Lowering Your Fees: Stop Shooting Yourself In The Foot, Now!

shooting yourself in the foot Google SearchNo, no NO!!!

I forbid you! Stop it right now!!!!

That’s what I wanted to shout out to my friend and new business partner when I read her email explaining how she feared that her client (in question) would refuse to move on to the next phase of our joint project.

Why was my partners scared, and why would the client fail to move forward, although it was painfully obvious to everyone involved that moving forward on the project was exactly what needed to take place?

The fear involved money. Specifically, my partner was afraid to quote our package price, and she’s had this fear in the past. In fact, I’ve had to advise her on her fears, and I know for certain that many freelancers (and agents) have this fear.

The fear plays out in our minds something like this:

We set out on our own to gain the ability to literally write our own checks in life. But then, we’re challenged on our courage, and one of the chief ways that we start to experience the challenge is when it’s time for us to quote our fees.

We experience the fear because of a few logical-sounding reasons:

  • We fear that we’re not experienced enough
  • We fear that our services aren’t desirable enough like (insert the names of the top-guns in our field)
  • We fear that our prospective clients will laugh in our faces when we have the gall to quote our prices
  • We’re concerned that our prices (although fair) just might be out of the client’s current budget (and they’ll reject our proposal)
  • We’re afraid that we’ll price ourselves out of the market, causing our proposal talks to break down while also causing the prospective client to seek the services of someone else
  • We’re frightened that our voice mails and our inboxes will stop collecting queries for orders

Let’s break down each of these fears.

1. The fear of not being good enough

Everyone has had to start somewhere. No one grew up with the skills to offer the type of services that you do. This means that everyone had to take a training course, or they had to apprentice their skills until they became skilled (or talented) enough to sell their services.

And as I’ve mentioned before, if you truly didn’t believe that you were good enough, then you wouldn’t have started your own entity. You’d be working for a company, dreading each day as an employee, like millions of others around the world.

That leads me to…

2. The fear of not being as desirable as (insert name)

Here’s a simple-yet-true fact that might surprise you:

If the client wanted to hire (insert name), then they would have!

Yes, that top-gun in your industry probably has a waiting list that’s longer than your leads list will ever be over the next couple of months. Yes, that top-gun probably has outstanding invoices for fees that would make your eyes bulge out of their sockets!

But that top-gun can’t service everyone, nor do they want to! And what’s more, everyone can’t afford the top-guns’s fees. And here’s something else to consider:

Everyone doesn’t want to work with (insert name)!

Maybe, just maybe, that prospect wants to work with a start-up…someone who will offer them more personalized services. Maybe they’d prefer to work with a professional who will be more readily available while offering more hands-on service.

Maybe they’d love to work with someone just like you!

3. The fear of being mocked or laughed at by the client

Okay, off the top, why would you want to work with someone so rude and unprofessional? Wouldn’t you rather find out their character, immediately?

If so, then quote your fees, then stand back and watch how they respond. Honestly, their response will tell you everything you need to know about their character, and what you can expect to experience from working with them.

Branding professional Julia “Juju” Hook says a lot of smart things regarding this topic, but here’s a quote she mentions that I love:

Know the difference between ‘You’re too expensive,’ and ‘I can’t afford you.’ Just because someone can’t – or won’t – pay your prevailing rate, doesn’t mean you’re too expensive…Sometimes clients are not the right fit for us, plain and simple.

There are a lot of entitled would-be clients out there-you’ve encountered them if you’ve been around even for a little while! Many of them (for a variety of reasons) will try to convince you that you’re “too expensive” because they’re resentful or ashamed of the fact that they simply can’t afford you!

4. The fear of pricing ourselves out of the client’s current budget, or out of our industry market rate, causing our work to dry up.

I’ve combined the last three fears because they all address the same issue:

You’re afraid that the client can’t afford you, and now that you’ve quoted a fee that they can’t afford, the client can’t wait to hire the next low-baller they make contact with!

When this happens, you’ve probably done what many a cash-strapped service provider has done:

You’ve immediately initiated the race to the bottom by lowering your quote…kind of like auctioning your fees in reverse!

The problem is, you probably thought that this would help you to lock in your sale, but all this strategy did was create uncertainty and misperception in the mind of your prospect.

Juju Hook experienced this when she was approached by a relatively new (yet obviously talented and professional) service provider. The service provider made the same mistake, and this is what happened:

When we sat down at the table and I presented my budget limitations, her automatic reply was, “I can give you a 25% discount. I’d really like to work with you.”

In a split second, it changed the way I felt about her. I wondered – if she would give up so easily on her hourly rate – whether or not she really had other clients, and why she was clamoring for work. I wondered if I’d misjudged her value.

