Should You Worry If A client Says You’re Too Expensive?

Written by Tayo Solagbade

Topics: Entrepreneurship

(This article was originally published on a static HTML page on my website on 7th March 2009 – and at Ezinearticles.com on Dec 14, 2010 )

For more than six years now, I have had the opportunity to work with – and closely study – individuals in various industries, in relation to how they request their service providers or vendors to serve them. Many times I have been shocked by the “predatory” disposition some of them adopted in negotiating with others. It is for this reason that I encourage YOU as a service provider to arm yourself with the ideas offered in this article, to avoid having to accept to work for less than is worth your while.

Loving Your Work, Does Not Mean You Should Not Make Profit!

I love the work I do. In fact, I have a deep passion for it. However, years of experience have taught me (the hard way) that I must also ALWAYS ensure that I earn a decent financial remuneration for doing my “enjoyable” work, so that I can meet my needs, AND also fulfill my responsibilities.

This became important to me over the years, since I sometimes found myself getting so carried away about the project being negotiated with a client, that I failed to agree payment that justified my investment of time, effort etc in delivering it.

Quite often, when the above happened, I ended up wondering how come I became short of money, so soon after completing the project.

My experiences led to me to modify the first item in my code of ethics (adapted from one used by Pierre Lecher), which originally read “The well informed client is always right”.

That first (of ten) items in the code of ethics document I give to clients now reads: “The well informed and profitable client is always right”.

Find/Work For Clients Who Pay Well Because They Value What You Do

I believe the survival and profitable growth of any business is greatly dependent on the active cultivation of a virile base of PROFITABLE, paying clients.

You see, if as a business person you allow too much sentiment or emotion to rule your judgment in pricing your products and services, you may eventually lose out in terms of profit.

Understand this. A client who really values you, will have NO problems accepting your fees if you explain the justification for them properly. Any client who continually tells you that you are expensive, without acknowledging the value you will add may be trying to get more without giving more. Such clients are unlikely to be good for your business health!

Don’t Listen To Poor Thinking About Pricing

Some people have tried to sell me on the need to always allow clients to “win”, so that I can keep them. I argue that I ALWAYS work hard to deliver more value to my clients than they pay for. This is in line with my code of ethics. Unfortunately, not every client will be satisfied with your efforts, no matter how hard you try.

I believe business must be done on a win-win basis. Accepting to charge unprofitable fees does you more harm than good. Many clients who make such requests are thinking ONLY of themselves and not of you. They do not care what happens to you after they get what they want from you – so long as they get it.

It is such clients that will make mountains of juicy promises about future patronage that you can expect from them, or through them. Don’t fall for their antics. Very often, those promises are made just to get you to agree to the unfair offer they make.

Once they get it, you will be shocked by the way they turn around and act like they never made them. Or sometimes, they will simply “conjure” some condition they know you will not be able to meet, as a requirement for fulfilling the promises they have made to you.

Trust me, I KNOW exactly what I am talking about here.

Would They Ask The Same Of A Loved One?

A good question to ask is: would they make the same demand they make of you, of their own relative or friend? Not likely. Therefore, do not let any client threaten you – openly or subtly – that s/he is considering an alternative to your product/service.

The beautiful thing about life is that people will always have to make choices. You must wish that your clients remain capable of choosing the best possible provider to serve them.

If they are able, and you make sure you remain THE best, they are likely to choose you over any others. If they do not, it would not be the end of the world. Neither would it mean you are not the best. Other factors can – and do – influence decision making of that kind.

Can You Really AFFORD To Give In?

This is not about being hard hearted. Even if you WANT to charge a lower fee or price, the question to ask is: “Can you really AFFORD to do that?” or “Can you really AFFORD to do that NOW, at this time when the request is being made?”.

In other words, can your business “accommodate” or “absorb” the cash flow shortfall that will result from your accepting to work for less than you should.

I ask these questions on the assumption that you would have accurately computed – for instance – what your hourly or day rate etc should be, so as to project an expected income amount for your time spent on a project (apart from the pricing you may put on value added).

Those two questions do not mean the same thing. Sometimes the client who asks for a price, below that which you have calculated to be your lower limit to achieve profitability, may need to be told by YOU that you cannot AFFORD to give a lower price than the one you have offered.

