Podcasts
FGDO Podcast 102 - Dealing with Price Objections in Your Design Business
by Michael Huggins, RGDEpisode 102
This episode: Dealing with price objections
This week we look at 6 ways that you can turn around price
objections from your clients.
For the last couple of weeks on ForGraphicDesigners Only.com we’ve been talking about the importance of proposals and proposal writing.
I’ve been talking to a lot subscribers lately about proposals – and I’m finding that a lot of solo designers, freelancers and 2 & 3 people shops have an oversion to doing proposals.
The feeling is that they are a lot of work that robs time and energy from your current projects and then at the end of it all there is no guarantee that you will get the project or the account at the end of the process.
So many designers have told me that they don’t like doing them and try to avoid them whenever they can.
But the fact is… a well planned, well written proposal is often a required component of getting the type of work you want.
If you want better clients and higher paying projects you should learn to do them well and persuasively.
It just last week I spoke to my friend Emily Cohen on a teleclass call at ForGraphicDesignersOnly.com about how to create proposals that win better clients and higher paying projects.
Emily’s has been a graphic design business expert for over 20years, Emily consults with creative firms and professionals across the country specializing in helping with writing and creating proposals and contracts.
She has her BFA in graphic design from the State University of New York.
And she’s a requested speaker at conferences like How and In-House, many AIGA events and even this year’s Mind Your Own Business Conference..
If your interested in learning exactly how to put together proposals that help you get more of the work you want then I really suggest you listen to this class. You can download your own copy of the audio class and the transcript by going to ForGraphicDesignersOnly.com and looking under resource section of the site and clicking on the download.
In the creative communication business we all understand the need for creating persuasive proposals…
But what happens when you’ve presented your proposal and your client says “I’m sorry, I like your proposal, but your price is too high.”
What do you do?
You could just drop your price – and then feel resentment and
rejection because you are undervalued and under appreciated.
Or you could just walk away… And forget about doing the work all together.
Or you COULD take another approach….
When you find yourself in this situation, you can start by asking
your client a simple question: “Are you open to looking at other
options so we can find a way to work together on this?”
If they say “yes” (and they almost always do) then you are ready
‘play ball’ with them.
And that means switching into your ‘Negotiator hat.
Now, don’t let negotiation frighten you. It doesn’t have to be
head-to-head combat. In fact, your negotiation will go much better
if you treat it like a tool to get to know your client better,
rather than a means of outsmarting them.
Adjust your thinking about negotiation. View negotiation like a
type of fact-finding mission that will help you find a mutual
solution for both you and your client.
Start off your mission with one very direct question to your client…
“What were you hoping to pay for these design services?” Their answer
will reveal if you are ‘in the ball park’ or if they are ‘out-to-lunch’.
If the numbers are workable (meaning you can reduce your cost and
still be profitable) then negotiate with your client using other
aspects of your service as bargaining tools.
Dropping your price to meet their budget number is the quickest way
to devalue your services. And a fast way to commoditize what you
do. The trick to good negotiation is to offer options to your
design services that still retain the value of what you do in the
eyes of your client.
Your goal in your negotiations is to present your client with a better solution than the one you just put forth originally.
So what can you negotiate with?
Here are 6 things I use in my negotiation process.
1. Build negotiation into each proposal
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In his best selling book “the 7 habits of highly sucessful people” Stephen Covey talked about the concept of starting with the end in mind.
Good negotiation starts with the end in mind. Design your proposals
with built-in items you can negotiate with.
To do this I often build the ‘ultimate solution’ into my initial proposals – a
full service approach to solving the problem. Do I do this even if my
client hasn’t requested it. You can build in services like copywriting,
research sessions, client interviews, custom illustration, art direction, photography
even print production are some of the options you can include.
Most clients view negotiations as a critical element of their job
description. And an integral part of their business success
(whether they like to negotiate or not). Especially if you are dealing with maketing managers of age firms.
Having a larger price that can be altered easily by taking out
value added services gives you a comfortable platform for easy
negotiations. While positioning your business to your client as a
value-add company that you want to be.
Essentially – Someone who has their best interest at heart.
2. Offer a discount for projects paid in advance
==========================================
One immediate way to reduce your price without reducing the value of your services isis to offer an incentive to your client for paying in advance.
Offer a 10% discount on your price for orders paid up-front. In
fact, some companies even have policies that require them to go
with the supplier that offers these types of discounts.
This is a powerful incentive to your client because they see an
immediate savings. And it’s valuable to you because you are
creating much needed cash-flow (worth the discount)!
3. Break the project into phases
==========================
This approach works really well with big projects that have many
components or have an undefined finished size.
Some projects like websites may start off so large in scope that
they carry a big price tag that the client is unwilling to pay in
one lump sum. These types of projects can be broken down into
phases or sections and billed as each stage is complete.
Often you can complete other components at a later date as a
completely separate project.
If you are starting large projects close to the end of your
client’s budget timeline, you can work this to your advantage even
more. Because your client can break up their large costs over two
different budgets, softening the impact of a large price tag item
while still leaving room for other projects in each budget.
Price negotiation tool number 4 is…
4. Combine more projects for a reduced rate
=====================================
Often when you go through the briefing process the client shares
their intention to follow-up with future projects. Sometimes this is a ‘carrot’ to help them reduce the cost with the promise of more work. Other times it’s quite legitimate.Keep note of this, and use it to your advantage.
For instance your client may ask you to put a proposal together for
a sales kit that involves Folders, corporate brochures, client
lists etc… with the intention of adding sell sheets to the project
scope shortly after the first phase is completed.
You can encourage your client to initiate the future project NOW at
a discounted rate rather than wait. Thereby reducing their overall
unit cost. And the large scope of work to you is worth taking on at
a lower rate if for no other reason than the “insurance of future
work” factor!
5. Offer reduced rates in exchange for longer lead-times
===================================================
Another way to reduce costs without depreciating the value of your
work is to offer a discounted rate in exchange for longer lead
times.
This allows you to schedule the project into the slower or quieter
times of your business (such as off-season work, or during scheduled client
project reviews or the client approval process…).
The client will appreciate the price break and you will be able to
book a full, steady schedule of work into your business.
Price negotiation tool #6
6. Alter your creative process
=========================
Finally, you can alter your creative processin rder to reduce your costs.
In my design process for example, I try to present no less than 3
concepts per project. If any of my clients have a concern for the
initial costs I present I can easily reduce the design time by
removing the additional concept time.
They don’t get the benefit of design exploration but they do see an
immediate cost savings. In some cases I got the project by reducing
the number of concepts in order to be cost competitive – only to have the client request that I build it back in once I have been awarded the project. And I’m able to push the fees back t where I had originally quoted.
Having a set design pattern and process is just one way you can
automatically build-in future negotiation tools.
The key to getting the highest price is to be comfortable and
efficient at negotiating. Never drop your rates without negotiating
for something in return.
You might be saying to yourself
“Yah, I hear you Mike, but this a more difficult and more involved than just lowering my price.” And t’s true. Negotiating to retain your value does take a little more effort. But you prevent your client from reducing your services to a commodity and you protect yourself from competitors by not making it easy for your client to shop out your services to others.
Believe me it’s worth it.
Well that’s it for another week.
Thanks for joining me on the ForGraphicDesignersOnly.com live podcast
Where you as a creative business owner learn how to attract more clients, Earn higher fees and get more of the work you want
Have a great week.
Dedicated to Graphic Designer SuccessMichael Huggins
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