(emphasis are mine/T.S.)

You see, you can’t talk out of both sides of your mouth by claiming your value (on the one hand) while eagerly devaluing yourself financially, on the other!

You have to take a stand for your inherent value!

Don’t back down! Fight for what’s fair, for what should be rightfully yours!

And can we talk about that phrase that we all hate, some variation of:

” I can get someone cheaper!”

Well, as Kate Hamill from the Freelancer’s Union points out,

THEIR fee structure history is not really relevant; YOURS is. So if your other clients pay $X, you can stand firm – that’s your fee, and you can’t go any lower. If they can’t afford you now, maybe they can eventually – but you won’t starve in the meantime.

Craig Buckler of Site Point also offers lots of input on the topic of not lowering your fees out of fear of losing client jobs.

He states that yes, the client could find someone to do the same job cheaper. He also says,

Whatever your charges, there will always be cheaper alternatives. You have less expensive competitors. The client may know students or family members willing to do it for a few dollars. They can do it themselves for nothing but time. However, they are negotiating with you because they need your services — don’t be afraid to charge accordingly.

Clients may also promise you future projects or recommend your services to others. Great … you can consider discounts or commissions when that work starts rolling in. You don’t need to offer it on day one.

Let’s talk about that other phrase we all love to hate…“more work.”

It’s a phrase that sounds so delicious to the unsuspecting and the desperate service provider. But those of us who are grizzled veterans hear that phrase, and we immediately groan!

That’s because we already know that it’s a phrase that’s used to bait us, exploit us, then leave us on the side of the road, begging for more work that never materializes.

It’s the ultimate carrot in front of the horse, and as I’ve mentioned in a past post, you’re not a horse!

No, you’re a human being, and a highly-skilled professional who is more than capable of finding your own work (Thank you very much!).

In fact, if a prospective or current client dangles that carrot in front of you, then here’s a script that you should use (from me to you):

“Thanks for the offer, but I have no problems with finding my own work. Now as we were discussing…”

You’re not being rude, but you’re not presenting yourself as a desperate doormat, either.

But What If I Really Want To Make This Deal Work?

Having said all of this, there will be that occasional time when a good client truly values you, but they truly can’t afford your fee. If you truly want to work with them and close the deal, then try this:

Don’t devalue your rate-simply deduct some of the work you provide within your proposed package of services!

When I quoted my content strategy rates to design agency owner, they asked me if they could pay for a two less hours than what I quoted. They were also careful to ask me if I could perform an abbreviated strategy session, reasonably.

I agreed that I could, and this allowed them to pay within their budget without cutting into my quoted hourly rate. And I was was sure to thank my client for not insulting me by demanding that I cut my rates. We were able to create a win-win scenario this way.

If you don’t feel that you deserve to be paid your worth, then it’s time for you to find employment, now!

But if you’d like to keep your business entity alive, then stop shooting yourself in the foot by continuing to lower your fees.

*Photo Source

About Terri Scott


Terri is a content marketing storyteller and strategist. She teaches marketing and entrepreneurship through stories for marketers of all stripes. Her specialty is creating narrative and she writes essays and memoir in her spare time. You can view her work at terriscott.contently.com, and she'd love to hear from you: https://www.facebook.com/profile.php?id=100011073971177

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Rodney Omeokachieo

I received the email containing a link to this post an hour after I just went through the same thing with a prospective client. It was all kinds of negation all warfare but somehow, I got myself in position for the last point which was to strip some services off the package. Thet weren’t too thrilled about that but I was persuasive. Great post. Very timely. And relevant.

Janice

Terri,

Wonderfully said!

To expand on what I’ve recently experienced from a few vendors after discussing the work (and value) to be delivered and then my inquiring about the cost, the reply has been, “what’s your budget”.

For me, this communicates the vendor is not comfortable in the worth of their services/product (and also they don’t want to lose the job).

Know your worth and ask for it. It shows confidence in what you can deliver and weeds out those who can’t afford you.

Phill Osler

Can you shed some light on taking this same approach when you are charging by the hour plus a percentage?
I’m a Civil Construction Estimator / Consultant. I charge an hourly rate to develop estimates and bid proposals. If the client is awarded the project I receive a percentage of the contract price plus what time it took to develop the estimate and proposal. If the client is not awarded the project, I am just paid for the time invested to develop the estimate and proposal.

Terri Scott

Hi Phil,

Thanks for asking me the question. Off the top, if the commission is tied into whether or not your clients are awarded the bid, then I’d think you’d receive your share. If they fail to win the bid, then I’d believe that you’d simply charge for your time invested, as agreed.

