How to Avoid Cheap Clients

Congratulations to the following winners of the “Stickiest Situation” blog contest: Ray Oliver, webmonster, optimus prime, dhecker, illuminosity, wdm, Anthony Feguson, kf, and Mark F. Those of you winners who don’t already have the IT Business Acceleration Manual, send me an email and I’ll send you a link to download it for free. Once again, EVERYONE who posted is a winner. And keep posting your situations there, even though no more winners will be announced (I have to make a living after all).

Please read their posts at the following link if you haven’t already, as they are all terrific and will form the basis of the next few blogs:

http://www.sitepoint.com/blog-post-view.php?id=177424

Next blog will address Optimus Prime’s sticky situation, reprinted below:

My problem is the following: lately I’ve been getting several leads through my existing clients (referrals) – but all of the leads I am getting are cheap clients. I don’t think I’m pricing myself too high, I think I’m just attracting the wrong type of clients. How do stop attracting clients from the low end of the market and start attracting better clients?

How would you advise Optimus Prime?

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  • http://www.fokjou.nl/ OReason

    Maybe you can make a deal with a small company. And you refer cheap clients to them and they refer big clients to you. Don’t know if it works, just a suggestion :) Good luck!

  • http://www.lengelzigich.com maxor

    I think the best place to look would be the client who is sending referrals. Was this client a ‘cheap’ client? If these ‘cheap’ clients are only coming from this one previous client, it may simply be that your referrer is sending you ‘cheap’ clients because they only deal with or know people on the lower end of the market.

    Is it an image problem? Does your site, personal meetings or other visual material present a low-market image? Is there a chance that you are being seen by a wide range of clients, but for some reason only the lower end of the market is getting a good first impression?

  • Tim

    What’s wrong with cheap clients? By cheap, I’m assuming you are referring to clients that dont want to pay much.

    I recently (within the last few years) came out of a developer job at a company that believed that the “small fry” weren’t worth the effort and decided to concentrate only on the “big fish” of the market. The trouble is they forgot one fundamental thing. Small clients generally pay faster, these are what keep you alive on a day to day basis while you are waiting for the mney from the larger jobs. Large clients, pay more and have more expectations on what they will get for that money. This usually means the development cycle is longer, hence you need to have constant cash flow while you are doing the larger jobs.

    On the topic of how to attract larger clients, I think you need to examine what it is you are offering your small clients. One phrase I’ve heard many times before is that people want to please their customers. You should never strive to please the customer, but rather strive to delight the customer. The difference is that a delighted customer will come back for more, will more than likely refer you clients (who are potentially bigger) because they know you go above the call the duty.

    I’m pretty sure I’ve seen it mentioned in this blog before as well, but customer relationship is key. If you can prove to your customers that you are not interested in just the job, but rather you want to help them build a better busines, this makes your advice invaluable to them. And this can translate to more money than what you are currently getting in a job by job situation.

    Sure you have to invest time, and maybe give the odd piece of advice for free, but cheap clients are not necessarily bad clients. It may be that you just need to see more of them and help them to realise that they need you because you provide that extra something they dont currently have.

    6 degrees theory dictates that sooner or later you will meet someone that knows someone that knows the people with the big dollars. It can be a hard road establishing these relationships, but over time, the they will be invaluable.

  • Jake

    Wow! Nice, long, and… Good!

  • http://www.rebornstudio.com optimus_prime

    Thanks to everyone who’s offered their advice. I’d like to mention that when I say “cheap” clients what I mean are the type of clients who typically don’t value quality work and make all of their decisions based on price. These types of clients usually respond to my pricing with comments like “I have a buddy who knows someone…” or “I had someone else quote this for $XX”

    The clients who typically refer these people is just about everyone. My good clients, my bad clients, my friends who have never referred anyone, etc… all seem to refer these types of customers. Only rarely do I get what I would consider “top tier” customers. I have met these customers sometimes through referrals and sometimes through coincidence.

    As far as customer service – I really do try my best to keep all of my clients extremely happy. I think they are happy – otherwise they wouldn’t return to me and refer other clients.

    I’m going to take a stab at answering my own question and guess that part of the reason I keep getting referred to these types of clients has to do with the image I keep with my current clients (the referrers) and how they project that image to the people they refer me to.

    I get to know my clients on a very personal level, and they solely interact with me. I talk to them candidly about how my business is going, what projects I’m working on, and what my day to day life is like. Because of this, they probably come to look at me as a friend or (since I’m younger than them – I’m 23) they look at me as “this great kid” they know. What I’m guessing might be happening is when they tell their friends about me, they know me intimately and are portraying me as a “whiz kid” instead of as a professional. I would guess that cheap clients much prefer the idea of hiring a “whiz kid” instead of a professional (which sounds expensive). If they were to tell their friends about me in a way that makes me sound like a professional person, I might get less referrals, but more quality referrals from people who are serious and ready to spend some real money on their projects.

    What do you guys think of my assessment? That’s the best guess I could come up with.

  • count zero

    Here are a few thoughts to ponder:

    What sort of image do you project to clients, etc.? Do you wear a suit/tie when meeting clients? Do you have an office where you can meet with clients? Although it seems silly, I can see how differently people treat me based on the image I project.

