My client Madeleine was offered a very appealing consulting project. She liked the client and loved the work she’d be doing. When asked her fee, she quoted them $15,000. Although that amount is less than she felt her work was worth, she really wanted the project and hoped the lower fee would help.
After a short time the prospective clients came back with a question: what could they get for $4,000?
What should Madeleine do? Before we answer that, I want to look at why this kind of thing happens.
So why does a potential client push back on price like this?
- Wants it but can’t afford it.
- Doesn’t really want it and is curious to know what else is available
- Wants to see how you’ll react and if you’ll lower the price
- Add your “People are a Mystery” reason here.
I know Madeleine is masterful at not only expressing but actually demonstrating her value. She has unbelievable credentials, and that made me think the prospect was actually just testing her (reason #3 above).
As I see it, there are three responses to a question like, “What could we get for $4,000?”
1. Remove value from your offer. In this case, you can review what you planned to do and offer solutions that would fit the new budget. For $4,000 Madeleine still may be able to make an impact on the project, but she might propose less time and less comprehensive solutions.
Importantly, she also may feel resentful or, maybe, just less excited to do the project this way. Personally, I don’t think this is a good energy with which to start something, but not everyone gets emotional in these situations.
2. Turn them down flat. You can say politely, “I work best with clients who are looking for a big improvement in their business. The fee you want won’t allow me to do my best work on your project, so I’d prefer to pass.”
3. Agree to do the same work for the lower price. This is a real temptation that can have lasting negative consequences for you. First, it’s a violation of an agreement you made with yourself when you decided on the fees. Next, this teaches the client that you will compromise and jeopardizes your ability to get full fees from them in the future. Sometimes, it makes you look desperate or wishy-washy and will likely erode respect.
What if you say you’ll give less value for the $4,000? Will you, really? It takes clarity and discipline to actually do less. For example, if you’ve committed to providing specific deliverables for the value, such as “a financial plan for the next 6 months of the business,” it may be hard to do a smaller version of this. You’ll have to rewrite your proposal entirely.
We’ve been talking about a consultant charging project fees, but what if you’re in a business, like massage or therapy, in which there are hourly fees? What do you say when someone really wants to work with you but can’t afford it?
Two words: “Save up.”
If you had a big job interview and went to your local department store for a suit, they wouldn’t sell you one without getting money from you. “But I have a job interview, and I feel good about it.” They still would tell you to go get the money and then come buy the suit.
Why do we – or potential clients – feel we can do business transactions without payment? It’s perfectly reasonable to say, “I’m glad to hear you want to work with me. I would like to work with you, too. The fee is $45, so when you’re able to pay that, please call me to schedule an appointment.”
FAQ about standing up for your price
Q. Samantha, I don’t have enough clients now! I have to take whatever I can get.
A. OK, take whatever you want. But just know you’re creating a pattern that will be hard to change later. If you teach people now what your value is (by clearly articulating your brand), then you’ll have fewer of these difficult conversations about price. (There are better ways to get more clients.)
Q. Is there any way to avoid the situation Madeleine got in with her fees?
A. Some consultants find that offering a range of options makes it clearer to the client what they’re getting for their fees. You could offer Options A, B and C, but I’ve still had clients ask for the value of Option C at the price of Option A. Sooner or later, you will have to stand up for yourself and your value.
Q. This sounds like a pricing issue. Why did you say it’s about brand?
A. Three reasons: building a strong brand hinges on the value proposition – what people get for their money. If your value proposition is weak or unclear, you’ll struggle here. Second, your brand is most appreciated (valued) by your perfect clients. Pushback on price often means the prospect is not a good fit and won’t ever truly “get” your brand value. Third, brand value has to be communicated. If you can’t make a case for your brand and why it’s worth what you’re asking for it, you need to improve your messaging.
What are your FAQ about pricing? Have you ever been in Madeleine’s shoes? What did you do? Let me know in the comments below.
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Amazing post Samantha! I really like what you said “Why do we – or potential clients – feel we can do business transactions without payment?”
I know I have ran across this many of times. I feel it is truly better to turn those kinds of potential clients away. Otherwise, like you said, you’re creating a pattern that will be hard to change later.
I truly love how you have taken the problem to the root… a branding issue.
