Whether you are a freelancer, entrepreneur or small business owner, odds are that you’ve found yourself in the middle of a price negotiation at some point.
The topic of money can be an intimidating and uncomfortable conversation at times.
But if you want to be a successful small business owner you’re going to have to learn how to tackle the subject in a professional manner.
Remember, it’s going to take practice
To give you a bit of context, I am a freelancer, blogger and owner of a graphic design agency.
Over the years, I’ve pitched to so many clients and quoted so many jobs that I feel like I could do it in my sleep.
But it wasn’t always that way.
Learning how to master conversations about budget and rates required a lot of practice. And a bit of trial and error.
But with each successive iteration, I became more confident in my ability to hold my own and stand my ground.
As will you.
But before I get into my tips on how to respond to clients who ask you if you can do the project for less, I want to offer a bit of food for thought by tackling two frequently asked questions.
Should you ever discount your rate?
My policy on discounts has changed dramatically over the years.
When I was just starting out as a junior designer I discounted rates all the time.
Frankly, I discounted more often than I should have.
I almost always ended up regretting it.
However, there were also times that it helped me get my foot in the door.
Like the time I accepted a $10 job on Upwork just to get a review on my profile (and later went on to make over $500k on the platform).
Admittedly, there’s a time and a place for slumming it.
But I hope for your sake, that part of your professional career is brief.
One cannot build a successful business on cheap work and cheap clients.
Cheap clients are often the worst clients.
They are more demanding, more indecisive and more critical. Not to mention they tend to be mentally draining.
As I became a more experienced designer, I quit discounting my normal rates and only offered slight discounts (10-15%) to family and friends and on bulk buys (like large projects and ongoing retainers).
Today, as a professional designer, demand for my services has never been higher and my plate is always full. I no longer have a need to offer discounts at all.
It’s the goal we should all strive to achieve.
Gain the upper hand, by ditching the desperation.
But the question remains, should you ever discount your rate? I would say, yes there are rare occasions where it might make sense, but do so sparingly.
And work towards “never”.
Is it a red flag if the client asks for a discount?
It can feel a slap in the face when a prospective client asks you to do the project for less.
But try not to get too offended.
It’s not always a nefarious act. Sometimes it’s just the client’s inexperience in working with professional contractors.
Some industries have a worse reputation for negotiations than others.
For instance, It’s largely considered “acceptable” to ask a freelancer for a discount because so many freelancers acquiesce. The same train of thought goes for real estate and vehicle purchases
On the flip side, you’d never consider going to a restaurant and asking for a lower price than what’s listed on the menu.
We can’t blame our clients for asking.
Sometimes they simply don’t have the budget in place. Sometimes they think haggling is what they are “supposed” to be doing.
In my experience, the simple act of asking for a rate decrease or for a discount doesn’t make someone a “bad client”.
For me, it’s only a red flag if the client continues to push after you’ve clearly said no.
But every business and every service professional is different. At the end of the day, I’m a big advocate of listening to your gut.
Now, let’s get to the three professional responses you can use when you encounter a client who wants you to do the job for less.
1. Stand your ground, but in an empathetic way
“My price for this type of service is normally [insert price or price range]. Is that within your budget?”
You can actually use the line above either before or after your client throws out a price tag.
Normally, I don’t even like to give the client a chance to tell me what they think the job should cost – I prefer to lead the conversation.
I play offense rather than defense. I know this isn’t my client’s forte (else they wouldn’t be coming to me in the first place). My clients probably have no idea what a service like this should cost.
Plus, I hate to waste time.
By throwing out a number early on in the conversation, I ensure the engagement is going to be a good fit for both of us before we go too far down the rabbit hole.
But on the rare occasion a prospective client beats me to the punch, and their budget is far less than what I would normally accept, I usually say something like …
“Unfortunately, I can’t do it for that price. My price for this type of service is normally [insert price or price range here]. If that’s not within your budget, perhaps I can refer you to another more junior designer?”
I love this line because it accomplishes three things at once.
Firstly, acting like you don’t want the project is actually a sales technique in disguise. It makes you seem exclusive, alluring and elusive. We all tend to want what we can’t have or is hard to get.
Secondly, it lets the client know that your price tag is not negotiable.
Thirdly, by offering a cheaper referral, you still come across as helpful and empathetic while politely indicating that their budget isn’t realistic for the ask.
Usually, the threat of handing an important project off to a less experienced professional (in this case a “junior designer”) is enough to scare the client straight.
You may even want to use this technique in conjunction with response number two …
2. Tell them what you can do for their budget
“I can’t do [insert project type A] for that budget, but I could do [insert project type B]”
Consider giving the client a few options for something that does fit their budget.
For instance, let’s say you have a client that wants a full redesigned 30-page slide deck but their budget is only $500.
I would say something along the lines of …
“I normally charge [insert price here] for a 30-page slide deck. If that’s not within your budget, perhaps I could create a five-page Powerpoint template for you to use instead.”
This line, just like the last, is also a highly effective sales tool.
It shows that you are willing to make the budget work by offering a less attractive albeit budget-friendly solution while simultaneously gauging whether or not that budget is real or just some low-ball price they threw out to see how cheap they could get you to do the work.
And regardless of which option the client chooses, you’ll likely make a sale.
3. Throw out a range and put the ball in their court
“I normally charge between [insert price range] for this type of project depending on complexity, edits and scope creep.”
Look, scope-creep is a very real thing. There are a million different ways a project can go off the rails or require more time and effort than you anticipated.
You always want to build a little wiggle room in whatever price you quote to the client, just in case.
And I often do this by offering a price range rather than a single flat-rate price.
This is an especially important practice when your client’s budget is tight or on the lower end of what you normally charge.
You can also use this range to encourage your client to be efficient about their planning and communication as the project progresses.
Remind the client that if they want to stick to their budget, they will have to be an active partner in keeping the project on track.
For instance, I recently had a client who wanted a simple 100-page pdf instructional e-book created.
Our normal price for a project like this can run upwards of $3000-$5000. And I knew this client had a bad habit of making last-minute changes to the project as I had worked with them before.
They were adamant that the top-line budget was $3,000 and not a penny more.
I replied with something similar to the following:
“Normally, we charge between $3,000-$5,000 for a project of this size. We can likely stay at the lower end of that range if we limit edits to no more than two rounds and the project successfully avoids scope creep.”
I find this strategy both levels expectations and helps keep the client in line by reminding them if they want to stay on budget, the ball is on their court.
Honestly, I’ve personally found that all three of the above-mentioned tactics (standing your ground, offering an alternative and always quoting a range) usually result in the client increasing their budget and dropping price negotiations altogether.
Human behavior is an interesting thing.
I’d imagine it’s the same reason people tend to spend a little more than they budgeted when buying luxury items, vehicles and real estate.
You see it happen on HGTV all the time. A young couple will swear that their top-line budget for a renovation is only $50,000 yet they end up spending closer to $100,000.
I think it’s hard for people to settle for less after they’ve set their heart on something – whether it be a new home, or their graphic designer.
At the end of the day, good clients, if they want to work with you, will respect your rates, and how you prefer to run your business.
How do you normally handle price negotiations with clients? Let me know in the comments below and don’t forget to connect with me on social media.