What do you say to people who tell you that you’re too expensive, that they can get what you’re offering cheaper down the road?
I remember when I first started my business; it used to really worry me. It’s so difficult to know how to price yourself in the early days.
So I’d capitulate. I’d offer a discount or reduce my price. I ticked along, but I found I was working a lot more than I wanted to for clients and a lot less than I wanted to developing my business.
This went on for a while, because – and I’m sure this will sound familiar to you – when you first start your business it’s really difficult to turn down any work at all. What if nothing else comes along? What if you don’t bring in any money this month? It’s a worry. We business owners don’t have the security of a guaranteed monthly paycheck.
Then I realised a couple of things.
First, it’s not about pricing your products and services, it’s about valuing them.
Second, if I gave myself enough time to work on my business, I wouldn’t have to worry about more business arriving because I’d be controlling it. My marketing systems would bring in the clients I need.
So, let’s talk about price today.
There are two types of customers: transactional customers and relational customers. I asked you yesterday what type of customer you want.
Of course, I can’t tell you what type of customer you should want. But I think you’d prefer relational customers.
The transactional customer is short-term. He spends lots of time researching what he’s buying and considers himself the ‘expert’ on your product. It’s all about price for the transactional customer – if you’re the cheapest, he’ll buy from you. If you’re not the cheapest, he’ll try to negotiate. The only thing he fears is “paying more than I had to pay”. There’s no loyalty here; he wants to ‘beat you’.
The relational customer, on the other hand, thinks long-term. She is looking for an expert she can trust and fears only “making a poor choice”. This customer considers today’s purchase to be one in a series of many. If she buys from you once and you meet her expectations, she’s very likely to become a repeat customer.
Your marketing and positioning will determine what type of customer you attract. If you position yourself as the ‘bargain’ choice and you’re always discounting, you’ll attract price buyers.
Price buyers are a major pain in the arse, in my experience. If one of the first things a potential client asks is about the price, I already know that they’re not going to be a good fit with me.
It tells me that they’re not really sure what they want to achieve and they don’t understand what I do. It’s also been my experience that these customers are poor payers and want endless changes and tweaks and fiddles and won’t listen to my advice.
Of course, making changes is their prerogative and I don’t care if they don’t want to take my advice. I do care, though, when they dodge paying their invoice and they’re paying me under the odds anyway.
One of my first clients beat me down on price. Then he took four months to pay me that tiny amount. I later found out that he bought a tin of floor paint from a shop owner I know, and never paid for that either.
So I don’t do business with people like that. I learned the hard way.
If you position yourself as the expert – which you are – you’ll attract the kind of clients you want and deserve.
You won’t usually get the quick sales, but you’ll develop lucrative relationships with your clients. You’ll build a loyal group who not only comes back to you time and again, but sings your praises to their peers.
Would you rather have 100 customers who beat you down on price so you make a tiny profit, are a nightmare to work with, then never come back?
Or would you rather have 75 clients who value you and your expertise, pay your fees, come back again and again, and tell everyone around them how great you are?
It’s a no-brainer, right?
So take a look at your positioning. Focus on the value you bring to your clients. Show them that they’re in safe hands and that you’re the only one who can do what you do (because you are – other people do it differently and they’re not YOU).
Here’s a quick tip on positioning: if you want to do a discount, do it right. Don’t offer 50% off, offer two for the price of one. Add something extra, rather than taking something away.
For example, when people join my Inner Circle, I give them a free copy of my book.
Spend time on your business, not just in it. Talk to your clients often. Every day, if you can. Build relationships. This is what I do, and it works. My clients aren’t just clients. They treat me as a trusted advisor and they never ask me for discounts.
And when somebody tries to beat you down on price and tells you they can get it cheaper down the road, wave them off and wish them good luck.
They can’t get it cheaper down the road. They can only get something different from somebody else.
Value yourself highly. Give your customers brilliant results and exceed their needs and expectations, and they’ll value you.
P.S. You might feel a bit uncomfortable at the idea of turning down business. I did. It’s perfectly understandable. But let me tell you a little-known fact: only a very tiny proportion of people buy solely on price. Most people don’t understand how elastic price is.
Vicky Fraser is a copywriter, author, and entrepreneur. She really did run away with the circus… but when she’s not swinging from a trapeze, she’s showing other copywriters and small business owners how to work with better clients, make more money, and stop missing bathtimes, first words, and dinners with angry partners. In fact, she wrote the book on it. Get your copy here.