Prices Are Non-Negotiable - RD290

The local tourism board where I live, a client of mine, in partnership with one of the local newspapers, produces a 72-page visitor guide every year for people visiting the area. The tourism director hired me to design a countertop display stand for these guides that they will place in various stores and businesses in the region. These visitor guides are an odd size. So I started researching companies that produce custom cardboard countertop display stands. And let me tell you, I was super impressed with one company I contacted. While browsing their website to see if they offer what I need, a chat bubble popped up saying, "Hi, I'm Frank. I'm available right now if you need to chat about anything." I took Frank up on his offer and asked what my best option was for the display stand I needed. He replied by requesting my phone number and asking if it was ok for him to call me, as it would be easier to discuss my needs over the phone. I agreed, and I was on the phone with him a minute later. Frank listened to what I needed, made a few suggestions and said he would email me a price by the end of the day. In my opinion, Frank and his company went above and beyond to impress me, a potential new client. But it didn't end there. Within a couple of minutes of hanging up the phone, I received a welcome email from Frank thanking me for agreeing to talk to him. In the email, he briefly outlined what we had discussed. And he attached an intro packet outlining the company for me to read. This intro packet upped my impression of the company tenfold. A couple of hours later, I received another phone call from Frank. He tells me he just emailed me the quote and asked if I have time to go over it with him. At this point, I felt like royalty. I was so impressed with the way they were treating me. I had never heard of this company before, and now I couldn't wait to tell everyone about them. Frank walked me through the various charges involved with my project, such as the price for a custom die, among other things. But when we finally reached the cost per unit, it was higher than I had hoped. Not overly so, but still more than I wanted to pay for them. When he asked me what I thought, I hesitated for a moment. And that's when Frank goofed up. Offer excellent customer service. Before I get to what Frank said, I want to emphasize the importance of excellent customer service and how it affects you and your design business. You may think of yourself as a designer, but designing is a small portion of what you do if you're running your own design business. And it might not even be the most critical portion. If you're working for yourself, your most important skill is the ability to sell yourself. Running your own design business requires you to be a good salesperson. Every client who agrees to work with you does so because you successfully sold them on you and your ability to do the job. They agreed to your price, had confidence in your skills, and trusted you to complete their project because you sold them on these things. This ability to sell goes way beyond the monetary aspect and is part of every interaction you have. It's what makes people like and what to work with you. Sometimes, even despite the price. If you lack this ability to sell yourself, you will be hard-pressed to find clients. I've said it many times before. Clients would prefer to work with a good designer they like, then work with an amazing designer they don't like. And it all comes down to your ability to sell yourself. What you should never do. Anyway, back to Frank. So as I said, the price per unit he quoted me was a bit higher than I hoped. And Frank sensed my hesitancy. And what he said next changed my impression of this company. When Frank sensed my hesitation, he told me, "Don't worry. All prices are negotiable." And at that point, the pedestal I had placed this company on crumbled. Frank had presented me with a reasonable price for what I needed, although higher than expected. But now he was telling me that price was negotiable. In other words, he was admitting that his company could do the job for less. So I asked him about it. My response was something like, "Are you telling me that the price you're showing me is not the best price you could have given me for this job? That you inflated your quote hoping that I would be gullible enough to agree to it?" Frank quickly went on the defensive, saying no, this is how much the job costs. However, if I wanted to negotiate, he would hear me out. I replied, "You're telling me that you would consider lowering the cost if I negotiated with you. That tells me that this price isn't really what this job costs and that you could easily do it for less. Otherwise, why tell me the price is negotiable? And even if you agree to take 5, 10 or 15 percent off the price, I will still wonder if you're conning me, and I could have gotten it for even less." At this point, I thanked Frank for the quote, told him I would get back to him if I had any questions and then ended the call. All the fantastic work this company did to win me over as a client went down the drain. What's the big deal about negotiating price? You may be wondering, what's the big deal? People negotiate prices all the time. This is true. In fact, I love haggling over prices. It's a skill I learned from my mother, and it drives my wife crazy when I ask for a discount or rebate from anyone. The way I see it is there's no harm in asking for a lower price. If they say no, I can still purchase whatever it is at the displayed price. And if they agree, I feel good about my actions because I got a better deal. But this situation is different. I wouldn't be upset if I were the one who had asked if the prices were negotiable and Frank had said yes. But the fact that he presented me with the price and immediately told me they were negotiable means he didn't have my best interest in mind. Frank was trying to get the most out of me he could. And when I showed hesitation on the price, he tried to save the sale by offering to negotiate. This company that I thought was so amazing now makes me wonder if I should consider working with them. Your prices are non-negotiable. But what does all of this have to do with you and your design business? You don't want people to think you're taking advantage of them. But any time you offer a discount or agree to lower a price, that's precisely what you are doing. If you lower your price just one time, that client will forever question any future price you give them. They'll always wonder if you're trying to take advantage of them. And even if you provide them with another discount in the future, they'll wonder if it's the best discount, or could you have offered more? Think about anything you've ever bought on sale. In your mind, if you purchase a $399 item on sale for $249, is it worth the sale price you paid for it or is it worth the original price? Most people feel the sale price is its actual value. You never want your clients to think your services are not worth as much as you charge because you offered a discount. Let's use hourly rates, for example. If you usually charge $100/hr and offer a client a discount of $70 per hour. They'll feel resentful should you ever charge them your standard rate in the future because they'll know you can do it for less. When are discounts ok? This is not to say that you should never offer discounts. There are times when lowering your prices is in your best interest. Pro-bono work Pro-bono work is an obvious example. Offering free or discounted work for a charity or non-profit you believe in doesn't diminish your perceived value. I highly suggest you invoice the charity for your services showing the total price with an applied 100% discount. Or better yet, and this is what I do, I charge the charity the total price for the project. And agree to donate the entire amount back to them after they've paid. This way, they get to claim the project as a business expense since they're paying for the work, and you get a tax receipt for the donation you make back to them. An added benefit of invoicing for your charity work is that should staff at the charity change; any future person will know the value of what you provided them because of the invoice. Friends and family Friends and family are also acceptable recipients of discounts. Doing something for a friend at a discounted rate or even for free shows them you care. Again, let them know the total price and that you're discounting it. My rule of thumb for family and friends is to offer more significant discounts for personal work. Offer smaller discounts for businesses they own. And no discount for companies they work for or if they own it with a partner. I don't mind cutting a deal for someone I care about, but there's no reason for collateral people to get a discount because of them. Retainer agreements And, of course, discounts are a significant selling factor with retainer agreements, where you presell your time or deliverables at a discounted rate in exchange for guaranteed monthly income. Other than these three scenarios, charity work, friends and family and retainers....