I’m actually working on a similar scenario. In addition to my content business, I also provide virtual assistant services. I’m going to provide services to a colleague, and specifically, I’ll be performing her lead generation. I’m being paid an hourly rate plus a commission on any sales she converts. If she can’t convert the lead, then I’m only paid my hourly rate.

Hope that helps. 🙂

Terri Scott

That’s an interesting perspective, Janice. Thanks for sharing that nugget! 🙂

Terri Scott

Ha! Funny that you caught this post right after your situation. I’m glad that you found a way to make it all work, Rodney.

Bonita

Fantastic advice. But it’s only once you’ve made the mistakes, that you really start to learn and to grow.. and that’s when advice like this is remembered and considered!

Terri Scott

Absolutely, Bonita! Experience is definitely the best teacher. We all have to get burned to learn.

xcd

Well Said, Terri! Love your candid, well-directed posts. So here’s my story: I present my proposal with my fee and the client punts: “we can’t afford this, can you scale back some of your services to make it more affordable?” I explain that for a marketing strategy plan, my approach is holistic and it’s difficult to repackage/cut back on services. I ask the client to come back with an offer of what they can afford or consider a payment plan in monthly installments. I haven’t heard back for months. It’s occurred several times that I ask clients what they can afford they refuse to comment. I find this confusing; I’ve given them a sense of my worth, which they reject, so clearly they have “a number in mind”… I’m looking for negotiating tips, because I can’t walk away from every opportunity. Your thoughts?

Terri Scott

Thanks for sharing your story, “X”.

While I like it when you present the option of having the client pay in installments (Creative!), I don’t like it when you ask the client what they can afford. It’s a down-grade phrase that smacks of desperation to make the deal work. Maybe this is why they’re refusing to comment? Read the quote from JuJu Hook about how she felt when her potential vendor down-graded herself.

We have to be comfortable with the fact that sometimes, a potential client can’t afford our fees! I still experience this fear, but that’s why I’ve diversified my offerings. This way, I have several income streams, and I don’t have to down-grade my fees out of financial fear. Can you do the same?

But then again, some clients approach negotiations with a poker-face, and some come to negotiations with the perception that we (the service provider) are out to cheat them (What?!?). There’s nothing you can do about a paranoid prospect.

Ennydee

Very enlightening post. i can totally relate.

Emmanuel

Well said. I too had such fears and am putting the past into the past

Abiola

Thank you Terri for this wonderful piece. It allays all of my fears!

Maria Todd

Terri, a well written piece full of great advice. I’ve been freelancing for years in the USA and have a U.S. appropriate fee structure. Now I am being hired by foreign governments and foreign clients in developing countries. They simply aren’t used to U.S. expert prices. It costs more to deal with them (accommodation of time zones, currency exchange fees, wire transfer fees, more travel, more health risks associated with the travel, etc.) I am working in some extremely niche focused areas in healthcare. While I do all these things in the USA, I find myself tempted to back down on international work. People in international development gigs rarely work direct, and instead hire through project managers that take sometimes as much as 60% from the rates they charge clients. But the consultants tell me “You’ll never get those rates in XYZ country like you get in the USA.” Any thoughts on how to bolster my pitch and not be sidetracked by naysayers?” I hate working through those project manager firms. Most assign PMs who are clueless micromanaging sniveling greedy @#%#$%#^’s. They are PMs because they can’t do the actual work of an expert but they have egos a mile wide!

Smith Msiska

Thanks for the email, am actually going through that right now, am just starting up and most clients, that are actually impressed by the work, still want me to lower my prices. It is really difficult to get work just starting up.

Terri Scott

It’s very hard when you need those first clients, and yet you want to hold firm to your fees. As I might have suggested, ask the client if they’d be willing to pay for a re-packaged offer? In other words, don’t lower your fees, but sell them less.

See how that works. But know that there will always be entitled bargain shoppers, and they’re usually a nightmare to work with.

Terri Scott

Wow, Maria!

I don’t have concrete advice, but for me, it would come down to whether the headaches are worth it, or not.

Personally, I have enough stress and personal responsibilities to handle without a client bringing me more stress. I also have chronic health issues to manage-these are also triggered by stress, so it’s that much more important for me to find the right clients to work with.

You mention the word “hate.” I’d look deeply into what you hate, and if dealing with such strong emotions are worth it.

Terri Scott

You’re welcome, good luck!

Terri Scott

Good for you! I hope it’s all going well.

Terri Scott

🙂

Jeff Crosby

This is exactly what I needed to read this morning. Very well thought out and very well written. This is going in my list of daily readings until it’s etched into my brain and all thoughts of devaluing myself and lowering prices are destroyed from my mentals. Thanks again

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