Prices Are Non-Negotiable - RD290

The local tourism board where I live, a client of mine, in partnership with one of the local newspapers, produces a 72-page visitor guide every year for people visiting the area. The tourism director hired me to design a countertop display stand for these guides that they will place in various stores and businesses in the region.

These visitor guides are an odd size. So I started researching companies that produce custom cardboard countertop display stands. And let me tell you, I was super impressed with one company I contacted.

While browsing their website to see if they offer what I need, a chat bubble popped up saying, "Hi, I'm Frank. I'm available right now if you need to chat about anything." I took Frank up on his offer and asked what my best option was for the display stand I needed. He replied by requesting my phone number and asking if it was ok for him to call me, as it would be easier to discuss my needs over the phone. I agreed, and I was on the phone with him a minute later.

Frank listened to what I needed, made a few suggestions and said he would email me a price by the end of the day. In my opinion, Frank and his company went above and beyond to impress me, a potential new client.

But it didn't end there. Within a couple of minutes of hanging up the phone, I received a welcome email from Frank thanking me for agreeing to talk to him. In the email, he briefly outlined what we had discussed. And he attached an intro packet outlining the company for me to read. This intro packet upped my impression of the company tenfold.

A couple of hours later, I received another phone call from Frank. He tells me he just emailed me the quote and asked if I have time to go over it with him.

At this point, I felt like royalty. I was so impressed with the way they were treating me. I had never heard of this company before, and now I couldn't wait to tell everyone about them.

Frank walked me through the various charges involved with my project, such as the price for a custom die, among other things. But when we finally reached the cost per unit, it was higher than I had hoped. Not overly so, but still more than I wanted to pay for them.

When he asked me what I thought, I hesitated for a moment. And that's when Frank goofed up.

Offer excellent customer service.

Before I get to what Frank said, I want to emphasize the importance of excellent customer service and how it affects you and your design business.

You may think of yourself as a designer, but designing is a small portion of what you do if you're running your own design business. And it might not even be the most critical portion.

If you're working for yourself, your most important skill is the ability to sell yourself.

Running your own design business requires you to be a good salesperson. Every client who agrees to work with you does so because you successfully sold them on you and your ability to do the job. They agreed to your price, had confidence in your skills, and trusted you to complete their project because you sold them on these things.

This ability to sell goes way beyond the monetary aspect and is part of every interaction you have. It's what makes people like and what to work with you. Sometimes, even despite the price. If you lack this ability to sell yourself, you will be hard-pressed to find clients.

I've said it many times before. Clients would prefer to work with a good designer they like, then work with an amazing designer they don't like. And it all comes down to your ability to sell yourself.

What you should never do.

Anyway, back to Frank. So as I said, the price per unit he quoted me was a bit higher than I hoped. And Frank sensed my hesitancy. And what he said next changed my impression of this company.

When Frank sensed my hesitation, he told me, "Don't worry. All prices are negotiable." And at that point, the pedestal I had placed this company on crumbled.

Frank had presented me with a reasonable price for what I needed, although higher than expected. But now he was telling me that price was negotiable. In other words, he was admitting that his company could do the job for less.

So I asked him about it. My response was something like, "Are you telling me that the price you're showing me is not the best price you could have given me for this job? That you inflated your quote hoping that I would be gullible enough to agree to it?"

Frank quickly went on the defensive, saying no, this is how much the job costs. However, if I wanted to negotiate, he would hear me out.

I replied, "You're telling me that you would consider lowering the cost if I negotiated with you. That tells me that this price isn't really what this job costs and that you could easily do it for less. Otherwise, why tell me the price is negotiable? And even if you agree to take 5, 10 or 15 percent off the price, I will still wonder if you're conning me, and I could have gotten it for even less."

At this point, I thanked Frank for the quote, told him I would get back to him if I had any questions and then ended the call. All the fantastic work this company did to win me over as a client went down the drain.

What's the big deal about negotiating price?

You may be wondering, what's the big deal? People negotiate prices all the time. This is true. In fact, I love haggling over prices. It's a skill I learned from my mother, and it drives my wife crazy when I ask for a discount or rebate from anyone.

The way I see it is there's no harm in asking for a lower price. If they say no, I can still purchase whatever it is at the displayed price. And if they agree, I feel good about my actions because I got a better deal.

But this situation is different. I wouldn't be upset if I were the one who had asked if the prices were negotiable and Frank had said yes. But the fact that he presented me with the price and immediately told me they were negotiable means he didn't have my best interest in mind. Frank was trying to get the most out of me he could. And when I showed hesitation on the price, he tried to save the sale by offering to negotiate. This company that I thought was so amazing now makes me wonder if I should consider working with them.

Your prices are non-negotiable.

But what does all of this have to do with you and your design business?

You don't want people to think you're taking advantage of them. But any time you offer a discount or agree to lower a price, that's precisely what you are doing.

If you lower your price just one time, that client will forever question any future price you give them. They'll always wonder if you're trying to take advantage of them. And even if you provide them with another discount in the future, they'll wonder if it's the best discount, or could you have offered more?

