that because he approached you with a low-margin request: “I need some help with my Wordpress site.”

In most cases, the answer is "No." If they need such support, this signals deeper issues, like a lack of understanding of the complexity of his business or the technology he is using.

This is a great insight into deciding how to structure your offering. Instead of saying, "Yeah, I have someone who can help you for x$/h," talk with the person and educate them on their challenges. Commercial Teaching (I'll write about it later in this Playbook) is a great tool for building an image of a premium software house in your clients' eyes.

In such a play of reiterating the "90% margin", the question will help you define new services. Instead of selling "ad-hoc Wordpress support", you could craft a monthly package of WordPress support and use your remaining skills in your team, e.g., a Project Manager who is on shift to add this as a premium SLA parameter and return to your client with a new offer in another conversation between you and them:

I see that you will continue developing your system, and the issues you face will most likely return here or there. I believe you need a partner who can be there for you and provide support on a long-term basis. Here is what I prepared for you (...)

Remember, when you calculate the cost of the service provided, try to hit the 90% margin. This can be achieved in many ways, e.g., by offering an uptime monitoring service that you already pay for or by offering a PM service that you already have. You add this all in the bundle and sell it for a premium price.

Yeah, sounds easy, but usually it's not that simple. At the end of the day, you need to realize that helping clients just on an ad-hoc basis will not make your Software House successful. You have to look at the long-term perspective on the clients. If they are stubborn and just want your short-term help, think twice before jumping on that ship. The effort needed to close small gigs, get paid for them is tremendous, and your margin will melt like ice cream in the summer.

Play #2: Uncovering Hidden Value in Your Current Projects with Total Cost of Ownership

The most money usually is in our current projects. Can we try to bump them to a 90% margin?

Most founders stop their imagination at "How can I charge a 90% margin on this developer's time?" They think, "Well, even if I put some juniors on the project, the average rate will just be around 50-60% margin; it's not possible to hit 90%." Not with that attitude. For sure.

The crucial mindset change is to:

look at the total value you provide, not just the cost of your inputs.

If you provide just good developers for hours, you might end up with 40-50% margins. The challenge here is elsewhere.

If you limit your understanding of the value you provide to your clients to the skill of a particular person on your team, you are limiting yourself dramatically. What your clients often buy is way bigger than you think. This requires a different approach anchored in understanding their Total Cost of Ownership (TCO).

You can find a nice article about how Momentum software house switched from a generic to a healthcare-specialised software agency in 6 months. They found out that for the projects in that sector:

• In healthcare projects, price pressure occurred less frequently

• Clients in this industry valued quality, reliability, and safety over cost

• Projects were more complex, which raised barriers to entry for competitors

• Collaborations were long-term in nature, rather than one-off projects

It means that they found out that focusing on specialization in healthcare allowed them to increase their impact on their clients' Total Cost of Ownership. They saw an increase in the average rate from 45-50 USD to 65 USD an hour. This is just the beginning of their journey to a 90% margin. However, I think they made an important step towards that goal: they changed their mindset from selling hours of engineers to delivering value.

The crucial thinking change is to look at the value you provide through the lens of Total Cost of Ownership. This concept forces you to look at a client's initiative from their highest possible view - how much new software will cost their organization to develop, maintain, expand, host, and care for legal aspects and security over its entire lifecycle. TCO is the ultimate north star of this mindset change. It allows you to find all possible venues of potential value drivers in your client's eyes.

Going back to your current projects…

Total Cost of Ownership is mitigated by the companies in many ways, but here are some very popular:

• using off-shelf solutions

• using existing team expertise to build custom software maintained by them

• buying external services to deliver one of the above

• reducing complexity of the systems by integrating them in new way and removing steps in the process

• buying company that has the team and software needed

• building off-shore/near-shore subsidiaries and move to them the operations and accompanying software

• trainings on the best practices how to use the off-shelf solutions

• hiring experts that can be cheaper and work in-house for them

Now, look at the system you develop for your client and all surrounding systems.

Ask yourself if your client can mitigate the TCO of the system you develop using any of the above techniques?