  • tomByrer

    You could have different pricing schemes; tell the clients $X will get you a more generic 2 page layout with one revision, while $XX is for multiple pages after competitive analysis of other sites and user testing, which will make the more expensive site earn more money.

    You could also do a tier system, where you’ll do one page at a lower cost at first, then add forms, mailing lists, better marketing later for more.

    Also, you may want to do a lower-cost site for special reasons. Such as helping out a non-profit that would look good in your portfolio. Or if you want to break into a niche market, say sports websites, you may do a cheap site for a local farm team.

  • Kyle Neath

    Well, I think you’ll have to make a choice here: Either accept their lower costs or keep your prices high and hope that they come around anyways.

    I would aim at keeping your prices at your current level, and when they tell you that their moms best friend’s brother quoted them for $xx, explain to them that you assure you are worth every penny they will spend.

    Explain to them that redesigning is wasted money, and it’s always best to start off with a great site (that you can offer them). Convince them that without a doubt, you will give them the most bang for the buck. Assure them of two things when meeting:

    1. They will make back the money they will spend on you (as this is of course their only perrogative in hiring you)

    2. They will never need to contact another designer, and they will be 100% satisfied with your work.

    You can of course give them examples in other categories: Would they pay a roofer that worked for 1/2 the pay, but his roof only lasted 1/3 the time of his competitors?

    Chances are they’re only trying to get you to lower your costs. It’s the goal of any small business owner: why pay $100 when you can get the same product for $80 elsewhere.

    On another note, I completely agree with count zero. While I stay on a personal level with many of my clients I have made it a point to act completely professional at meetings. Dress like you’re going to an interview, speak with proper english while you’re doing business, and save the small talk for after you’re done with the meeting.

  • jmdaviswa

    Since you keep getting handed lemons, perhaps you should make some lemonade. How about putting together some inexpensive, low-effort (on your part), template sites for these low end customers? I have found that these low-budget customers often don’t want much from their site at first; so get ‘em up and going with something cheap and cheerful, then upsell additional capabilities.

  • http://www.realityedge.com.au mrsmiley

    This type of “cheap” client is something we all unfortunately have to deal with. The main issue here is that you will encounter this at any level of business.

    I’ve got a tech writer that does work for me and he has a saying which I believe holds more most aspects of business …

    “You can have it fast, good, and cheap. Pick any two …”

    It’s your job as the guy making the sale, to establish the fact that you have the superior skillset. I also am a young starter and am currently 24. I recently had to convince a client to pay more for hosting because it would save them money in the long run. Somehow I managed to pull it off, and I think it comes down to that motto.

    If you can prove that your service is fast and of excellent quality (not just good, I mean very very very very very very good), then the client has to expect to compromise on price. If they want a low price, they will sacrifice one of the other two metrics. No matter who they go with, good or bad, they will lose out on one of those in order to come out on top with the other two.

  • JMorrow

    Salespeople deal with this all the time. The best idea is to figure out what you are going to say before they challenge the value of your proposal. My pitch goes something like this:

    Me: John, there are tons of people that can build web sites cheaper than I can. And I’ll be honest; they might even do as good of a job. There’s only one problem. You need more than a web site.
    Prospect: I do?
    Me: Yep. Web sites are a lot like a telephone number with voicemail. You can have a memorable number with top-notch information on your recording, but if no one calls, it’s a waste of money. Web sites work the same way; they are a part of a much larger system to take your business to the next level. When you buy one, you need someone that understands your industry, company, and objectives, so they can design a solution to take your business to the next level. Webmasters don’t do that; business consultants do. That’s what I am.
    Prospect: Hmm… (uncertain)
    Me: Listen, I know I can bring your company more results than anyone else out there. Why don’t we sit down over a cup of coffee and let me prove it to you?
    Prospect: All right.

    You still haven’t sold them entirely, but at least you have an opportunity to justify your price. Before your next meeting, learn everything you can about their business and then design a solution that demonstrates your knowledge of their business and the specific results you can bring them.

    If you do your work right, no one will deny that you are worth the price. However, you will run into people that still can’t afford you. Find out how their cash flow works and see if you can design a phased development cycle with payments at the end of each phase. Most of the time, you can work out a creative plan that both meets their needs and pays your bills.

    Of course, some people will never have any hope of being able to pay you. They have a business that is going down the tubes and they thought a web site just might save them. If that’s the case, refer them to a good small-business counselor and tell them to call you when they are ready to take their business to the next level.

    Still, that scenario doesn’t happen often. I close 80% of the customers I sit down with and design a custom solution for. Like you, I spend time developing a relationship with them, but I focus more on positioning myself as an expert. High school students, nephews, and overseas designers can’t compete with that. You win almost every time.

  • Dano

    Do you want to send me these clients?

    Seriously:
    One good tactic is a long sells cycle.

    A little story:
    Once i had a client that told me: “I know how much a site costs” and “with that money i can hire an employee”.

    I told her (i think that i was agressive):
    “what do you want another employee for, if you dont have clients”. That was the reality. She wanted a site because she needed more clients.

    I have to say that she never hire me, and she dont still have a site (the story happened in november 2003).