This article is part of my monthly Word Carnival and I won’t even ask if you know what I’m talking about. I know it’s something that just about every small service business, solopreneur and freelancer deals with at some point.
It could be when you’re just starting out and doing what you can to build a business. It could be during a down economy when your customers zip up their wallets. Or it could be something that permeates every business deal you make.
The fact that people will try to cut you down on price isn’t your fault. Everyone wants “a deal” and services are somehow always perceived as negotiable.
The fact that they try to cut you down… and win… well, that is your fault.
Before you get mad at me for telling you the truth, you can put that blame on me, too. I’ve had plenty of experience wanting a job badly enough… not being confident enough about getting it… not wanting to deal with conflict and confrontation… wanting to “help” and feeling almost selfish for (gasp!) asking to get paid.
The good news is that I’ve also had plenty of experience dealing with it and considering we’ve made it almost 15 years in business, I’ve dealt with at least some of it the right way!
It’s not always easy. Sometimes you even have to concede failure and walk away from a job.
But if you start smart, you can mitigate those times when it seems like the only thing someone is interested in is winning a price point. Don’t cave! Try setting yourself up for success instead.
Know Your Own Worth
If you don’t understand the value of what you provide, can’t articulate it or don’t sound convincing when you do, you might as well be a cute little kitten walking into a cage with a bunch of hungry pit bulls.
Got that image in your head?
Good.
The only way around it is staking a claim on what you’re worth before you show up at any prospecting meeting or enter any business negotiation.
If you waver from your conviction that you’re damn good at what you do, know what you’re talking about and will do your prospect’s job like a genius, they’ll smell blood. And attack your pricing.
You’re not running a business because you’re lazy and dumb.
Wear your expertise proudly. Show it in everything from your shoes to your haircut. Yes, how you present yourself matters.
I once met with a prospect who showed up looking like a disheveled mess in sweats with a mop of flyaway hair. The only thing missing was the fuzzy slippers. And you can bet your booties I made a judgement call about that person.
Exude high-worth in everything you do from your appearance to the way you sit at a table and the words that come out of your mouth.
If you don’t believe it, nobody else will.
Lead With Value
Price means nothing without context.
What if I told you your website was going to cost $5,000? Would you spit your coffee out onto your desk? Or would you raise a skeptical eyebrow and wonder why so cheap?
If you wanted a simple WordPress site, you’d probably lose some coffee. But if you expect a 10,000 page eCommerce site you’d think I was scamming you.
The fact is, people want to know how much something is going to cost. It’s a reasonable question. But when it’s the first question – and the one that they’ll base their decisions on – it’s the wrong question.
So don’t answer it.
I always start with some version of “it depends” and then turn the conversation immediately to business needs.
Find out what your client wants and needs. Talk about how you’ll deliver it. Make it clear what results you provide and what you can bring to the table that puts you in the unique position of being able to do the job and do it well.
Even if your price ends up being more than your prospect can afford, you want them to walk away pining for all that juicy goodness you just offered – not cruising with a shrug for the next cheapest competitor.
Obliterate Words Like “Expensive” From Your Vocabulary
This is an unnecessary bit of self-sabotage. I used to be so guilty of sitting down with a prospect and apologizing ahead of time for the pricing I was about to give them.
Not because I was overpricing but because my brain had convinced me that since the last person had told me the price was too high, the next person would, too.
“I know it’s expensive, but…” I would begin, and then try to backtrack through value to why it was worth it.
Bzzzzzzzt!
Wrong.
I had become my own competition.
Tuck this little tidbit under your hat the next time you’re in a price discussion with someone: just because they can’t afford your price doesn’t mean it’s too expensive.
Start at worth and value, never at price. And put any issues about unaffordability squarely on your prospect. Trust me – it’s them, not you.
Never Negotiate Below Your Value
The first thing you need to do is know what your pricing threshold is so that when someone says, “Can you knock ten bucks off?” You’re prepared with an answer and you don’t have to look wishy-washy while you consider the 497 reasons why you may or may not want the job/want to lower your price/should or shouldn’t lower your price.