Using the above list you can find "black swans" - term coined by Christopher Voss, an author of the "Never Split the Difference: Negotiating as if Your Life Depended on It" book, where he explains that a black swan is knowledge about your negotiation opponent that changes their negotiation position dramatically and justify high-margin engagements. What are the common “black swans”:

• Your expertise and knowledge on the system complexity is so high that any attempts in on-boarding new “in-house” members by the client failed. Of course not because of your active actions but because of the complexity, DNA of your company that curates experts in this domain, process knowledge, communication barriers.

• the system itself is “legacy” for others and “known” to you and it is very hard to find new people to join the project unless it’s your way of onboarding them.

• the system is hosted, maintained by your team and none on the client side actually knows how to assure business continuity without you

• the company tried to build off-shore presence but failed due to lack of focus/budget

• your system is already simplifying the work for your client and is vital part of their software, is not easily replaceable

It is your responsibility to align your pricing with the immense value and risk mitigation you provide. This might involve a respectful but firm conversation about the strategic partnership's value.

Ask yourself a question:

Do I really charge enough for my service, taking into account all the factors my company covers for my client?

Finding black swans can work both ways, though. If you realize that your core value is in one person with great relationships with your client's team, you can quickly end up in hard talks about "buying out" your crucial team member.

These are “black swans” of your collaboration with them and should be treated with great attention. When a client tries to buy out your crucial team members, it's a signal that they want to reduce the dependency on you and look into seriously limiting an engagement with your company.

Don't get fouled by “promising new projects” around the corner, “but we just need your colleague to be part of our organization, in other way we can’t unlock it.”

Play #3: Be a Business Consultant

Another angle is to use TCO to find places where your client naturally needs you to step up and contribute more.

A good example is when you have a great relationship with key stakeholders on the client side, but you keep asking them for a "new project". You walk around them, have great talks, but they keep saying, "We need more time to think about it, we will get back to you in the next quarter."

Instead of waiting, look at the Total Cost of Ownership of your client's current systems. You know a big set of them from your team. You might find places where they miss a crucial person who can pull off new initiatives. The ownership is divided between your team and theirs, with neither having the capacity to bring new initiatives to life.

Putting another pair of eyes on the project, someone who looks from the business perspective and from the broader perspective as an owner of the system, you find a vast set of new features, business concepts, and improvements you can challenge with your stakeholders.

What works very well here is to create a map of people on the client side and craft their main Jobs to be Done. A great article about it written by it’s author can be found here.

Thanks to AI, you can now feed it to your preferred AI model and prompt:

#Prompt 1 of 4
Act as Tony Ulwick (Jobs-to-be-Done), with the lens of a Software-House Business Developer.

I’ll give you:

A brief system description (features built, upcoming milestones).

A list of client stakeholders.

Your tasks:

For each stakeholder, use Ulwick’s template:

When [context], I want [action], so I can [outcome].
Identify their functional, emotional and social jobs.

Ground each job in our current technical progress and strategic timing.

For every job, propose 1–2 business opportunities (new modules, integrations, partnerships, GTM concepts) that fit our roadmap.

Such business opportunities open up a new type of conversation with upper management of your clients. Such conversations have to be value-driven, which means that they should be oriented around what kind of value you can bring to your client, taking into account their current and nearest business objectives and their respective JTBD (Jobs To Be Done).

Here is an example of ChatGPT, where I use the above prompt to discover new opportunities for a sample client. As you can see, the proposed opportunities might fall too far or too near the current business objectives. Your role is to provide as much data as possible. When you feel the proposed opportunities are so good that you can actually take them to the client's stakeholders, the big question is: How do you do it?

Another great book can help us in this process: The Mom Test. It is a great framework for conversations with clients that enables you to avoid being too sales-oriented, narrow-minded, or attached to your beliefs. Below is a next prompt that you should use as a follow-up of our JTBD conversation:

#Prompt 2 of 4

Using Mom Test principles help me in validating the above Opportunity Proposals

This prompt will instantly convert the Opportunities Proposals from the first prompt into projects or services with questions that trigger your stakeholder attention and validate their desire to pursue that path or not.

Secondly, you have to understand that to win such new projects discovered using the Business Consultant approach, you might go through an earlier sales funnel than you usually do. Why is it so?

