All companies have a rate they base their quotes and estimates on. Sometimes it’s hourly, as many contractors and professional services have found work best, and other times it’s a flat rate based on a product, a package, or a project.
In the creative world this can get even more precise. Voice talent, for example, can charge by the word, by the page, by the finished hour (which is the length of final product after all editing is completed), or studio hour (which only counts for recording time), and a slew of other options depending upon the union or agency affiliation of the talent, the usage of the finished recording, and the extent of production work that the recording requires.
Value > Price.
But even with all of those variables, no matter what your industry is, it’s still important to know your value and be able to communicate it in your quotes.
It’s more common in some industries to also have a negotiation process, where either the client responds with a counter offer to your initial quote, or they state a budget upfront that you build your cost assessment from. The wiggle room may be larger based on your history with a client or the amount of work they propose, but there should always be a boundary as to how low your lowest point actually is.
This is where a business owner’s mettle is tested. Many will be afraid to lose the client in the bottom line, and start out far lower than what their value is. Or, if the client presents their budget first and it’s outside of that magic margin the contractor already set, many will just grin and bear it, as they’re just happy to have any offer on the table.
You should always be aware that if you start low, your price can’t rise unless more work is added. You’ve compromised your time and your worth before you’re even sure this is an ideal client who will build lifetime value for your business!
But there are three ways to maintain your value in the face of price objections from potential clients:
1. Agree to a lower rate, but offer less.
If you’re being asked to cut your fee in half, you have the option of cutting your work in half.
If you’re a video producer, this may mean your client gets a stock template and no revisions. The revisions are also effective leverage for other creatives like voice talent or graphic artists. The real loss of their value isn’t felt for your client until they want them, but don’t have the option.
If your client has a certain amount of graphics or sound files they want, you can also adjust that number to represent how many they can actually get for what they’re proposing, based on your base rate.
2. Compromise on expectations.
Maybe this isn’t doable if you’re a mechanic who needs to repair a complete transmission. You certainly can’t do less there! But you can change your timeline so this customer is not on the calendar ahead of full paying customers. They will have to make a compromise in convenience for their “good deal”.
Your warranty may be for less time, or you may opt for rebuilt parts instead of new, so your overhead is kept lower.
For creatives, this is where stock multimedia or non-exclusive, royalty-free licensing can come in (whether it’s a license you’re acquiring or one you are granting the client). Where you would normally be developing an original, unique piece of work for your client that they would have the comfort of knowing was exclusively for their brand, they’ll have to risk sharing it with countless other businesses that may get more brand association out of it.
3. Be willing to walk away.
This is really the meat and potatoes of negotiation. Unless you are prepared to leave the project on the table, you will almost always put yourself in a position where you leave money on the table instead. And if you have a client that presents extreme resistance to seeing your point of view at this stage in the bargaining process, you can be assured working with them on the actual project will be filled with even more headaches. It may be a blessing in disguise!
A successful business person will come to love the conversation that is the negotiation process, because it’s an opportunity to gain clarity with client, educate them, and reinforce the value of your work. Negotiating in fear puts you not just at a disadvantage with a client, but can risk pricing yourself out of business. Always enter into the scenario with an open but focused mind on your own goals, your abilities, and what makes the most sense. Your ideal clients will love you for it. The rest are for someone else to deal with.