Maybe you’re ok with knocking ten bucks off. But know what that threshold is.
Even better, don’t knock anything off.
There are other ways to negotiate on cost that don’t include cutting into your profits or devaluing yourself.
It could mean taking something in trade. The key is to trade like-for-like value.
It could mean setting up a payment plan. A big price tag may seem daunting but splitting it into small chunks over time makes it more attractive for your client – and a guaranteed income source for you during that time period.
It could mean offering an incentive. Reward timely responses, up-front payments or shorter timeframes with a discount.
Or it could be as simple and straightforward as reducing services to match someone’s budget.
The next time someone tells you they can’t afford your prices, try asking them what they can afford and then removing services until you hit the right price point.
Ask About Budget
Most people will say, “I don’t know” but if you’re lucky you’ll get some input that you can craft your services around.
I haven’t had a lot of luck with this approach because it’s rare someone will have the remotest idea what they should/can/want to spend (until you give them your price, and they know it’s definitely not that).
But here’s a trick that can sometimes ferret out a person’s spitting-out-their-coffee point: Test a few price ranges out on them.
Ask them how they would feel if you told them your services turned out to be $100. How about $1,000? $10,000?
You can pick your increments but keep them simple (don’t ask about every dollar) and keep them relatively far apart. The idea is to find the point where your customer’s eyes start to bug out so you can back down and find a more comfortable place.
Lots of times you can get a halfway decent idea of the range you should be working with. But only after you’ve nailed value!
Turn Your Prospect Into A Co-Conspirator
You may ultimately be doing the work but don’t talk about what you’ll do – talk about what “you” will do – together.
If you have a brilliant idea for helping your customer, phrase it in “we” language.
Oh hey, you know what we could do to make that thing really work? We could totally do this…
If you can get emotional buy-in you’re more likely to get financial buy-in. So get your prospects invested in what you’re proposing. Give them co-ownership.
Before long they’ll start thinking your brilliant ideas are their own. Pat your ego on the head and let them. If they pay you to execute those brilliant ideas – and you do it brilliantly – who cares?
Don’t Get Frustrated
Its not personal. It’s business.
That’s one of the toughest lessons I had to learn. Heck, I still have to relearn it from time to time because when you own a business, it’s a bit like your baby and any sleight or attack on it can feel very personal, indeed.
But when someone tries to knock you down on price, it’s not about you.
When they tell you how crazy your pricing is and that they can get what they want cheaper somewhere else, it’s still not about you.
It’s about their financial situation, their priorities, their perceptions.
Sometimes you can’t influence those things at all and that’s when you know it’s time to walk away. Be as objective about it as you can. You’re still awesome, even if that total idiot can’t see it.
Decide What Your Help Threshold Is
Every year we opt to do a certain amount of pro bono work. Once we hit that threshold, we’re done. Take you’re I’m-broke-but-a-really-great-guy sob story elsewhere.
It’s a good idea to plan ahead of time for the eventuality that you may find a cause to support or a guy you can cry into your beer with whose project you just have to take.
Sometimes we do work for schools or for our community. Once I met a dead-broke woman who had a great business idea and a ton of passion and I would have paid her to do that project just because it was fun and I wanted to.
But we do run a business so if we run around feeling generous and bleeding-heart all day long, that could make for some bad financials. So we plan out our digressions ahead of time. We may not know what we’ll be doing but we’ve got some time and budget slated for it.
Pick and choose where you want to donate your efforts and you’ll be less inclined to feel pressured to lower pricing or give services away.
It’s a tough road from “Here’s my price” to “Here’s what I’m totally worth”. It’s fraught with jabs at your self-esteem, thick-headed prospects and plenty of failure. Sometimes we’re our own worst enemies.
