One of the questions I often get from entrepreneurs is, what do I do when clients are reluctant to pay the price I’ve set?
Setting a price for what we do as entrepreneurs can be one of the most difficult things to establish. What should I charge? Should I look at what others charge and price below that?
Like the unusually talented NYC trumpet player in the photo, why would anyone pay me for this great thing that I love to do?
All issues of price come down to value.
And once you establish that value, value yourself enough to stay with it!
A few years ago, one of my corporate consulting clients approached me about a very large project. After going through everything she wanted, I submitted a proposal. Her response? Oh, I don’t have the budget for this! Was there any way I could cut the price?
Rather than be disappointed (which was an impulse that would pop up for most of us!), I got down to business instead. I got clear about what was most important to her in this project. Since I’d done similar projects before, I had a pretty good idea, and I started there to ask some clarifying questions.
When I came back to her with a revised proposal that reflected what was crucial to her, she was appreciative. I then took the process a step further.
I outlined for her what the implications were for her and her company of leaving out the steps not included in the revised proposal. I did that in a gentle way, by way of reminder.
My flexibility in responding to her and what she was telling me allowed her to open up to the value that I was providing. It created flexibility within her.
She decided to see if she could find the money for the project in its original form. After a couple of days of waiting, she got back to me: ‘I found the money – let’s go ahead.’
Yay!!
Not only did I get the full revenue from the entire project, I also had a chance to show my client I was listening, that I both wanted to and was able to respond in a useful way, and that she now had the full value of what I could offer.
Not every scenario has this happy outcome, but even if she had stayed with her budget, she is now clear that I have clarity about the value I was offering.
Here are some guidelines to help you get paid for the value that you offer:
1. Be clear about your price. Clarity creates confidence. Developing a price chart for services or products that you offer regularly will help you, so you don’t have to rethink this every time someone asks you for a price.
2. Stand in the value that you offer. One of the things I work on with my clients is confidence. The work you do is valuable! When you are confident about the value of your work, beyond simply hours spent or the cost of materials, you have handle on real value for your clients. Is a Starbucks latte really worth $4 in time and materials? No! You are paying for an experience – that is its real value. Having confidence in your work’s real value allows you to stand firm in any discussion or negotiation about price.
3. Don’t give discounts. By discount, I mean don’t cut the price of what you offer because someone asks you to. Don’t devalue what you offer by cutting the price just to get business.
Sidenote: Setting a lower price for a reason, as part of your strategy, is a whole different thing. Early bird pricing for a workshop, for example, can be an incentive for people to sign up, and benefits you because you know who is enrolling earlier.
4. If your client has a limited budget, offer what you can. When you’re presented with, ‘I don’t have the budget’, then work with the client to provide what you can within their budget. Ask questions. Listen to what is most important for them. Then focus on that first in your revised proposal.
Be creative in ways to provide the value they are asking you for. In most cases, they will see that you are trying to make it work, and that you also stand behind the value of what you do.
5. If the client decides not to pay what you charge, then graciously let them go. Send them on their way with good wishes. And within yourself, you can add even more goodwill, with a virtual basket of freshly baked muffins (with organic butter! :)).
That inner graciousness and allowing of free flow will help you to move on. Letting them go creates space for a new client who really does value what you offer and is willing to pay accordingly.
Pricing is an area of growth for you as an entrepreneur. You don’t necessarily start with supreme clarity, with confidence – very few of us do! I sure didn’t! Be gentle with yourself as you travel this part of your journey.
The exchange of value between you and your clients is central to your business. Without that, you have no fuel, nothing to fire up your business. So it’s important to develop and grow in your ability to stand in your value.
And when you do, you will draw to you the clients who willing to pay for the value that you offer. Clients who are perfect for you and your business!
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Do you feel clear about the prices of your product or service?
What would help you be more confident in the value of what you offer?
We’ve all got this challenge, so your share would help everyone!
Leave a comment below.