How to Handle Price Objections
It’s not unexpected that individuals and businesses have tighter wallets in this economy. This, coupled with people who have been laid off and are now starting up their own companies, can be tricky. Little or no money creates a difficult situation for folks trying to promote themselves, thus raising the number of times we service providers hear “no, it’s just not in my budget right now.”
When I first started freelancing, I thought the conversation had to stop there. “They’re simply not interested,” would go through my head. However, I’ve come to realize that responses like these are actually great starters for conversation. There are essentially three things we can do when we hear such a response.
1. We can let the client go.
This may be an okay option if you’re too busy, not taking on more client work or just don’t care. However, the old cliche of “the best time to promote yourself and gain clients is when you’re busy” is true. Why ride the project roller coaster of ups and downs? Instead, spread your work deadlines out evenly and regularly. There’s sure to be room to add a new client.
2. Think about lowering your price.
If this is the route you want to go, make it clear to the client that you’re making an exception for them. Simply dropping your price because a prospective client says so devalues your service and effort. This can be a great option if the work is something you really want to do or if you’re slow and need the money.
When/if agreeing to the client’s price request, make sure you state why you’re dropping the price. Something such as, “Because I’d really like to fill out my portfolio with more brochure work, I’ve decided to create yours at the discounted rate of…” works well. Again, stress that this is an exception to the rule. Generally speaking, this will keep your new client from advertising this discount to their friends and colleagues.
3. Start a conversation.
When a prospect tells me my bid is too high, I immediately respond to them by asking what they were hoping to pay for design services. If the prospect feels comfortable responding, this offers me a ball-park figure. I then explain that while my prices may seem high up front, in comparison to other designers with a similar level of quality, I’m actually more affordable. Try offering reasons as to why you’re the more valuable choice. A client may agree to find a lower service provider, but could they spend less in the long run by getting their logo done right the first time around with you? These are points worth mentioning.
A good way to meet halfway is to also think about tailoring your service to the client’s needs. For example, if you really want to work with this client, could you offer them three logo options for the price of X-dollars opposed to your usual five for Y-dollars? Is there a way to turn a website that called for eight sections or links into four pages with simply more content? Your ability to adapt is usually appreciated by the client, plus, you may find a new service or package to offer.
Surely some will disagree and think pricing should be set in stone and that’s that. I, on the other hand, have found that a willingness to work with your clients usually creates a strong working relationship. You’re showing you appreciate their business and they’re a bit more likely to come back to you for more work in the future. Furthermore, a client who accepts a tailored service that meets their budget is a different breed than those who are just out to get work for cheap. Think of handling price objections as an opportunity to problem solve instead of simply writing off prospects.
Leave a Comment
When clients ask me if my rates are negotiable, I say “Only upwards”. It gets a chuckle and lightens the mood. But it is a polite way of saying “No I won’t work cheaper.”
This is a great article, and definitely one I needed to see. Thanks for the different options of handling this situation. I’m stuck in the metro-Detroit area, definitely a tight wallet area.
Wow! I LOVE #3. Will have to use that suggestion, for sure. This was a great post.
Great points. Starting a conversation is a good way to get feedback. Of course it can flip on you when your potential customer gives you a figure too low but it gives you insight. The ability to be flexible with your pricing or the service you provide will help your business grow.
I’ve found that giving the client the ability to do any upkeep work themselves on a project (mostly on websites, but occasionally on things like letterhead, too) helps greatly with explaining the value proposition of a project. Being able to say ‘Well it may cost more up front, but you’re saving money over time because this project management system that you are able to access allows you to edit any part of the site, so you won’t have to hire someone like me down the line to make minor, or even majors edits to the content. Let me show you what it looks like.’
This does assume you don’t want that upkeep work, but really, that’s generally small stuff anyway, and you’re better off spending your time on the project itself, not the grunt-work that follows.
This is where commanding a niche and being a specialist really helps. The “solution” to this problem is to offer prospects something that they really need which they simply can’t obtain from most other service providers. Then your task becomes one of leading the prospect to recognize this fact. The conversation is really key here.
Great points and I especially like #3. It is the best way to agree on a price or explain why you charge your price.
I have tried to start a new thing. I actually set them up on a billing cycle. Yes, it is more work as a invoice-keeper. Let’s say a project is $1,000.00 then spread that out in months, $200 every month for 5 months.
Thanks,
Tyler
Great article! If a low budget project comes your way that you really want to work on, you can use a combo of #2 and #3 from above to negotiate a discount on your services in exchange for a portion of their services for free.
Ex: We are currently working on a website for a small PR firm at a small discount in exchange for some free press. A few months ago, we did a complimentary logo for an amazing photographer in exchange for a free maternity photo shoot and one of our new baby. We got to keep all of her photos too, it was around 150 for each photo shoot!
I usually only reserve this for projects that I really want to work on and not for every prospect looking for a deal. If you give this a try, make sure to agree on the exchange and include it in your contract.
Great pointers.
Its very important though to remember not to undervalue your work or work for peanuts. At the end of the day they are asking you for a service that they cannot do themselves. If they want to use you because you make excellent logos for example, they should be willing to pay for that service.