But if you’re tired of pricing negotiations that leave you exhausted, defeated and even angry, it’s time to rethink how you approach them. Before you put yourself through the wringer again, or compromise under pressure, try reminding yourself of these few tips and practice, practice, practice.
Do you have a challenge getting people to understand the value of what you do – and pay you accordingly? Share your woes in the comments, you’ve got a sympathetic ear!
This post is part of the monthly Word Carnival series of posts. This month, our carnies take on the challenge of knowing your value and conveying it to clients so that you can charge what you’re worth – and get it! Read the rest of the Word Carnival posts here for more great advice from some of the smartest business owners and entrepreneurs you’ll meet.
I love the image of the kittens and the pit bulls. That certainly puts a perspective on not ‘wearing your expertise proudly’. That’s a stand out line for me Carol Lynn in this excellent argument for pitching your worth.
Leading with value and price meaning nothing without context really strong points too. Unless you fully understand your client’s problems and can match your offer to their solution, having a discussion about price is pointless. Great article and one that every service provider should pin to above their desks and refer to the next time a client leads with price or argues the cost.
Oh Sandy, believe me when I tell you that I’M going to print this and pin it over my desk 🙂 It’s a work in progress… but yes, price always depends on context! Otherwise you can quit your job and start packaging up and selling widgets. The good news is you can probably feed them to the pit bulls 🙂
Thanks for this fantastic post. I wish I had it last Saturday. I had a meeting with a client who contacted me after reading my profile on LinkedIn.
The meeting was to discuss me doing some ghostwriting for him. During our discussion I realized he needed a blog. I offered to set up a WordPress blog for him. He was happy with that. When it was time to talk ‘cash’ he managed to knock off £50 from my fees.
I agreed! I know. I’m too much of a softie. But as a newbie I didn’t want to lose that deal. Plus I’m not good at negotiating.
But what made me mad was what he said at the end of our meeting. He told me that ‘money is not an issue for him.’ Oh dear!
However, It’s not too late for me to get what I’m worth. I’ll be working with him for a while. He wants me to write the posts for his blog and later on a book. Armed with the information from your post I won’t be getting stung again!
Have a good day.
Hi Junie,
I feel your pain! I know all about not wanting to lose the job. So next time, you have to go in and tell yourself that you want the job, but you are not willing to compromise your value to get it. Find a fair price and be firm. Everyone will try to get a deal! If they want a lower price, give them fewer services. You don’t even have to negotiate. What are you negotiating? Whether or not you’re good enough at what you do? Nope. Stick to your price and if the other person can’t afford it, that’s their issue, not yours. I hope you get lots of work from your new client and that you state your terms for the next job!
Thanks you so much Carol for this advice. I need to read what you said often so I’m going to print it out and keep it on my desk.
You’ve been a big help and I appreciate it.
Have a great weekend. 🙂
Hey now, what’s wrong with fuzzy slippers?! J/k – I’d never wear them to a client or vendor meeting. (Unless it was via Skype. Then I’m TOTES rocking the fuzzies, believe you me.) After productivity/”time” management, pricing is probably the biggest obstacle for most of the solos/freelancers I speak to weekly. Great advice here. I especially like the idea of the price range test, and the brilliant point that their lack of cash flow is not your fault. One of those “derrrrr, why didn’t I think of that?!” moments!
I remember one day as a kid, going to church with my parents and looking down to see my dad wearing big, blue fuzzy slippers. Being a dad (ie: a man and busy with young kids) he had walked right out of the house without realizing it. So I suppose there is some leeway in there for fuzzy slippers 🙂
Try the price range thing. It has worked for me lots of times, especially when you get a sense of when the person is in “holy crap I can’t afford that” range.
When my son was little and I was in college, our weekly trips to the grocery store were punctuated with me saying, “No, we can’t afford that.” It was my way of trying to reason with a 5 year old about all the bright shiny things the store kept at his eye level. Yes, we were on a tight budget. BUT if there was something *I* really wanted, you can bet I’d figure out a way to find the money. Priorities! So yes, you’re absolutely right. It’s not about your price. It’s about whether or not your prospect sees and understands the *value* of what you’re selling. If they get it (and they want it), they will find a way to pay for it.
