You’re too Expensive
Services industry professionals hardly ever talk about their prices. That includes me. Pricing services is so hard, and talking about prices is even more difficult. It’s personal. It’s not about covering a lot of overhead, product cost, or even location costs in many instances (for those of us who can work from a home office). The number after the dollar sign on a quote is a reflection of our skill, experience, pricing practices, and the value we deliver our clients. Talking about that openly (and especially online) is a terrifying prospect. Why? Because it’s as if I’m attaching a dollar sign to my professional worth. Because it’s similar to an employee talking about their salary in an open forum where anyone can dissect the number and make any assumptions they so choose. It’s really personal.
So, are you ready to get a little personal? Let’s talk about how to deal with customers who haggle or say you’re too expensive.
If you provide a service, then you’ve probably heard all the variations of the same sentiment—you’re too expensive. You are definitely not alone. I hear it every once in a while (thankfully less often than I used to), as does every other services professional I know. So, how do you respond?
There are a few different approaches you can take. I certainly can’t tell you which one is best because every situation is different, as is every business. Let’s discuss a few approaches.
Prevention is the Best Approach
Annie over at Off-Center Design is a good friend and industry colleague. We work together on an on-going basis as she designs and develops our customers’ websites and I write the content. We work really well together, and every customer who hires us as a team ends up with so much more than a website—they walk away with a brand foundation that was created utilizing a smart strategy that is built around their specific business, goals, and customers. It’s all about market positioning and connection. And it’s more than that—our creative brains feed off of each other (in a completely non-creepy way, I promise). We come up with bigger, better, more creative solutions when we work together.
In the beginning, we didn’t realize what we were doing was special. We assumed that every website designer and content writer worked just as we do, creating a strategy that blends design and content and a laundry list of other things. The result was that we often could not sell our services together because we didn’t explain the benefits properly to the customer. To those customers, they couldn’t justify spending an extra few hundred dollars because they didn’t see the value.
Now, we do a much better job of putting into words the benefit of hiring both of us. We clearly outline the benefit to the customer making it a no-brainer for them to say yes. Instead of hearing that’s too expensive or some variable, the closest version I hear from potential clients is I don’t have that much on hand. Can I make payments?
*Note: Before you begin to think that we are especially expensive, let me tell you we’re not. We are almost always on the low end of the spectrum when offering quotes. But it isn’t really about the number for customers. What do I mean by that? Keep reading.
Emphasize the Value and Benefits
So, how did I manage to change you’re too expensive into can I make payments? It all starts with a very detailed proposal. When a potential client approaches me, I talk to them about their specific needs. If the customer needs a website, I ask questions to determine the functionality needed, their goals associated with the site, their target customers, what type of customer they would like to reach if they’re not already, etc. I ask and then really listen to the answer. Once I have the answers (and more), I ask them to give me a few days to create a proposal for them.
Then, I begin to create a strategy that will function to help them meet their goals. I present to them a proposal that outlines my recommendations, makes it clear that I have a plan and strategy in mind for them, and outlines their goals and the specific services I can provide to help them meet those goals.
The entire proposal makes it clear that I was listening when they were talking, and I put all of my experience and knowledge behind creating a strategy to help them meet their goals. Many clients aren’t sure what they need when they come to me, but they know they need at least one service. So, it is part of my job to lay all the options out in front of them. Then they are making a more informed decision.
And the result is that every potential customer who has ever received one of these proposals has become a client. They don’t always purchase the entire proposal (it’s often a sports car when they might only be ready for a minivan). But they are assured that the entire proposal would benefit their business, and more importantly, that I truly was listening and I have a plan. Often, these same customers come back again to begin work on the next component in the original proposal months after we’ve completed the first project. And this is exactly what I want—to create a relationship with potential customers that means they see the benefit of my services and return for more help when they are ready.
Things weren’t always this way, though.