Think about anything you've ever bought on sale. In your mind, if you purchase a $399 item on sale for $249, is it worth the sale price you paid for it or is it worth the original price? Most people feel the sale price is its actual value.

You never want your clients to think your services are not worth as much as you charge because you offered a discount.

Let's use hourly rates, for example. If you usually charge $100/hr and offer a client a discount of $70 per hour. They'll feel resentful should you ever charge them your standard rate in the future because they'll know you can do it for less.

When are discounts ok?

This is not to say that you should never offer discounts. There are times when lowering your prices is in your best interest.

Pro-bono work

Pro-bono work is an obvious example. Offering free or discounted work for a charity or non-profit you believe in doesn't diminish your perceived value. I highly suggest you invoice the charity for your services showing the total price with an applied 100% discount.

Or better yet, and this is what I do, I charge the charity the total price for the project. And agree to donate the entire amount back to them after they've paid. This way, they get to claim the project as a business expense since they're paying for the work, and you get a tax receipt for the donation you make back to them.

An added benefit of invoicing for your charity work is that should staff at the charity change; any future person will know the value of what you provided them because of the invoice.

Friends and family

Friends and family are also acceptable recipients of discounts. Doing something for a friend at a discounted rate or even for free shows them you care. Again, let them know the total price and that you're discounting it.

My rule of thumb for family and friends is to offer more significant discounts for personal work. Offer smaller discounts for businesses they own. And no discount for companies they work for or if they own it with a partner. I don't mind cutting a deal for someone I care about, but there's no reason for collateral people to get a discount because of them.

Retainer agreements

And, of course, discounts are a significant selling factor with retainer agreements, where you presell your time or deliverables at a discounted rate in exchange for guaranteed monthly income.

Other than these three scenarios, charity work, friends and family and retainers. There's no reason for you to offer a discount.

What if a client questions your price?

What do you do in a situation where a client questions your prices or asks if they can get a discount? This scenario is bound to happen to you at some point. You give a client a fee, and they ask if there's any way you can do the job for less?

First things first, your price is never wrong. You chose whatever price you presented because you believe that's how much the project is worth. If you thought to yourself, "there's no way anyone would pay this much." you would never present that price. So stick to it. Tell the client you're sorry they feel that way, but that's the price for what they're asking of you.

However, if you think you may lose the client, offer to negotiate. Never on price. Instead, negotiate the scope of the project.

Offer to cut out parts of the project to lower their cost. On a website, for example, Instead of every offered service having a landing page, offer to create one "Services" page that lists everything they do. This makes less work for you and can shave off a bit of the price.

If it's a printed booklet you're designing, You could suggest they reduce the number of pages to bring the price down on both design and printing. Or suggest they have it saddle-stitched instead of perfect bound.

Anything you can do to reduce the scope of a project will, in turn, lower the price, which may help the client with their decision. And, it doesn't compromise the value you bring to them.

By showing clients how much they can save by eliminating options, they learn the value of those options and feel less conflicted about paying for them.

My personal experience is that most of the time, the client will appreciate the effort but decide to stick to the full scope at the price you originally quoted.

Think of it in terms of buying a new car. How would you feel if the dealer said they could offer you the same make and model vehicle at a lower price, but it won't have air conditioning? The original price won't seem as bad anymore if you want air conditioning.

So allow your client to lower the price by reducing options on their project. If they accept the lower price, you're still getting paid for your work at the price you deserve. And if you're lucky, they'll decide they don't want to lose those options and choose to pay your original cost to keep them.

What if you can't reduce the scope of the project?

For projects such as logo design, where you can't reduce the project's scope, I suggest using the three-tiered pricing system. Offering three different price options, each with an expanded scope gives clients a choice and minimizes their chances of going elsewhere.

You must be ok with losing clients.

I must point out that you have to be prepared to lose clients. There's always the possibility that the client doesn't like your price, and instead of asking for ways to lower it, they decide to go elsewhere. And you know what, that's ok. Any client that doesn't see the value in what you do isn't worth having as a client.

Again, think of cars. Many people buy Toyota Corollas, while others prefer to drive a Mercedes-Benz. Some design clients can afford your services, while many can't. It's up to you to focus your energy on those who can.

One last tip on clients who think you're too expensive.

If a client ever tells you your price is too expensive, you may want to respond like this.

"I'm sorry you feel that way. I understand that for some people my prices may seem high. But I assure you, I charge what I'm worth, and I have many repeat clients who are very happy paying for the services I provide them.

I know, that hiring a designer is a big investment. And not everyone can afford my prices. No hard feelings if you would prefer to find a less expensive designer."

You'd be surprised when you answer in this manner how many people will decide to work with you anyway.

All of this to say, your prices are non-negotiable. You deserve every cent you charge and more. So never compromise your principles or values just because a client is hesitant about the price you present them. It's your business, after all, and you know what you're worth much more than they do.