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To Cut Or Not To Cut?
by Barbara Mencer
Say your prospective client doesn't immediately jump at the chance to work with you. What's your first response?
To cut your price? To lower your rates?
I ask, because I've had several clients lately who, when strategizing about how to "land" a client, want to immediately lower their fees. And they're not alone. It's the first thing most service providers do, especially those who are younger, less established, and eager ... if not desperate ... to capture new business.
So, why do people do it?
Because they assume that price is the deciding factor when people make hiring decisions. They're right ... sometimes. Price can certainly be the deciding factor in choosing one provider over another. But most of the time it isn't.
I attended a marketing program recently where the panelists ... four in-house corporate lawyers ... were saying the things that mattered most when they hired a service provider to work for them were knowledge, expertise, and overall value. Price was the last thing they looked at.
I wrote about this last year. Only then it was from the busy consumer's perspective. The message was simple. Don't waste your time chasing the lowest price. Focus on getting the best value for the money, time, and effort you have to expend and the hassle you have to endure. In most cases, the "lowest bidder" isn't your best choice.
Well, your clients are looking at total value too. Do you provide a service that's superior in some way? Do you make it easy to do business with you? Are you more efficient, friendlier, more responsive, smarter? Do you have a better system? Do you inspire more confidence? Do you deliver better results?
"Uh, no, but I'm cheaper."
That won't fly.
So, should you ever cut your price or lower your fees if people don't sign on right away? Maybe ... sometimes ... but it would have to be in response to a special set of circumstances and you'd have to have a clear indication that price is, indeed, the deciding factor. For the most part, though, we'd say, "Don't do it."
Focus, instead, on making sure you're providing the best value proposition you can.
"But I need the business!" Okay, we get that, but chasing after it isn't likely to work. How well does it work in personal relationships when you chase after somebody? In most cases, not so well. It's no different in business. Price cutting = chasing.
There's another reason why you, as a provider, would cut price at the first sign of resistance or lack of interest.
You don't believe you're worth it.
That's a psychological issue that likely has nothing to do with the actual value the client would receive or what the market for the particular service in question will bear. That's about you.
Now, I'm not being critical. I imagine most of us have been there at one point or another in our careers. Sometimes we feel like "imposters," and how can you charge that much when you're thinking you're not really the competent professional you pretend to be?
While the decision to lower your rates or drop your price can be based in logic, it usually isn't. It's more likely based on the psycho-logic of "I'm not good enough." Do you really want to put that out there? No. Is it true that you're not good enough? Probably not. We all talk smack to ourselves and some of it we actually believe. Most of it is nonsense.
So, what should you do to get the business? Go to work on increasing your value ... and go to work on increasing your belief in yourself.
Do these things, and, before long, you'll be attracting all the clients you want and charging more, not less ... and you'll be worth every penny ... and then some.
Warmest Regards,
Barbara
P.S. Want an exercise to build up your belief in yourself? Let me know and I'll send you the one that helped both me and Denise as we built our practices.
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