NFIB

How to Respond When Someone Says Your Rates Are Too High
04/ 02/ 2002


If you're in a service-based business, it's inevitable that from time to time your clients or potential clients will tell you that your prices are too high. When this happens, there are specific ways to answer that will maximize your chances of continuing to do business with them. In today's Workshop, writer Jeff Moses discusses some ways to handle customers who think your prices are too much.

If you're bidding on a specific project, make sure that your client understands how much work will be involved. Sometimes people have a superficial understanding about fields with which they're not familiar and will think that even a complex, lengthy project is quite simple. For instance, a graphic designer I once knew commented that many clients seemed to think that even the most complex logos and illustrations simply "appeared on the page." They didn't realize the extent of working and re-working required to come up with top-quality designs. For this reason, educating people about what a project will require, in both time and effort, may serve to assuage their doubts about your price.

Having some written material on hand that discusses the steps involved in your work can help clients gain a greater understanding of what you do.

When possible, use your expertise to suggest ways in which a client's project can be simplified, streamlined, or shortened. This will help reduce the overall expense for the client, and will almost always automatically give you the job.

Hourly rates vary widely among service providers, even within the same industry. Of course, the more experienced a person is, the more they will tend to charge per hour. But some clients may not understand the value of working with someone who is experienced in the field. A Web site designer with years of experience, for instance, will probably be able to work much more quickly than a designer who is just starting out. The difference in hourly wages between these two may be significant, but the experienced designer will be able to complete a project much more efficiently and, perhaps, even more economically. For this reason, experienced individuals need to explain why they charge more per hour.

Giving a total quote for a project will eliminate questions about hourly rates, but such bids are often difficult to make accurately in advance. Be sure that you don't shortchange yourself. When making a bid, include a range in which the total price will fall.

Often, people will tell you that your rates are too high simply because they want to negotiate a lower price. This may be human nature, but don't be too quick to come down. You're a professional, after all, and have taken time to build your business reputation. Ask a person, "Exactly why does my price seem too high?" Listen to their answer, and then explain to them that you've been working in the field for X number of years, have been involved in numerous successful projects similar to theirs, and can give references from satisfied customers. Many times prospective clients will simply agree to pay your price.

If a clients is adamant about wanting a lower price, ask him or her, "How much were you thinking this project would cost?" Remember, people know that they will have to pay something. What you want to determine is how much higher your fee will be than what they were expecting. You may find that you're not far off, and that reaching a compromise is easy.

When a potential client is extremely concerned about your rates, be ready to suggest someone who doesn't charge as much to do the work (perhaps someone new to the field).

Don't be discouraged if a potential client decides to go elsewhere because of your price. It may be a blessing in disguise; you certainly don't want to become involved with a client who feels that you're not worth what you're charging. This type of client can become a royal pain, and may end up not paying you all you've earned.

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