Possible Meanings Behind Your Client’s “You’re Too Expensive” Complaint

Whenever a client says you are too expensive, s/he may actually be telling you one or more of the three things I have explained below.

In considering each one, remember that we are assuming you already KNOW that YOUR price being contended by the client, is the lowest offer you can make, if you are to remain profitable. Therefore, lowering it will NOT be a practical option to consider.

1. The value your product/service adds does not justify your fee. Try asking the client to give up some optional features of the total product/service. so that you can charge a lower price. If s/he is unwilling to do that, you may have no choice but to walk away.

Be sure however to do so without offending him/her. In fact, going by my experience, I would say it is better to let it “appear” that s/he is the one letting you go, and that you are the one trying to avoid being dropped (but of course in your mind, you would know the truth!).

This approach really helps the client’s ego. There will be no hard feelings, and in the future it will not be hard to rekindle the relationship, if the opportunity presents itself.

2. The future benefits you promise/offer are NOT attractive enough. If you feel you can accommodate it, you may ask offer the client some additional incentives (preferably non-monetary) that will make him/her accept your fee. For instance, you could throw in an offer to do FREE training, or something else s/he might value enough to accept your price.

If s/he says NO, then again, you may want to consider walking away.

3. The Client has found another person/company offering better value at the same (or possibly lower) price than yours. This can be interesting. I have seen clients negotiate with winner takes all intent, especially when dealing with solo acts or small companies.

For example, they would ask the solopreneur to accept to supply product/service at near rock bottom prices, and still refuse to provide an advance for him/her to do so – claiming some other person/company is “waiting” to pick up the job, if s/he does not accept their terms.

Their argument: S/he is still young and growing, and needs to win (or indulge) them as customers, so they can provide referrals etc. If s/he manages to do what they ask, the cheque never gets out on time, and s/he has to make repeat calls and visits to get it.

Quite often, whatever profit there is on that job, is eventually lost by the time s/he does get hold of the cheque.

The “Client/Customer” Ocean Is Filled With Countless “Fishes”.

Let me share one secret with you: Clients, like employees will ALWAYS come and go. It’s a normal process in life. What would be abnormal is if it did NOT happen.

There is even a name for it: “Attrition”.

The logical question then is “What can you do to minimise the negative impact of client attrition?”

The answer is simple: Make a habit of marketing to – and winning over – new clients DAILY.

I would emphasise that you aim to win over more clients of the type that will be wiling to pay for the kind of value you offer. Once you do the above, you will find that just as some clients “drop off”, your newly recruited ones will take their place.

That is not to say you should not work hard to keep your clients. You should work hard to please/delight your customers with good service and surprise zero cost extras e.g free upgrades. The point being made however, is that you should NOT try to keep them at all costs – especially not when it becomes obvious that what they insist that you do for them WILL hurt your business.

Note of course that your rate of client attrition would normally not be the same as your rate of new customer acquisition. In fact, it should be quite low in comparison. If it is NOT, then YOU need to check what you are doing that’s driving clients away from you. If you do a good job of it, the rate of client attrition will eventually be negligible when compared to the rate of new client recruitment.

Be Kind To Yourself

It is even possible – and this has happened to me – that a client might ask you to see yourself as part of his/her business, and therefore accept what YOU KNOW is an unfairly low price, to deliver your product or service.

I argue that such a client needs to be told to also see him/herself as a part of YOUR business too, and therefore NOT offer to pay YOU at rates that will not let your business grow!

Like an associate of mine would say, “No one comes into Lagos to count bridges!”. Few people will fail to see “making money profitably” as a major reason for going into business. You (and those who may choose to invest their hard earned money in your business) have a right to expect to be profitably remunerated every time you deliver your product/service to the client’s satisfaction.

For as long as you have checked and confirmed that your stated fee/price for your product or service is appropriate, do NOT be worried about those few people who may use the “excuse” that you are expensive to deny you their patronage.

You cannot sell to everyone every time. Move on, and you will find others willing to pay you profitably!

[IMPORTANT: This blog's contents are being updated following the transfer to www.tayosolagbade.com from my former domain - Spontaneousdevelopment.com. As a result, some parts of it may not work properly for now. Quick Tip: If a link contains "spontaneousdevelopment.com", simply change it to "tayosolagbade.com" - and it should work. This applies to article links as well as image links. Work continues to update the links(in over 500 articles). Tayo K. Solagbade.]

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