Play #4: Build new services to get early in the process

Every project in a bigger organization goes through a few stages before it rolls out as a full-scale custom software development endeavor. It has to be discovered by upper management and researched internally. The findings sometimes have to be verified with external service providers (you!) in small projects that could seem like a "waste of time” to many software houses. It might be a PoC project or even something way smaller, e.g., Copilot training or UI Path training. You might think "this is not my specialization, I’m not good in trainings", yep, that could be a good reason to reject such an opportunity. However, down the line, the agency that will sell this training will gain insights into your client's problems outside your current project scope. They will be in touch with your stakeholders much sooner, having a huge advantage over you - they are teaching your client how to use the new tool to address their upcoming business objectives.

This is just an example, but the play is more generic. To discover new projects for your current clients, you have to be open to creating new services. Not to get spread too thin with your offering, but to learn one crucial truth:

Earlier you are in the process, the better margin you get.

This exercise with your client's stakeholders to discover the broader scope of the system, looking from the point of view of their business objectives, enables you to specialize in a new set of lucrative services. You might learn that your software house, which you thought has a core unique selling point in RPA, actually can build a great business around selling training because this is an easy door opener for much bigger deals. Just don't close your eyes to it.

Will this spread you too thin? If the new service leads to your core offering, no. If na new service has no direct implication on your core service, you must reconsider how significant an investment it is for you and in most cases, reject this opportunity. The crucial thing here is:

You can roll out as many new services as you want, unless they lead to your core offering.

Therefore, continuing our example GPT, let's use the following prompt:

#Prompt 3 of 4

My software house specializes in [your specialization], the above business opportunities and corresponding experiments is a lot of work and assuming the client sees value in one or a few of them, instead of doing them upfront, I would like to sell it as productized service (a service with defined scope, result and price). I still want to follow JBTD and Mom Test approach, just move the burden of validating towards the client. Can you help me in reframing the above experiments in such way that we keep our principles but we shift the effort further and we firstly get client buy-in?

The result is surprising. You get a list of well-shaped productized services ready to be pitched to your stakeholders!

But how to pitch it?

#Prompt 4 of 4 

I like productized-service no [select the number], how shall I approach my stakeholder following Mom Test principles?

The above prompt (as a continuation of previous ones) will result in a well-drafted frame for a meeting where you know:

• How to open it

• How to measure the demand

• How to steer the conversation towards your newly created service

I encourage you to experiment with new services because you are:

• Breaking out from the current development cycle

• Jumping into new areas

• Shifting your client's perception of you

• Being ahead of others

Of course, the devil is in the details. You must judge how well you can deliver the newly crafted productized service. If, for instance, the producized service will lead you to an entirely new set of technologies (e.g., ready systems vs custom ones), you might end up positioning yourself as an expert in a new, gigantic domain.

In moments like this, think outside the box and tap into your network of companies and individuals who can help you deliver this new service. The last thing you want is to hand a “warm, ready-to-buy” client over to an unknown company with a slick website shouting, “We are experts in X.”

Even if you partner with someone to launch a finely crafted, productized service, remember to own the process and the big picture - and keep the client close to your company.

Play #5: Look for Gold Peanuts - The "Hero" Fixed-Price Model

I mentioned the Fixed Price model as one of the main reasons for low margins. Many software houses have abandoned it after terrible experiences, and it can even kill a business. Yet it is also a powerful way to capture the true value of your service and command high margins.

This works when clients overestimate the total cost of ownership. They approach you thinking a project will cost far more than it actually does because they lack deep technical insight or because you have (ethically) educated them on the complexities they’d face if they went it alone. Without your specialized skills, years of experience, or proprietary methods and reusable components, the project looks massive to them.

For you, though? It is peanuts.

Gold peanuts.

This is the sweet spot for high-margin fixed-price work.

How to Execute the "Hero Fixed-Price" Play:

• Identify "Gold Peanut" Opportunities: Look for projects where clients warn, “This is a massive undertaking for us,” yet you know you have a proven, ultra-efficient solution.

