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How Do You Handle Rate Negotiation?

negotiateI recently followed a thread on one of the forums I frequent that told the story of a virtual assistant  contacted by a potential client who was actually shopping around for the lowest price during their consultation call.

While I think it’s rather rude to be doing price negotiations with several professionals while on a consultation call with another, it’s human nature to search for a bargain. Add to that the fact that many popular books promote finding the cheapest virtual assistant possible and it can add a layer of frustration to the consultation process. And I’m sure that it happens to other service providers as well.

So what do you do when you find yourself dealing with a potential client who wants to negotiate?

The first instinct is to lower your rate or give them a special rate, especially if they happen to mention that your rates are higher than one of your competitors. We’ve been conditioned to believe that we must offer ‘lower prices’ to prove to our clients that we care about them. After all, don’t all of those commercials imply that?

What we fail to understand is that many of these lower price marketing pitches are for goods, not services. And as a service provider, we need to make this difference clear in our own minds before we can relay that to clients and potential clients.

You have to believe that you are worth every penny of your going rate and more.

Then you have to resist the temptation to question that belief when faced with someone who questions that rate. And I know that can be hard. Especially when you’re just starting and looking desperately for clients.

Some things to keep in mind when faced with a price negotiation situation:

  • It’s not personal. The potential client is simply trying to get the best price that they can, they aren’t asking for a deal because they don’t think you’re worth your asking price. In fact they have no idea what your worth, which leads us to
  • Be prepared to illustrate the value of your services. This can be providing them with examples of how you’ve served your current and past clients or pointing out what it’s costing them to do it themselves. They are coming to you because they have a problem that needs to be solved, you need to show them that you are the solution to that problem.
  • Toot your own horn. Trained and experienced in the tasks that they are looking for? Let them know they are getting an expert. If they’ve mentioned lower priced providers, ask if those providers can say the same thing.
  • And of course if you have discounted rates and/or value packages be sure to share that information.

You could also give them two options as a friend of mine does with his business. He offers Plan A and Plan B. In the case of a service related business, Plan A would be your set rate and time frame with the project completed in its entirety. Plan B would be at a lower rate with a longer time frame and perhaps even with some tasks cut from the project. In a case like this, chances are they are going to see the wisdom of Plan A.

Always keep in mind that your rates are set where they are for a reason and by agreeing to less you are causing a shortfall that will need to be made up somehow.

And remember, refusing to negotiate on your rates doesn’t necessarily mean you’ll lose the client. Just because they feel they should try to get a lower price doesn’t mean they won’t be willing to pay the going rate. Especially since you’ll have convinced them you’re well worth the rate.

About TMarieHilton

Tina Marie Hilton provides online technology services to forward thinking businesses. She writes on her Tips from T.Marie business blog to share insight and information with other small businesses and entrepreneurs. It also makes her feel like that certificate in creative writing isn't going to waste completely.

1 Comment

  1. uberVU - social comments on January 17, 2010 at 6:33 am

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    This post was mentioned on Twitter by TMarieHilton: New post: “How Do You Handle Rate Negotiation?” http://bit.ly/56POFg



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