Are you often asked to discount your fee or price?
Typically, when a prospective customer or client balks at your price, it’s because they believe that the value of your offering is less than what they are being asked to pay.
But, not always. There IS another reason. It’s this…
They subscribe to the theory that one should never accept the first price; that every price is negotiable.
In other words, yes, they absolutely believe the value of your product or service exceeds the price. They want to buy. They just want to get the lowest price they can.
We believe that if the fee you charge is appropriate then there is no need to discount it. You are providing absolutely exceptional value and should be making a very healthy profit.
As the first of the Five Laws of Stratospheric Success in The Go-Giver, the Law of Value states:
Your true worth is determined by how much more you give in value
than you take in payment.
But They Still Want You To Discount
This can be unnerving, right? After all, you’ve worked hard for this sale. You’ve already invested so much time, research and sweat. You don’t want to lose it. (By the way, all of this is exactly what that person is counting on you feeling.)
Good news: You can maintain your fee.
3 things must be in place:
- You know you are, without question, worth what you are charging.
- You have effectively communicated value that exceeds the price.
- You phrase your response respectfully, confidently, and tactfully.
One of our clients who we’ll call “Brenda” owns a private-duty nursing company. She recently received a call from someone who’d seen her advertisement. It was a woman who — along with her siblings — felt it was time their 90-year-old Mother had a professional nurse with her throughout the day.
Brenda did the discovery, quoted her fee of $30 per hour, and provided a number of references. Her fee is a bit higher than many of her competitors, which Brenda let her know.
Two days later she received a text from the prospective client saying:
“I discussed this with my brother and sister. We’d love to hire you. If you would agree to $25 we’ll go ahead and sign the contract with you right now.”
What Did Brenda Do? What Would You Do?
While $5 per hour might not sound like much, it actually has two effects:
- Over time it is significantly less money.
- More importantly, it tells you — and the marketplace — that your market value is $25 per hour, not $30.
Brenda texted back a very nice message that said:
“Good morning, Sue! Thank you and I completely understand if my fee is not in your budget. Your Mom sounds lovely and it would be my pleasure to help out if circumstances change.”
Just moments later Brenda received a return text that said:
“Please don’t walk away. We will pay $30 an hour and we’re so excited to have found you. We will make it work. Please reconsider.”
As Brenda Suspected
It simply was a matter of their instinctively trying to get a better price.
Notice what Brenda did:
- Knowing her value she made the decision to stand by her fee.
- Rather than react with disgust, disappointment, or indignation she responded with respect, confidence, and tact.
- She thanked the person, complimented their Mom, and shared that it would be her pleasure to work with them if circumstances change.
Again, because she had done a thorough discovery of what the family was looking for and communicated her value accordingly, plus backed it up further with a number of testimonials, she was very confident that the only reason for the price negotiation tactic being used by the children was because they felt that’s what they were supposed to do.
With that in mind Brenda’s job was to handle the objection correctly, which she did. And the family will benefit greatly, as will Brenda’s company.
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I consider myself fortunate that I’ve never had to negotiate with a client by text message, but that’s a topic for another blog post.
Michael, LOL Likewise!
I can’t tell you how much I appreciate these principles that continue to flow from a wonderful team… Kathy Tagenel & Bob Burg.
Steve, thank you so much. Very grateful for your kind words!
So grateful to have learned this principle from you, as it has served me well through the years.
I used to consider lowering my fee on a regular basis, which made closing the sale uncomfortable, to say the least. My posture was uncertain and I think that came across, which did NOT feel good.
You’ve taught me how to realize the value I offer, confidently communicate that value to the prospective client and feel comfortable doing so. Thank you, Bob!
Thank you, Linda. Knowing you as I do now I think you could’ve written that article. Keep up the great work, my friend!
Awesome nuggets Bob!
Thank you, Ibiwari. Very grateful for your kind feedback.
Bob, I just love how confident, kind and nurturing you are when you’re getting to know a prospective client. And your results speak for themselves. 🙂
I dealt with a discounting situation just recently. Like Brenda, I let the prospective client know that my fee is higher that most people in my field (because I’m more experienced and get better results). That’s when I discovered that it wasn’t just a negotiation tactic–he had a fixed budget. Rather than caving on price and being annoyed with myself later, I offered to reduce the scope of work to bring the project in line with his budget. He said he would wait until he could afford my price and terms because clearly I was great at what I do, and I am worth waiting for.
So I didn’t get the gig (yet). But the upside is that I have time open in my schedule for a client who can afford me, and I have more time for my own projects. And my self-esteem is intact!
Thank you, Kathleen. Appreciate your kind feedback. Congrats for maintaining your fee integrity and doing so in a way that your prospective client appreciated.
Bob, thanks for an excellent post. You have to have self confidence and be fully aware of your value.
When a potential client seeks to lower your fee often times we are not able to determine if it is a negotiating tactic or a firm demand. In either case you have to be willing to walk; in a polite, professional manner of course.
Thank you, Frederick. Well-said! And thank you for your kind feedback!
Hey Bob,
Another great piece of advice!
I know how easy it is to just get mad and tell them to fly a kite. Kudos for helping us rein in that knee jerk reaction!
Best,
Jeff
Thank you for your very kind feedback, Jeff. As Zig Ziglar always taught, responding is far more productive than reacting. 🙂
AMEN and AMEN! As always, I LOVE your very clear and simple steps to, what I call, “owning your worth”.
Such wise, wonderful and immediately implementable tools Bob!
Always love learning from you – THANK YOU!
Sending love and gratitude to you and yours,
Joan Endicott
Thank you so much, Joan. What a kind compliment. Very grateful for you, and very grateful that “I GET TO” be your friend {Note: Joan is the author/publisher of the I GET TO series – well-worth checking out!} http://www.joanendicott.com/shop/igettobook/ http://www.joanendicott.com/
You’re so AMAZING, Bob! I want to send you the updated, larger version we did a few months ago – your testimonial is the BEST ONE and predominate on the back cover now…Ken Blanchard wrote the forward. I’ll get one out to you! 🙂 (On it’s way to Amazon – YEE HAW!)
Cool. I’d love that. I still hold up your booklet from stage as an example of booklets that can be created for great marketplace positioning! Fantastic about Dr. Blanchard writing the foreword. Congrats!
Knowing your value is indeed a way to make yourself discount-proof. If you don’t know your worth and if you can’t explain your prices to your customers, it’s understandable that they’re still looking for negotiating a discount.
Great point, Fred. Thank you sharing your thoughts with us!
YOU, Bob, are a Master Communicator and Teacher! Your advice is direct, positive and effective! I will share your message because everyone needs to have this insight whether they are in sales or, need to tell someone “No,” in a polite way. Love your wisdom, Bob!
Wow – thank you, Chiqeeta. Coming from you, a person whom I believe to be an extremely powerful and effective communicator, I take that as a great compliment!
Excellent post Bob! I will be sharing this post many times. So important for people to have confidence in their products and services; the value they bring to the table. You detailed out a simple but powerful way to keep firm on pricing. I know it will help many people I share this with; to believe in themselves more and be able to communicate their value more effectively!
Cynthia, thank you. I so greatly appreciate your kind feedback regarding the post! And I love the fantastic info you teach! {Note, be sure and subscribe to Cynthia’s excellent YouTube Channel at http://bit.ly/2Bnlt03}