• Anchor on Their Perceived Value/Alternative Costs: Explore their alternatives: internal build estimates, bids from less-specialized firms—and position your fixed price as a bargain by comparison.

• Structure with Phased Value Delivery: Break the work into milestones that each unlocks a portion of the total value. Some phases may absorb most of your effort but deliver outsized client impact.

• Deliver with Grace, On Time, and Premium Service: YYour communication, regular updates, and expectation-setting are part of the high-end experience. Share timely status reports, run bi-weekly demos, and manage the project professionally.

• Never Mention Hourly Rates: To the client, the rate isn't the argument. The value behind the project is vastly bigger than your fixed price. The alternatives are all far more expensive or risky. This is what matters. You charge a fixed price, deliver excellently, and the client is in heaven because they got immense value. You are in heaven because you're earning a 90% margin that gives you space to innovate and improve.

The checklist above is essential. Your workflow with these clients shifts - project management changes, internal communication adapts, and everyone on the team must understand we’re in a fixed-price model. If a client requests new features, the team should immediately escalate to the PM or Account Manager, who can, with grace, discuss scope changes and turn them into upsell opportunities.

Sounds simple. But where is the trap?

A sign of a bad fixed-price project is when your client is surprised that a vital part of the system is not in the scope.

In a fixed-price engagement, your greatest effort goes into teaching the client what’s in—and what’s out—of scope, using clear logic and courtesy. If you ever have to say, “That’s hard to estimate,” you’re on shaky ground. A strong fixed-price proposal has one hallmark: a naturally well-shaped scope of work.

If your offer leaves too many loose ends zones and you tell to your client “we’ll cover that later in a separate SOW” you’ll end up negotiating forever.

Play #6: Discover places where client overestimates Total Cost of Ownership

Sometimes you’re sitting on a gold mine. Your reputation can be unbeatable in a specific segment - thanks to your marquee clients, niche expertise, proprietary software or business know-how, and relationships with the right decision-makers. When clients look at your track record, they assume that even at your top consulting rates, their total cost of ownership will still be lower than working with cheaper, less capable agencies or hiring and training in-house staff.

Case in Point: Callstack

They sell what’s essentially a commodity - React Native consulting - but they’ve built a powerful premium brand. Despite many competitors, Callstack reached roughly 40 percent EBITDA. That margin isn’t generated by developers alone - it must cover operations, sales, marketing, project management, software licenses, hardware and R&D. To net 40 percent EBITDA, you need exceptional rates.

From a Polish cost base, here’s a quick back-of-the-envelope:

• Mid-level React Native developer salary: 14 000 PLN/month (~3 500 USD)

• Billable hours/month: 154 (inc. paid holidays) ⇒ about $22/hour cost

• To hit 90 percent margin: you’d have to charge $220/hour

That’s unrealistic without a top-tier brand. Callstack achieved it by positioning itself as the market leader co-hosting a React Native conference with Meta, producing high-value e-books, and having their own developers evangelize best practices. Their prospects’ in-house teams already read Callstack content daily and speak highly of their experts.

Look for the same signals in your niche:

• Client developers reference your blog posts or open-source projects.

• They expect a “wow” from the very first interaction.

• They want you to look-and be-expensive.

This requires a "face" in the whole process - someone who:

• Has a strong opinion

• Is known by the community

• Has a strong track record (contributions to OSS)

That person projects the premium impression. Behind them, a skilled business developer nurtures the relationship, signals expertise, and identifies broader business needs.

Callstack embodies this strategy through key figures who combine deep technical authority with community leadership - making their premium-price “hero” model not just viable, but irresistible.

Key OSS Figures as Brand Ambassadors

• Mike Grabowski - His contributions to facebook/react-native and microsoft/react-native-code-push with 130,000 GitHub stars combined, making his name instantly recognizable to any RN developer

• Michał Pierzchała - Built his reputation as the testing and performance authority through his work on Jest (44.7k stars), becoming the go-to expert developers trust for best practices

• Satyajit Sahoo - With 2.4k GitHub followers and libraries like react-native-tab-view used in thousands of projects, he represents the modern face of React Native innovation

When potential clients see these names on your proposal, they know they’re not just hiring another development shop but getting direct access to the people who built the tools their teams rely on.