Not saying dont negotiate – I nearly always do, just saying to remember that your not a charity – something I did way to often when starting out!
all good points. I’ve found lately that when I quote a site or design work, stipulating somewhere that “there’s a solution that we can reach if this doesn’t fit your current budget” can mitigate some of the up front apprehension for smaller clients.
I’ll definitely use number 3, negotiating is the point here, so a good conversation can be of great result;keeping the person as customer.
I’m in the process of letting a client go. They were quite lucrative back in ’05-’06. Lately, they’ve turned into real nickel-and-dimers. So, I’m seeking payment for my last round of work, and away they go.
As for negotiating on price, I’ve found that usually means that I’m supposed to lower mine. And I’ve had a snootful of playing that game.
What I’m doing is seeking more high-dollar clients and less of the nickel-dime crowd. And, yes, even in This Bad Economy, they are out there. Yes, you have to hustle for them and do your A-1 best work, but they are indeed out there.
For #2, I’d add that you should explain that you will be doing less work in order to accommodate the client’s financial situation. You don’t want word to get out that “XYZ Web Designer will lower his or her prices if you squeal enough.”
It should be clear that you’re offering less value, and not just lowering your price on a whim.
Thankyou so much for this. The article was invaluable to my understanding of the sticky issue that is money. The whole area of payment is too stressful for me to handle. I usually submit, comply and then bend over backwards for my clients. It drives me up the wall.
But you’ve given me some very useful tools to help. Thanks again!
Perfect timing! I just had this conversation with a client this morning. I wasn’t willing to just give a discount, but I suggested some ways to make the project cheaper and we successfully came to an agreement where I lowered the price in exchange for pushing the deadline forward.
#2 Lowering price.
Not sure this is the correct way yo go. If you asked a plumber to lower his price he’d tell you were to go, and not before taking a leak in your bath. Why should anyone in the creative industry be treated with less financial respect for their own skillset?
Thanks for tip #3, that is a great starting point for further negotiations/conversation.
@stevie cause if you don’t someone else will take that job and pay their bills. If you have savings in the bank sure wait until a good client comes along but you might have to wait a long time. Honest truth in this economy.
Dropping your price is asking for trouble. If a client tells me my costs were too high, the response that’s worked best for me is ‘OK, which elements would you like to leave out?’. Works every time.
Good post and tips, pricing is always a debatable topic and for some reason in the creative field clients always seem to want to pay less than what you ask. I feel if you really need the work or money and the client wants to pay a little less than what you normally make, it could be worth it just to get some income in. But if you are working on other projects or don’t really need the money then you definitely should not lower your rate. A lot of times clients are just testing the waters as well to see who’s welling sell themselves short.
What’s all that weird looking money in that purse?
@Jo Duxbury, when you say which element they want left out, do they leave out anything or they go with your price? My assumption is that why would they leave out something when they come to you at first to get the job done right?
@sean_hex Usually they end up going with my price and either leaving something out, or we come up with a slightly different way of doing it, still meeting their original objectives. It’s not a matter of not doing the job right
They still get a great end result; it just may not be as long/big/complex as they’d originally asked for. Part of my role is to give advice on how they can best spend their money and often I suggest alternative ways of doing things in order to accommodate their budgets (their original brief might not be the best way to achieve their results). This can also translate to leaving something out; other times it means e.g. getting a junior to do some of the more basic work.
What is very frustrating when the client won’t give you a budget to work with initially. ‘Tell me how much it will cost and I’ll see if I can afford it’ – sound familiar?! I ask for at least a ballpark range so that if it is way too unrealistic, I don’t waste the client’s time or mine on a proposal. I don’t always get it out of them, but it does help to know what level to pitch my proposal at, hence avoiding the ‘you’re too expensive’ conversation. I am also very transparent about my rates up front which helps clients get an idea of how much I might charge.
I’m more of #1. right now I have little bills so Im more picky with the work i pick up. If I dont find work for that week i’ll work on one of my (many) projects that keep piling up.
I think option #3 should be the first choice, but option #2 is also good when you have less task at hand or free and need to make money..
Thanks,
Precious tips. Thank you.
I’m new to freelance and was just denied a job that I really didn’t even pursue. I did a freebie video just to add to my site and was asked if I would freelance a job. Reluctantly, I agreed to estimate the job. I guess I was too high. I wrote about the experience and what I am going to do in the future to avoid these situations hopefully. Just click my name. BTW, I just found this site today and really appreciate what’s going on here. Thanks.
Good advice,
assuming you don’t want to lose the customer your last point about entering into a dialogue is a good one. Often you can use the Contrast Frame to minimize the fee in their mind. A dialogue will often end up in some form of compromise or negotiation. Just remember the first rule of negotiation, “never give without you get”. So, if they ask for a reduction advise that that is possible if you can cut back on some of the service.
Concerns about price are really questions about the value of what you are offering. Your prospect is comparing your offer to others or even comparing your offer to the “status quo” (i.e. leaving things the way they are).
One of the best things to do as you start a conversation is to reiterate the value of your offering, especially referring to the points your prospect has shown the most interest in.
Greg
What we fing when training cold calling is people are objected to because their approach is all about them and bears no value to the person being called. Switch that and you will soon see massive improvements.