WHEN NEGOTIATING WITH NEW CLIENTS, ALTER SERVICES NOT FEES
This post originally appeared on January 17, 2009, but we feel this topic will always be relevant!
To say that economically, things are rough around here would be an understatement, and at this point also a cliche. For entrepreneurs, things are tougher than they once were, no question. But that’s not to say that there aren’t still opportunities for marketing and PR professionals to turn a profit.
It’s really tempting to get so excited about the prospect of a new client that you underbid yourself. Not to mention the dynamics of this recession. You might start thinking “Wow, things are really tough right now, and I’m sure they can’t really afford my normal rate. We’re in a recession. Let me lower my fees, so that I can close the deal, just this once…”
But you’re never going to turn a profit if you don’t get paid what you’re worth. And you can’t get paid what you’re worth if you hedge every time someone says they can’t afford you. Furthermore, that will really come back to bite you once this recession is over. Your clients (who didn’t know you were doing them a favor) will think that you’re only worth the peanuts that you charge.
Scenario: You meet with a new client. You absolutely love them. They love you and you’re both giddy about working together. You promise them a proposal/quote for your services and they tell you they’re looking forward to it. You go home, happy and start slaving over the proposal. You painstakingly detail the scope of work and deliverables. You decide how long all of this will take, outline the budget and break down your fees. You submit the proposal and wait.
Then a curious thing happens. You hear nothing. Your phone doesn’t ring, e-mail goes unreturned. Your future client, who was once giddy about working with you has suddenly gone awol. You wonder if they’ve gotten cold feet.
Once you reach them over the phone you find out that while they still would love to work with you, they can’t really afford you, at least not at this time. You quoted them five thousand and they were thinking more like two. You’re disappointed because you think that you won’t be able to work with them. Not true! You can still work with this client, you just have to reconfigure the terms of the relationship first.
And even though your first instinct will be to do so, Don’t Lower Your Fees. I know this sounds counterintuitive. You’re faced with a client who you really want to work with but it seems they can’t afford you. Well they can’t afford all of you, but they can probably afford a piece. You planned to give them 20 hours of your time per week? Cut it down to ten. You budgeted for weekly client meetings? Change that to monthly meetings. Tweak your proposal so that your clients can still get you, just less of you. Lower Your Level of Service, Not Your Fee.
Secondly, Itemize Your Proposal. If you’re not an analytical thinker, this might seem a little tedious and annoying but it’s very useful when you sit back down with the client and try to figure out what can stay and what can go. Make use of outlines and bullets. Break the proposal down by month so that the client can see what you’ll be doing at any given time. If next month is going to be tight budget-wise, your client can automatically look at your list of monthly duties and pick a few things to cut. This way you don’t end up working more hours than you’re billing the client.
Lastly Be Honest. Communicate clearly about what you can and can’t do for a certain dollar amount. Manage expectations so that people realize how much time it really takes to make the magic happen, and then put a dollar amount on your time. Don’t avoid “the talk” just because you think the client will change their mind about hiring you. If you are honest about how much you cost and show willingness to negotiate by changing the scope of work to match their budget, chances are, you’ll get the contract.
At the end of the day, you can’t afford to not get paid what you’re worth. Good clients understand that and are willing to pay for your expertise.