Behind the scenes, you need a systematic delivery engine:

• A lead consultant who owns the process and maintains the premium impression.

• Cost-effective team members who execute each step under that consultant’s guidance.

• A brand and account-management approach that together enable 90 % target margins. Even after back-office, marketing and shareholder costs, this yields impressive EBITDA.

Source: GitHub

Callstack’s GitHub stars add up to 13.7 k + 1.7 k + 3.2 k + 3 k + 3 k + 1.1 k, for a total of 25.7 k stars. That level of visibility drives tens of thousands of dollars’ worth of traffic every month. Their open-source growth engine, built on the repositories they own and the projects they contribute to. Forms the top of their marketing funnel and creates massive leverage.

Your agency might not yet have such an extensive OSS portfolio, but even a handful of well-targeted projects in your niche can set you apart from 99.9 % of competitors.

Watch for signals that clients are overestimating your value:

• have your clients ever negotiated with you on the price?

• Are they unusually enthusiastic about your price-to-value ratio?

• Do they come to you for broader business advice, not just software?

• Have they invited you to industry events where no other software agency is present?

Those are clear signs they view you as a strategic partner rather than just a vendor.

I’ve been in situations where a client’s unexpected enthusiasm revealed that I’d underpriced my offer. Afterward, I revisited my proposal and confidently increased my margin.

Play #7: Contract project in phases tightly connected to delivered value

You can think of it as small fixed-price projects. Several of them are phased in the Statement of Work. The key here is to look at every phase as an opportunity to maximize the margin by understanding the value of this phase in your client's eyes. Your specialization and reusability can significantly reduce the risk of incorrect cost estimations. Phasing this in small “fixed-price” projects assures you don’t fall into too big troubles if something is omitted.

Let's give you an example. A regular division of phases in a project will look like this:

• Discovery & estimation session, two weeks

• Building project framework and environment, two weeks

• [X, Y, Z] user story/feature shipped - MVP v 0.1, two-week sprint

• [X, Y ,Z] user story/feature shipped - MVP v 0.2, two-week sprint

Instead, look from the perspective of value delivered to your client.

• Validated user interface, including cost estimation

  • 1 week for client acceptance

• Crucial workflow x/y/zis ready for review on a staging environment

  • 1 week for client acceptance

• Validating the workflows with pilot users

  • 2 weeks for the client and his users

• Pilot launch

  • 4 weeks

The first example shows your perspective on the project, where keeping the team busy is most important to you in order to reduce operational costs.

The second example shows that you understand your client's perspective. It makes realistic assumptions about his time to react and his business objectives. It also gives space for a premium price.

Play #8: Use Challenger Sale to shift talk from hours to value

A few weeks ago, I had a great conversation on LinkedIn with Michael Grubka, CEO of Apropo, who wrote a very popular article about hourly rates.

Long story short: Specialized software houses charge around 280 PLN/h (approximately $70/h), while generic firms offer services for just $50/h. Despite the higher rates, these specialized companies often win projects because clients are willing to pay a premium for their domain-specific expertise and proven experience in the field.

My comment triggered a discussion about a different way of looking at rates. Instead of aiming for the highest rates, we should aim for the highest margins. Michael wrote, "The best companies with the highest EBITDAs are the ones that very often sell fixed-price projects."

Bingo! I'm not delusional. My experience is not an exception. It's a pattern.

What is the most important thing you need to do? Stop talking about rates. Period.

So, what can you do if your prospect asks you about hourly rates?

I've created a GPT for you. You can access it here. It uses publicly available Challenger Sales excerpts and is sprinkled with my prompts to make it more accurate for software houses. In essence, it helps you turn the talk from rates to the real value you deliver. You have to reposition yourself in the eyes of your clients from the very beginning.

Here is an example chat with our GPTS. You can see how our AI tries to reframe the conversation from “hourly rate” to value-based. You can notice how, by providing context about the client and our company, the GPTS tune the message and focus on Challenger Sale methodology.

The most important value of this tool is that you are not alone in your mindset change. The prompt will help you find arguments to talk with your clients differently in challenging moments.

