BD tips and insights

By Alistair Marshall

What to do when clients want a price negotiation

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Having a price negotiation with a client is not always easy, but it’s an important skill and one that you’ll need to employ more and more. Clients bargaining with their professional services firm is not unusual. It’s perfectly reasonable for clients to care about their money, and it’s smart for you to show that you respect them and care about helping them get best value for their spend with you.

In areas where the supply of professional services exceeds demand, and there are at least some acceptable alternative providers, your clients ultimately have the upper hand because they can always choose to go to someone else.

It used to be much more difficult for clients to find other providers, but now that everyone is online and Google knows all, your business is at greater risk of competitive pressure. In a price negotiation, you may be forced to retreat to the best terms (i.e. lowest price) they can negotiate.

Even when clients have few alternatives, and are likely to stick with you as their service provider, you need to be careful about how to handle negotiations around fees and services. Handled badly, what starts as a polite and pretty positive price and terms discussion can escalate into risky bargaining, and foster bad feelings and disputes down the line.

The wrong response to client-instigated bargaining can lead to emotional overreactions, unexpected consequences, and loss of business judgement. Once your business relationship is damaged by the wrong kind of bargaining, it may be a nightmare to repair.

Carefully crafted bargaining tactics can preserve revenues, build relationships, and even help some clients back off a little (without loss of face).

Avoid the downward spiral into losing share of client spend and revenues by:

  • showing respect for a client’s interest in their buying terms
  • engaging in constructive bargaining
  • valuing their business relationship with you
  • avoiding bitter struggles (after all, unless your work is truly in one of those high-demand, low availability niches, your client is generally in a strong position).

Walking into a bargaining forum, many professionals are naively optimistic. This is where it can pay (literally) to understand your value and the value of your firm, and where you produce greatest value for your cost. Top clients don’t expect low fees for the services of real experts – you get what you pay for, as I wrote about in an earlier post (‘Experts don’t charge low fees’).

You may be convinced that you do great work, are well liked and truly valuable. But before you up the ante by simply standing your righteous ground, consider the evidence and consider the alternatives from your client’s perspective. Only rarely is there no realistic alternative.

Some clients simply want cheap. Most business owners, as well as successful individuals, would regard it as irresponsible to pay more than the best available fair price for most things. Some things they may be prepared to pay far more for are:

  • rarity
  • scarcity
  • prestige
  • reputation enhancement
  • ease
  • risk reduction
  • insurance against bad outcomes.

Contact JMA to find out about coaching and training so you can have productive a price negotiation and preserve your value.

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