THAT just hits the nail on the head, Tea. it’s totally a matter of priorities and no pricing in the world and no value in the world is going to convince someone to spend their money if it’s not their priority. We have been pitching a particular prospect on a job for. ev. er and they LOVE us and want to work with us and are totally fine with the pricing and it’s not even a matter of not affording it. But the job for them is take it or leave it. You can’t force priorities on someone. When it starts to hurt, it will become one. Until then, you have to walk away.
Bravissimo! Thoroughly enjoyed your post, Carol Lynn. You always grab me by the collar and rope me in.
Here’s the thing for me …
I hate talking about money/pricing/fees. I’m awake, aware, alert, and alive to the fact we need money to survive and business owners are not in the giveaway business. I “get’ it (as is witnessed by the stack of bills on my desk right now). Money has forever been an uncomfortable topic to broach. (I know. Probably some subliminal message from my childhood)
So, in lieu of starting the client conversation out with money, I definitely prefer your approach — speak in terms of “we” and focus on the “value” of your offerings.
Beside the kitten/pit bull mental image, I LOVE this …
“Even if your price ends up being more than your prospect can afford, you
want them to walk away pining for all that juicy goodness you just
offered – not cruising with a shrug for the next cheapest competitor.” Have them walk away thinking they’re really going to miss out on something spectacular if they don’t hire you. And maybe … just maybe … they’ll sleep on it and call you back.
Thanks for always pulling me down the page with your brilliance and your engaging writing style. Ever consider teaching writing? 😉
Sorry I made you cringe with the pit bull thing! But it’s pretty true – unless you go in there with confidence and maybe a whip, you are going to get eaten alive.
Ok, enough on that topic! I have never been fond of the money conversation either. I have gotten better at it with lots and lots of practice and I have also learned not to get insulted when people tell me it’s too much. It helps to write it out (like a proposal) so you can put the dollar amount on paper. Then you can list all the benefits and the price tag at the end and let the person read it for themselves as opposed to you having to be the one saying it. It’s cheating a little 🙂 But it could be a good interim step if you’re just getting used to saying HEY! PAY ME!
I’m glad you enjoy my writing, thank you for your kind compliment! As for teaching it, funny you should say that because I have recently given it some thought except I realized I don’t think I would know how!
OOoh wee that visual hit home for sure…confidence has been a true challenge even though those close to me would NEVER believe that, so I have learned what they see is way better that what I feel which IS a good thing. I have gotten better at it though and I now stick to my pricing and if it’s not what one is willing to pay, I AM ok with them moving on. I definitely have learned to not go below my threshold so it’s not detrimental…still gotta work on it with a friend..wanna help her but can’t afford her..vs. her affording me…Love this as always!
Getting to your value is a big deal! I don’t know a whole lot of people who are just born confident and can swagger around charging whatever they want. We mostly struggle with how to translate what we do well to dollars. And we doubt ourselves and second guess ourselves and do things to ourselves that we would never do to other people because we would think it was just too cruel! I’m so glad you worked through it all and have come to terms with your own value. You have to see yourself through the lens of the people who DO think highly of you and realize wow, that’s me! I am that good!
That image of a kitten in a cage of pit bulls rocks, Carol Lynn, as do your practical strategies for keeping pricing negotiations going your way. I’ve never tried the “name a pricing band till their eyes bug out” strategy, but it sounds worth pursuing.
That particular image seems to have struck a lot of people, lol… I have actually had a decent amount of luck with the bug-out approach. It usually follows someone saying they have no idea what their budget is and I just follow it up with, ok, so what if it costs $1000? What if it costs $5000? At some point they freak out 🙂
I’m definitely going to try that. 🙂
Great article, I like the idea of role playing it out.
