Choose your words wisely when answering questions about costs. (Photo by pfla)
I was recently talking with a marketing services professional about buying her company’s services. The conversation was going well: I was interested in what she had to say, she asked good questions, provided intelligent project insights I hadn’t thought about, and convinced me she could provide the value I was looking for.
Everything was going great, until I asked the question, “What does something like this cost?”
She launched into a spiel about her project base rates and retainers, and then digressed back to what her hourly rate was (in case I was wondering). And, when I took more than a second to respond (not because I was blown away by the fees, but because I was still writing them down), she started talking about discounting these fees and coming up with a better price.
Not only did she devalue her services right then and there, she made me wonder whether or not I even wanted to work with someone like this.
How can you avoid such confused approaches to pricing and discounting and what are the sensible approaches to take? Here’s a peak at some advice from your fellow professional service providers from our Fees and Pricing Benchmark Reports:
- Other than for prepayment in full, never discount pricing. Once you do that, the client assumes you will do it again. It makes your relationship to the client about price, not value.
- Don’t compete on price, because you will lose on price. Compete on quality, value, and service.
- Never start low and expect to increase your fees easily. Your starting rate is the most important negotiation of all.
- Don’t price anticipating a steep decrease in negotiation. Rate decreases should include a slight scope reduction.
So, when it comes to pricing your services, present your price in a way that focuses on the value and outcomes of your services. That way, if you do get resistance on the price, you are better able to:
- Defend your price
- Decrease the fees (if you absolutely have to) while making a comparable decrease in the deliverables
Now, I only wish I could go back to the marketing service provider and let her in on these little secrets.