Many business books advise here to talk about their problems, but this is not enough:

"Our problem is a lack of developers, give me some! Now! And cheap!"

Stop that nonsense. Let's talk a bit about your project. If your prospect does not have time to explain his situation, you might be in touch with the wrong person or just with someone who already knows what he is looking for: the cheapest offer. In The Challenger Sale book, they pinpoint exactly this challenge: if there are no differentiators, the only one becomes the price.

Fortunately, many clients are not that tight to the "show me your rates" request. They are keen on explaining their situation in a broader context:

• So, how is this project already going?

• Is it part of something bigger?

• What is your company's core business?

• What is your team size?

In the responses you receive from your clients via emails and on the calls supported by Challenger Sale GPT, you slowly draft a picture of client’s business. You start to understand that their money is much bigger. They have a great "90% margin" business themselves.

That's what you are looking for.

However, you can also learn the opposite:

• Their business is not in really good shape

• They are in a very aggressive market, and their own USP is quite hectic

• The people you talk with are B-players, you see their actions, answers, and you feel that

• They are not open to talking about their actual business situation

• There is no cultural fit, no flow between you and them

You have to pause for a moment. If you have these or similar signals, even if you manage to reframe the deal into a 90% margin, you have to be sure of one thing: it won't be easy to deliver because they will challenge you, provide hectic requirements, play you, or even try to cheat.

You have to be cautious and prioritize such deals that actually, using the Challenger Sale process gives you confidence that they are in good business, because when they are in good business, your 90% margin play might have enough room to roll out.

Play #9: Capture the high-trust window and tailor your product to your client's needs on the fly

Here is another crucial mindset change: You are the product.

You have to understand that people buy from people. Harvard Business School research reveals that emotions drive up to 95% of purchasing decisions, even in B2B environments. While business decisions appear data-driven and ROI-focused, underlying emotions like trust, confidence, and perceived risk are the real drivers. They are building their decision process on many factors, but when they open up to you emotionally, they become less analytical and more feeling-driven. The emotions behind the areas you uncover in front of them are strong - they feel fear, they feel tension, they know they could do better.

If you can capture that trust by asking the right questions and building the right relationship, you become (for a moment) a product. As Yale Insights research shows, decisions made on the basis of feelings hold up longer in the face of new information than decisions made deliberately and rationally - meaning when you win emotionally, you win durably.

This moment does not last forever, especially in bigger companies. The emotions cool down, and the founder starts analysis once more, seeks confirmation in your offering, tries to ask more complex questions, and validates you. But this is the time that allows you to improve or even build your new service or services. I call it "high-trust window."

You know that you take a calculated risk. Either the client buys from you on a 90% margin and you have to deliver a new promise and most likely eat up a bit of the margin, or you just sit and see how this business opportunity runs away from you.

The Reality of Sales Meetings

So, how do you do such sales talk? Look at the article: Why We Sell Ourselves for Free and Get Upset with Clients When They Don't Buy Anything.

This article teaches you how to perform the first phase of the Challenger Sale process - Commercial Teaching.

The second phase is the Tailor Phase, which is exactly our play is about. You should not pitch the same old story about your company and the same old services to everyone. You must rethink the Value Drivers, the kind of Organisation you deal with (DNA), and the Emotional Impact on the fly.

Drafting such a new offer is material for a new playbook. However, the crucial mindset change is as follows: use the trust window to redesign your service, keeping in mind the 90% margin goal and the maximum value delivered to your client.

The above stories aim to uncover one crucial thing in our 90% margin playbook:

Know your value.

You'll need to repeat to yourself daily what your unique selling point is and the value you give to your clients that you are very specific about. You can't get distracted by "prospects" who come and say that you are too expensive. They might be right because they don't want to buy your service, but just a tiny fraction of it. The challenge here is to educate or leave them because sometimes the best educator for your client are their own mistakes.

Play #10: Focus on the long run

You know the saying "Stay hungry, stay foolish", a famous quote popularized by Steve Jobs in his 2005 Stanford commencement speech. I often see this approach on the sales calls where Software Houses try to close the deal too fast because they are frustrated by endless calls with hesitant prospects.They are not willing to invest in yet another free consulting call. This mindset of brutally qualifying leads not based on the potential but based on the actual, direct business value is short-sighted.