Keep it up Samantha! :)
I own a small business and I have another view point. As my business grows, I find myself delving into new areas that I know nothing about. I may only have $4000 in my budget but when I ask for a price, since I know nothing at all about it, I hope that it will cost less than my budget. I really have no clue. Okay, I get a price quote of $15,000 and I only have $4000 to spend. Should I do nothing at all until I can build my business to be able to afford $15,000? If the person that I talk with can’t figure out how to help me at my price, knowing I am not going to get the “all” of her talents, then I will try to find someone who can help me stay in my budget and will be helping me grow until I can afford the $15,000 package. I always remember my uncle who built a multi-million dollar business from someone who believed in him and gave him credit for 6 washing machines and told him to pay when he could. My uncle built his business from that loan and ended up making the loaner a very wealthy man in doing it and stayed loyal to him. They grew together. I understand if someone only wants to be able to do their best work and wants someone to pay for it, but they may also be missing an opportunity. An item at a store can’t be negotiated, but the time and energy put into a project can be redesigned to make a different project. JMHO
The point I get from this post isn’t suggesting inflexibility but instead encouraging us to stand strong on the value of the service we deliver. If a 15k consultant is going to help a business increase annual revenue 10% which translates to an extra $200,000 in profit, then the potential client needs to be able to make this bridge and see the obvious value. I have found, if we are confident we have the talent to help clients reach agreed upon goals then setting the price is very easy. Make it fair to you. The results will make it more than fair to the client. The issues come in when the client simply doesn’t trust that you can be successful. They want to lower the risk on their end. I believe no contract should be signed, at any price, until there’s shared trust between agency and client. Instead of saying to prospect come back when you can afford it, I would instead suggest saying come back when you can trust me. Enough case studies with other companies and they should be back with their checkbook out.
I recently quoted a price on a website, and the “potential” client decided to look around. I haven’t heard from him again. I was kind of upset because I know will not get a better website for less money. It made me decide to write a couple of articles about why someone should not buy a free website at my blog.
I’ve also been on the side of Cas, knowing I need some help and not have the money to get it. That can be difficult too. Certainly, I think different kinds of packages can be offered, but we need to protect the value of our brand too. And it is really tempting when you have no income at all.
Your insights are always welcome Samantha!
What an awesome discussion – thank you all so much!
Cas, I was hoping someone would make that point, and I love the example you used to make it.
Here’s why I wrote from a different point of view: I rarely see my audience of enlightened marketers rejecting the last $4000 from a small client who needs them badly. More often, as in Madeleine’s case, the client has plenty to spend and simply doesn’t like the price (my interpretation; could be they didn’t see the value) or, as Shawn mentioned, doesn’t trust us to get the promised results. In the face of that power and potential rejection, a lot of my clients wonder what to do.
The discernment required to know when to reduce your fees, when to barter or trade, and how to work out payment plans is (a) more than I could cover in this post and (b) a very, very advanced skill. If someone is struggling in his or her business, I think they should wait till later to test this skill.
I totally agree with your point and have loved to offer generosity to others whenever I can. But I had to learn the hard way – repeatedly! – to put my own oxygen mask on before I tried to help others who needed air.
Great discussion on a real life topic. Seems as though a range of product offerings (not just options to a service) is a strategic way to provide services for those clients that can’t afford the full service. I’ve learned the hard way that the client you discount heavily to may be the client that prevents you from working with the next client that fully appreciates you and your service and is willing to pay full price. Really enjoyed the article and the comments.
Hi Steve – seems you and I are doing all we can to persuade others to avoid that mistake – compromising price in a way that prevents us from serving the next client. Hey, I think my header says “No compromise” for a reason!!
Oh goodness, do I know this one well and have done more compromising on price than I sometimes want to admit to! I swear to Friday, the folks that “fought” most about price were the most demanding, most difficult, most prone to throw a hissy fit of any clients I had. I could bend over backwards for them and it wasn’t “good enough”. This was way before the internet days when wonderful discussions like this were going on and I was a single parent trying to get through the days. I believe, now, that had I really given thought to I wanted to work with and stuck to it, life would have been a helluva lot easier!
My recommendation, from 20 years of doing it the other way, is to either come up with multiple packages (bronze, silver, platinum or, as I came to see it, Yugo, Chevy and Beamer) or a range and then stick with it. If you truly feel the person meets your criteria, then I absolutely believe finding a way to serve them with a product that is in line pricewise is excellent.
My 2 cents? Even when I brought the specs down to match a new price, I still found myself doing the original work because that is what I believed the client was truly asking for and what was needed for the project. And that is a my responsibility (of course) and one painful way to spend a whole lot of nights and weekends for a little bit of mula!
Hey MamaRed! Thanks for your comment and the wisdom of 20 years. Life is too short to negotiate and fight and struggle. I hope everyone reading your comment will short-cut this learning curve and stand up for themselves and their price. :)