You’ve just had a great discovery call with a potential new client. The entire sales process has felt easy and natural from the beginning. You like your prospect, and they like you. They definitely want to do business with you! But your rates are a little out of their range.
Don’t get discouraged, panic, or feel uncomfortable! According to Howard Stevens, author of Achieve Sales Excellence, price only makes up 18% of what goes into a decision to buy. Your competence is 39%. And your prospect has just handed you an excellent opportunity to demonstrate a high degree of competence in how you handle this request.
If the prospect truly wants to work with you, but requires a lower price, never lower it without getting something in return. If you cut your price without getting something back, you devalue your offering and encourage them to ask for even greater reductions. They’ll think, “How much are you holding out if you just cut your price? Your service is not that valuable after all.”
There are three effective ways to negotiate when you’re asked to lower your price.
- Reduce your price, but get something of value from the customer.
If you are willing to cut your price, require the customer to give you something in return. It could be that he signs today, or guarantees a certain minimum number of hours (if you’re charging by the hour). You may negotiate that he personally introduces you to two other professionals he knows that would be candidates for your services at your regular rates. Whatever you do, be sure to put those terms in your contract. The key is to get the customer to give you something valuable in return.
- Reduce your price, but take away something of value to the customer.
If you are going to lower your price, then either take away or reduce one or more of the services you are offering. For instance, if you normally charge $400 to write a blog post, do a corresponding email, post it on social media and manage reader engagement, you might agree to lowering your price to $350, but take away the social media posts and engagement.
One caveat: if you are going to offer a price reduction, always offer the maximum you’re willing to give first. Don’t start small and let the prospect negotiate higher. This eats away at your prospect’s trust. He will wonder how deep the well is if you begin with your least valuable concession first. If you start out offering 2%, then 3%, then 10%, you can claim that is your maximum, but the prospect may not believe you. You’ve demonstrated that he can get more value if he negotiates harder, and you’ve taught him to focus on the cost of your services rather than the value he’s getting.
- Stick to your price and add something to sweeten the deal.
Give something of value, but hold your price. Think about things the prospect has said during your discovery process and see what you can use as leverage. If you have previously declined to perform a certain service because you don’t really want to do it, you might add that back to your package or offer to help find someone else who can do it at a price he can pay. If he or she has mentioned needing to learn a certain app or tool you know how to use, offer him a few hours of coaching to teach him to use it.
Price negotiations don’t have to be as scary as we sometimes feel when we’re asked to do it. Handling it well can further confirm, in your prospect’s mind, that he’s made the right decision to work with you. If you start with your best offer first, you will preserve the trust you need to serve as the foundation of a strong relationship that benefits both of you.
Rachael Hodo is founder of ProAdmin Solutions LLC. This article was adapted from one originally written for BillHartBizGrowth.com.