When I was a personal trainer I crafted a pitch that took 30 minutes (length of a free consult appt) and I managed to get to a pretty good conversion on learning how to be confidant and tailor the pitch as I worked through the intake process with them. And you truly had to have your game face on from the word Go, if they sensed any uncertainty or hesitation they were lost.
The next challenge came in making sure that I continued to get paid after I got to know the client and not let my prices and satisfaction get nibbled away at with freebies, extras and discounts.
I have since launched a new business helping independent authors, and others, to become savvy self-promoters. I don’t want to make the same mistakes again.
I could have used this advice when I first went into business for myself 5 years ago.
Oh, I could have used this advice when I first started too 🙂 And I can still use it now…
It’s all in the attitude. If you walk in with uncertainty, it’s like this subliminal signal you’re sending and it really does wreck the opportunity. If you walk in thinking “They’re going to think it’s too expensive. I’m not going to get this job.” Then guess what? You won’t. Pretty much 100% of the time.
Glad to hear you’re paying it forward, so to speak. If only we could all help each other avoid some of the painful mistakes!
Great post, Carol Lynn. As I mentioned on Sharon’s post about the topic, you are right that this is not limited to the newbies in the freelancing world (or any business, for that matter).
Maybe it’s my seasoning that makes walking away easier than it used to be. That or I don’t like the snap of pit bulls. 😉
Thanks Cathy! It definitely takes some seasoning before you get used to people telling you how nuts your pricing is, not taking it personally, and then walking away with nary a shrug! Oh, and the pitbulls 🙂
An excellent post! A lot of people (local marketers) have such a hard time pricing what they are worth. I, at times, have had issues myself.
I’ve also had a hard time defining the line between free advice and when I need to start charging. I have had more than a few business owners take advantage of me and never end up paying. I have also had business owners that I give a lot of advice to and they become great long-term clients.
You make a good point, which is that sometimes people will appreciate your efforts (ie: free stuff) and sometimes they will simply use what you offer and leave. We have the same issues drawing the defining line between helping and giving away the farm. Most times it helps to know your limitations ahead of time. So you know what you’re willing to give and what you’re not.
We had someone approach us out of the blue the other day and say “here’s my website, can you tell me what you think and what I should be doing with it?” Basically asked us for free consulting without a single thought! So what’s the answer? Sure, but pay me? Sure, I’ll do it free of charge? Well, my answer is… here is something I noticed that needs fixing, and here’s the cost for a full review and consultation. But you have to really think about that because if you end up answering in the moment, I bet the tendency is to be helpful and just say “sure!”
I loved the kitten / pit bull image – especially because a kitten with the right attitude could totally own the pit bulls. My 70+ lb Irish Setter thinks both of my 12 lb cats are above her in our little pack (and no they don’t claw, bite or hiss at her).
To get around the price negotiation reflex I now tell all my prospective coaching clients the same thing. “I’m in the business of pricing accurately. If you work with me you’ll learn how to do it too. That means there are no secrets, and you won’t find out later I inflated your fees. The fees for services proposed are the fees. However if it doesn’t fit in your budget we can talk about what pieces you can live without, or alternately do in phases to fit your cash flow.”
My right clients appreciate that, and the fact that they don’t have to worry if they got the best price.
You know, you’re right about the attitude thing. I’ve seen some teeny cats own the room even when there was a big, bad dog lurking.
I love your approach to explaining to clients how your pricing is a reflection of your ability to help them with pricing! That’s pretty ingenious.
And yes, the most common way that we (personally) deal with pricing issues is to simply revise services to meet budget.
Thank you for a spot on article. I work in a B2B environment, and consistently see my customers struggling with this same issue. I liked your observation:
“Not because I was overpricing but because my brain had convinced me that since the last person had told me the price was too high, the next person would, too.”
This SO common, and frequently, SO wrong. I know of many businesses that undervalue their services based on this premise.
I have 2 questions.
1. Do you consider it acceptable in dealing with a return client that is very price sensitive to soften the blow by when announcing the expense of an item by acknowledging it may be higher than expected?
2. How do you recommend that a brick and mortar store show value on a commodity item that may be available from some online site for less money?
Hi Rob, thanks for your input. The mind game we play with ourselves is the worst part of any negotiation!
To your questions…
1. I’m conflicted about whether its a good idea to say the price is higher than expected. But I think I lean towards not wanting to add that qualifier. I guess it would depend on the situation.
Sometimes we throw out a number when people ask for an instant price, so we may say “a website is $500” (I’m making that up just to make a point.) But then when we put together a proposal we realize it will be $1000. So in that case I don’t know that I would necessarily qualify it as being higher than expected, but higher than the original estimate. I know I’m splitting hairs over language but at that point you have established that you gave an estimate but after a chance to review features/benefits A, B, C and D, this is how much you need to do the job.
If they have already given you a budget that they need to hit and your price comes in higher, then I think it’s ok to say “this is outside your budget range but here’s why…” And then let them decide if it’s something they can afford or want to scale back.
2. There are 2 really compelling reasons for people to shop online instead of in a store: (1) The item comes to YOU – very simple; (2) The amount of information you can collect in the form of reviews, opinions, video, blog content, etc, to help you make a purchase decision. That kind of info you can’t get in a store because you generally run up against salespeople who don’t know much.
So with that said, it’s tough to make a commodity valuable without competing on price BUT there are two things that can help mitigate.
The first is experience. There are some things I will buy in a store even if I can get them cheaper online because of the experience of being in the store. That includes atmosphere, people, customer service, culture, etc. That’s why the Walmarts and Kmarts of the world compete on price because who loves going to a big box cattle-drive? So if a store can create a culture and an experience that engenders loyalty, price becomes less of an issue.
The second thing is information. That may be by way of QR codes that someone can Quickly scan to get the same information they might have gotten online, knowledgeable sales staff or some other kind of easy access to answers for questions. This one is a little tougher to do but it also leads back to customer experience.
I hope that helped!
Thank you for adressing my questions. Your reply echoes my sentiments. At my company, we are facing the challenge of trying to educate our customer base of ways of adressing the challenges presented by online commerce to brick and morter and we hope your advise might be helpful to them.
Good luck, let me know what kid of response you get!
I love, love, love this article! It really is all about attitude and confidence and the ability to give and receive. When I first started out in my business, I referred a client to a colleague who I knew could do a better job of helping them with a particular project. I was asked by my client to attend the meeting so we could talk about it afterwards and determine next steps.
As the meeting progressed, I could see the scope of the work expanding well beyond the initial project. I started to feel uncomfortable on behalf of my colleague. At the time, if I had been in his position, I would have simply allowed the scope creep. But he handled it beautifully and taught me a valuable lesson. Without apology or any apparent discomfort, he simply said:
“We’d be happy to work with you on these various projects, but what we’re talking about goes well beyond the scope of this initial proposal. So, let’s talk a bit more about your priorities, needs and budget. Then, if you’d like, I’d be happy to go back to the drawing board and put together a more comprehensive proposal.”
I was blown away. It was so simple. And by acknowledging the scope creep and offering to put together a new proposal, my colleague managed to avoid making the mistake I had made on more than one occasion. Before this, I had often allowed the scope to creep and creep and creep. I wanted to be (and to be perceived as) helpful and generous. But in the end, I resented my client and was angry at myself.
Thank you, Carol Lynn, for another spectacularly valuable piece!
Thank you, Erica! I think we all find ourselves in that same place at some point. Like you said, you want people to LIKE you and find you helpful and generous. But then you realize they will respect you more if you exchange value.
As much as people want a deal, I do think they devalue you and lose respect if you come in too cheap or do too much. We’re not selling plastic cups. We’re selling our brain power!
I have been in plenty of situations where scope starts to get out of control and then I get mad. But ultimately I have to be mad at myself – because I let it! So, live and learn, right??