How many times have you come across a client who may have tried to convince you to lower your fees for a service? Probably too many times to even remember. Let’s face it, negotiating is exhausting, especially when all you expect is to be paid well for a service you’ve poured your heart into in this competitive economy.
It’s not uncommon to come across such clients, and it almost seems as if you may lose them if you don’t give in to the pricing pressure. However, you don’t necessarily have to succumb to it. What do you do then? Offer a discount?
As convenient as it sounds, there are way too many incidents of discounting gone wrong. Unless you want unnecessary cuts in your profit margins, you should avoid going down that road. Here’s what to do when a client starts pushing back on your fees.
“The rate for my service is $200 per hour, but if needed, I am willing to work for less.”
Here’s a classic example of backtracking. For a good reason, it’s even worse than succumbing to the pricing pressure because you gave up before even busting a gut. Sometimes you may fall prey to words like “I can get the same thing from another seller for a lower price” and backtrack again, but that’s never a permanent resolution. It’s rather a voluntary invitation to exploitation.
Instead, learn to acknowledge that while it’s commendable for someone else’s prices to be all over the map, yours will remain at your preferred level. Here, the entire process will eventually come down to two possibilities:
Either the buyer walks away (a possible risk)
Or you set your foundation and continue selling for a price that brings you reasonable profits.
Treat the Client Reasonably
“We don’t entertain anyone who pushes back on our prices.”
This comment is probably one of the biggest mistakes most sellers make. A buyer pushing back is not a ticket for you to treat them unreasonably. It’s important to understand where buyers come from, and some of them may also have a good reason to challenge prices, but just because they do so doesn’t indicate that they’re any less valuable to your business.
All it entails is that they may be trying to determine how to engage your solutions. They may either land a discount, settle for your prices, or simply leave, but all they’re doing, in the end, is asking. Hence, it would be best if you always treated them reasonably while holding your ground.
Never Break Down the Cost Structure
“How did you come up with that price?” “Why does it cost this much?”
It’s common practice to challenge a seller’s pricing strategy. However, explaining your cost breakdown is a path you should avoid at all costs. Without further ado, here’s why. Many firms with premium profit levels do not reveal their pricing strategy as often as some do. It’s like asking about the fuel cost for the truck that brought a shipment of a certain phone to determine why that phone has a certain price. Lifting your hood just because you’re asked to is never the way to go about it.
Last but not least, do not hesitate to ask the right questions. Instead of cutting the price down for someone, ask them what component of that product they would like to give up for the price to come to their level. Remember, clients will eventually end up paying more for a product or service that they deem more valuable than the alternatives.