What to Do When a Client Wants to Negotiate Price – Answer: DON’T

how to negotiate pricingYou’ve met with a potential client, listened to his/her needs, defined a scope of work and put a price on it. Then it happens. S/he asks something like, “is that the best price you can do?” Negotiations have begun.

It is tempting to, at this point, negotiate (meaning lower) your price. In fact, many consider it an expected mode of business foreplay. You want the job after all (especially if you are starting out), so you lock hands and begin to wrestle.

You should consider not doing this. I know it goes against conventional wisdom, but the moment you start chiseling down your pricing in response to client pressure, you set 3 very bad precedents, all of which will hurt your business.

1) By negotiating price, you are admitting your first price was inflated.

The idea is you did not give your best price first, which should always be your practice. And even if the client gets a lower price, it sets a subtle precedent for gamesmanship and should be avoided.

You want a reputation as a straight shooter; don’t let a potential client hurt that reputation by pressuring you to waffle on price. Let your first price be your best, and only, one.

A note here: Make sure your prices are competitive for your market. Even a little high is okay if you can show extra value in your work. If your prices are out of sight, though, you need a good reason why. But if you are competitive, there is no call to reduce them.

2) Price changing shows lack of confidence.

People do business with those who are confident in their abilities to provide value. If you immediately cave on price, it shows lack of confidence in the value you provide. If what you have is truly worth it (and you can show why), set a price and stand by it.

In fact, it is a good idea here to, nicely of course, provide your potential client with the names and numbers of some of your competitors. Encourage them to shop around; this shows you have confidence in your offerings, which you should indeed have.

Here is a dirty little business secret: if you stick to your guns on pricing and show you are not nervous about competing offers, the vast majority of potential clients will NOT walk away, even if your price is higher. And the ones who do are not worth having in the first place. Those types tend to be a chore. The ones who pay what you are worth are going to make up for those who walk. 

3) Lowering your price isn’t good for your client.

Clients who pay your first price will be happier in the end and so will you. The reason is simple –  they get better results because you will be earning what you know you are worth, and your heart will be in your work. Dropping your prices hurts your morale, builds resentment, and drains your enthusiasm, all bad things for your client. If you work for less money, you will have to take on more work to make ends meet, which spreads you even thinner than you already are, causing your work to suffer.  Your clients need you at your best, and part of being at your best means getting paid. And by the way, it is perfectly alright to say exactly that to your client.

Negotiating price is a nerve wracking, but inevitable, experience in business. But take heart. Your work has value and you should not be ashamed of asking for appropriate compensation. It’s scary at first, but you will get better at it. Set this good precedent now; you’ll do better work and gain better clients.

Thanks for reading.



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