Why You Might Be Seeing Price Sensitivity Often
When I started out as a freelancer, my prices were rock-bottom low. I didn’t have a portfolio and I had a very short list of testimonials. My references were great, but most of them were from an employer-employee situation, not a contractor to subcontractor. I struggled to find clients initially, but after the first few clients it became a lot easier since I then had a portfolio and recent, relevant references and testimonials.
Initially, my prices were low because they should have been low (after all, I was a beginner). But, after adding to my experience, portfolio, testimonials, and references, I should have raised my prices. Why?
I soon discovered that although I was the cheapest freelancer in the pool of freelancers I was competing with, I still had a lot of customers who were trying to haggle prices or who were telling me I was too expensive. Because I was new and desperate, I often would cave and lower my prices. The result was that I was earning lower than minimum wage by the time I finished each project.
This cycle continued over and over. I would bid low on a project. The client would ask for an even lower price. I would agree to that price. Then I would work a lot of hours for very little pay. These customers were also the ones who often revised every word I wrote. And I was terrified to raise my prices, sure that I would never find another client. I was already pitching my little heart out to find those I did land.
At the persistent urging of several other business owners and a business coach I was working with, I raised my prices. Suddenly, customers weren’t even blinking when I told them my prices. There were hardly any attempts to haggle.
Perceived value is very real. Because my prices were so low, potential customers were not seeing my services as a deal. Instead, they were seeing my services as not worth much. They didn’t see the value in what I had to offer because I wasn’t properly representing that value through my pricing.
Remember when I said that the number next to the dollar sign in a quote is a representation of my skill, experience, knowledge, and value? Well, that’s more true than I realized when I was still a beginner. Customers feel the same way about my prices. And if I’m pricing my services at rock-bottom prices, then they have to assume there’s a reason for that.
By raising my prices, I also raised potential customers’ expectations of my value, experience, skills, and knowledge.
The customer who were paying more for my services were more satisfied with my work. They requested fewer changes, and it became easier to find new clients because they were sending referrals my way.
There Will Always Be Someone
While most of my clients who are sent the sports car proposal generally ask if they can make payments or choose one service at a time, there is still one client every great once in a while who will tell me that my prices are too high.
There are four basic approaches you can take with this type of client. You can:
- Discount your services.
- Offer fewer bells and whistles to lower the total.
- Convince them of the value and benefits you’re offering.
- Wish them well and say goodbye.
I don’t price gouge, or charge more for a company that I think has deep pockets. My prices are quoted based on a minimum price I’ve established for each service, and increased if more than the usual amount of time will be required to complete the project to the best of my ability. Because of my pricing practices, I don’t offer discounts. So option one isn’t an approach I take anymore because I’m already charging the least amount I can charge. I won’t deliver a product that isn’t everything it should be; so, I can’t then charge less for the same quality of work that I would deliver for the full price.
Option two, to offer fewer bells or whistles, is already built into my proposals. By outlining each option and the prices associated with them, they have the options in front of them to make the best possible choice for their business.
The third option certainly comes up sometimes. Occasionally a potential customer will need to meet face-to-face to discuss a proposal. Typically, I send the proposal and ask for a phone meeting within 24 hours to discuss their thoughts, and in that phone call I can easily share with them my rationale for the approach I took and the recommendations I made. Generally, for most of my customers, knowing my rationale is exactly what they needed to then sign the dotted line. If you’re in this position (you won’t receive a yes or a no, but a request for more information possibly or no answer), then outline the benefits. Let them know you have a plan to help them meet their goals.
Option four is a tricky one. For me, option four happens when option two and three (which are already built in to my proposal process for larger projects) have failed. I never want someone to be talked into buying something they don’t view as valuable. Everyone must do what’s best for their business.
Whether you’re just starting out or you’ve been at this a while, remember that every interaction you have with potential clients is important. Even if someone is telling you that you’re too expensive, that exchange can teach you something. Learn from it. Grow from it. Figure out what you can do differently in the future.
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