BANT is not always your friend

Probably you know this lead-qualifying technique where we assess Budget, Authority, Needs, and Timeline for a given prospect. It’s a great way to gauge the actual state of the prospect’s buying process and your position in it; however, just relying on BANT can extremely harm your business. What’s very important is to also score the prospect on its alignment with your ICP (Ideal Customer Profile) and its Buying Committee. An example:

You’re in talks with a Director of Technology at a big corporation of about 5,000 people. His current situation is a bit weak - he doesn’t have much budget but must solve a crucial pain point in their custom software.

Looking from the BANT perspective: budget is small, the person has authority, need, and timeline, but the deal size is too small for you to engage. You already see similar projects you had in the past where for months you’d fix some small piece of software for a friend or a tiny company.

It’s clear that this Director of Technology has significant decision power in his organization. He simply doesn’t have a proper decision window to push a new project through right now - but that doesn’t mean he won’t have one six months from now. The small project he’s talking with you about is a starter. He’s learning how you work with him, if you’re trustworthy, and - most importantly - whether you can solve his problem.

I’ve been embarrassed a few times seeing founders kill a relationship with a vast, promising company because they failed to realize how the “big boys” play.

Again, doing business with big corporations is very different from startups (that’s a topic for another playbook), but what’s essential to understand is that you have to score your leads and business relationships on their long-run potential.

Your mindset should always look at a realistic but ambitious long-run perspective. If you don’t have time for such investments, pass it to someone who can spend the time and conduct Commercial Teaching - just keep yourself in the loop. Be there; you’ll be surprised how often just being part of the process teaches you so many new things and opens possibilities you’d never have thought of.

Imagine the worst-case scenario

At the beginning of this playbook, I wrote eight reasons companies keep low rates. They’re all rooted in one thing: fear. Even when you apply the above 9 plays and understand your real value, you still have to face that fear.

What helps is visualising the worst-case scenario. It sounds simple, but breaking it down makes your emotions less likely to influence your decisions. You can prepare for the bad scenario or acknowledge with the other stakeholders the calculated risk you’re taking to turn the tables. This will shift your relationship with your client into a space where you can take a deep breath and start building your Growth Engine.

I often fall into that trap:

• “What if the client starts to look for another vendor?”

• “What if our deal is rejected and we have people on the bench?”

• “What if we underestimated the effort needed in this fixed-price project offer?”

All these questions are totally valid. Instead of muting them, write them down and take a realistic look at what you can lose and what you can gain. Write it down, share it with your shareholders, and keep it in the back of your notes when you talk with your clients.

Conclusion

Each play discovers the hidden gems you might already have in your software house.

• Play #1 uncovers side services that are at your fingertips.

• Play #2 broadens your view of your clients with TCO.

• Play #3 scales your value by shifting your role to that of a business consultant.

• Play #4 uncovers how you can open new opportunities if you get in early in the decision process with a new set of services.

• Play #5 turns your eyes toward your know-how and opens you to a new way of looking at fixed-price projects.

• Play #6 uncovers a hidden gem in your team and brand—how your client can be intimidated by it and pay the premium for it.

• Play #7 shows you how to structure your offer into value-driven phases so you can sell it at a premium rate.

• Play #8 shows you how to talk with new prospects using Challenger Sale in a way that reframes your relationship from hours to value.

• Play #9 shows you that sometimes you are the product, and leveraging that allows you to draft new, high-value services on the fly.

• Play #10 shows you how simply changing your approach to your clients will change how they perceive you and ultimately lead to higher-margin deals.

There are more plays to come. The above ones aim to show you the many places your current software house can search to maximize its margins without a huge shift in the Unique Selling Proposition.

These plays can dramatically change your financial situation and help you reach your highest level of contribution to your clients. However, there are more levels to achieve. If you look deeper into your company - your team, values, drivers, unique offer, passion, and knowledge - you can use that to discover a potential Growth Engine: a growth engine that allows you to specialize in the eyes of your clients and hit even higher valuations, better deals, and, most importantly, deliver superior value to your clients.