Win the Conversation About Fees for Your Services
One question clients frequently ask me is, How do I negotiate when a customer claims my prices are too high? For some, negotiating their own fees is one of the most challenging tasks of owning a business, but it’s also one of the most important skills for long-term business survival. The good news is you can learn and practice negotiation skills.
Here’s the strategy I’ve shared with clients for years to help them successfully negotiate: Mount a counterattack that prevents the issue of “your prices are too high” from arising in the first place. Here are two key steps you should take before you make the pitch:
- Do the math
- Demonstrate the value of your offering
Do the math
Before pitching a customer, know your own numbers and the customer’s numbers. On your end, have a firm grasp of all your costs and the market value of what you offer. Clearly communicate set, firm price levels for all your offerings, so the customer doesn’t get the impression you’re making up numbers on the spot.
On the customer side, explore their business model so you can determine whether they can afford your fees. Understand how their costs and margins and learn how their transactions are structured. Do they have recurring customers or one-offs?
Research the demand for their services or products and the competition. Tailor your pitch in their language to show how your fees can fit their income model.
Demonstrate the value of your offer
Your pitch should clearly communicate the value of what you offer so that the thought, “this costs too much,” won’t cross the customer’s mind.
Start with setting the context and managing expectations. Talk to them openly and transparently about the sales process, let them know you will ask them for a decision, and acknowledge not everyone is the right fit.
The wrong approach, however, is for you to talk non-stop about the features and benefits of what you offer. Make space in the conversation for them to feel in control of their decision. Ask them what is the importance of this project or purchase to their business, so they articulate for themselves the value of what you offer. Ask them how they determined the budget. There may be an opportunity to educate them about the work, and for you to better understand whether they are looking for price or value.
Don’t be afraid to walk away
If you know your numbers, it will be easier to say no if the customer doesn’t appreciate the value of your offer. That’s not the outcome you were hoping for, but the timing wasn’t right this time. Let the customer know that’s okay.
Avoid the temptation to discount the price more than you can afford to give away–that’s not the way your business will grow. Look for other ways to get to yes: change the scope of the project, reduce the number of deliverables or offer payment plans.
If you would like to learn more about how this might apply to your business, let’s talk: