It is important to clarify at this point that in an international market place where companies regularly compete with individual freelancers working out of low-pay economies such as Pakistan, India and Malaysia customer loyalty or even customer custom based purely on price is not a good deal. It creates unwarranted pressures on both sides of the supply-and-demand equation which never make for lasting customer relationships, and usually leads to a lot of mutual acrimony which is never good for business.
Because we have all, at one time or another, been on the customer side it is important here to stress that everybody wants a good deal and everyone wants to pay as little as possible for as much as possible (ourselves included). This is why it is really important to be able to explain clearly what customers are actually paying for when a service gets under way and then work to communicate with the customer so that they can understand that what they are getting priced $XXXX more than say, some freelance working out of a hut with a net connection in Bangladesh, is actually a better product for very specific reasons which they will benefit them.
We know that 99.9% of customers are in a position to fairly appraise a service the moment it is explained to them and once they decide to go for it they are also confident in the provider’s ability to provide it cost-effectively and at the right level of quality and in their own ability to choose the best service for their money. There is a tiny minority that sometimes spoils it for the rest and these people, few and far in between as they may be, really do not deserve to be in business.
The question though remains, how do you negotiate for your services? Well, provided you have communicated well why you think your price range is not the same with the freelance hut-dweller of Bangladesh the ultimate price tag will be decided by the quality, accuracy and smoothness of the service you provide within the parameters set by a competitive international market.
In other words: be honest, explain and also understand. If your client really wants to do business with you because they value your quality but are $10 short of your asking price weigh carefully what a smooth working relationship which may lead to other things is really worth to you.
Now for the easy part. There are certain aspects of the negotiating and pricing process that you should avoid at all costs mainly because we know from experience that clients use them with the specific intent to reduce the price and nothing else. If you are going to be honest with your clients you should expect nothing less than equal honesty back.
The list that follows is not exhaustive but it should give you a start on what not to go for when deciding how to price your service:
1. I am looking for a job lot. I am putting together x number of websites/ebooks/articles and want your best price. This implies one of two things, either that you do not get enough work in which case by giving you all this work your potential client feels they are doing you a favour and you should therefore work for next to nothing or that it’s so easy doing a website, book, article that actually working on x number of them is not much more trouble and the price should reflect this.
Note that this is different to where genuine savings in time and effort can be made through an integrated marketing or production approach where, for example, a client who wants a website also wants a brochure and the design and research time will be reduced as it can be done as part of the same job. Then savings achieved can and should be passed to the customer. But lumping x number of projects together and asking for a discount because of that sends out the message that A. Your service is not really being valued, you’re just being hired for convenience and B. The client considers his business to be less than best and deserving a lot less than your total care and attention when performing the tasks in question which is why he is willing to pay you so little.
2. I am on a budget but want the best service possible. I will pay you more with the next one. Every business is on a budget and the scale of it is never sufficient to comfortably do the job. Always there are savings to be made and if you really want to work with this client you should go ahead and explore, mutually, where these savings can be achieved. But at face value this is a no-goer. No one wants to pay more for the same service they received for less, so there is no logic there. If the next website, design job, book or brochure costs more it is because the scope is greater and it’s that simple. There are many ways to express goodwill in business. You can offer special promotions, you can offer additional value or higher quality. You can receive more work. You would never though give money back to a customer as a way of expressing your gratitude for their having hired you to do a job for them and they, similarly, would not dream of agreeing to pay you more money for a project which has cost less unless they also extend its scope.
3. This is a test. I have a lot more projects in the pipeline which you may get. This is the carrot and stick approach. The stick is the price tag which they want you to drop or they will pull this project. The ‘whack’ from it will hurt more because you will also lose the at the moment non-existent but planned projects. Ok, let’s clarify this one straight away. A project is a project. It does not mean that if you plan to get more work it becomes easier or cheaper. Similarly your prospective client cannot possibly think that he will get good work from this really important first project if he ‘tests’ you by lowering his offering price.
4. Give me your best price and I will make sure others hear about your service. This one has to be up there with the pink pigs performing aerobatic manoeuvres backwards. It’s possible but physically unlikely. If a person working to get their business off the ground cannot afford to pay for a decent service it is highly unlikely that they have any connections that actually count or that they have any time to spare at all to promote you.
5. I want XXXXX and expect XXXXX. Here is where you need to exercise your judgement. There is a fine difference between a client who is very hands-on and wants to understand each part of the process and a client who hires your expertise and then goes ahead and does the job himself through you. The first one can be turned into a valuable ally, being an integral part of the process. The second is a person who suspects your every suggestion as a means to increase the price and who thinks they know better.
6. This is a simple project it should cost $XXXX. Again there is a distinction to be made here, though the use of the term ‘simple’ argues that maybe it shouldn’t. There are some clients who understand the process. They understand what’s involved and they also understand that unless they let you know they are experienced you might consider taking a little more leeway than you should. That’s not a problem. These are great clients to work with. The flip side of the coin is someone who does not understand the work, does not comprehend the process and, through ignorance, thinks it’s easy which means they also think your service is oversold and overpriced and everything they give you is already too much. They are usually the ones who “would do a job [themselves] if only they had the time”, avoid them like the plague.
7. I am looking for a mock-up in order to decide. Ok, this is a deal breaker straightaway. Let’s take it outside the field of service provision and apply it to products. What do you say to Ford, for example? I am not sure your cars are right for me. I am looking for these specs why don’t you design a car just to show me you can really understand what I want and can actually do it? If you are professional, or even if you are starting out, you will have a portfolio. The portfolio is there for prospective clients to assess your abilities. If they cannot do this simple fact then it also means they are in no position to assess anything else like what they want, why they should hire you, why their business is different and why they are in business. That kind of client is a time-waster who will only cost you money with no guarantee of work.
Having written about the seven most common approaches by prospective clients I should perhaps label them the seven deadly sins of online negotiating, in truth though they can happen anywhere.
If you want to be taken seriously as a professional (even if this is your first job) act professionally. Understand that your services are needed by someone to get their business up and running and make money. They have pressures of their own and they can easily misunderstand what you say, particularly if they come from a different culture where there is a different way of doing business. The recipe to successful business dealings is simple: provide quality, hard work and ingenuity. Strive to be part of the solution not part of the problem and when dealing with your customers be transparent and honest in your dealings and treat them like you would like to be treated in their shoes.
The Web Direct Studio company Blog is penned by a number of our in-house staff from our different ones of activity. They write anonymously in order to free their range of expression, particularly when it comes to criticiing their sector of activity or making observations about their job. They work under a simple edict: What you say must make sense and must fit in with the tone of our online business. Apart from that they are the ones who choose the topic they write about in each Blog post.
