If the Client Thinks Your Price is too High, He’s Right

John Tabita
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In his book, The E-Myth Revisited, author Michael Gerber contrasts the two very different types of people who decide to go into business for themselves: The Entrepreneur and The Technician.

The Entrepreneur starts out by thinking, not about the business he’s going to create, but about the customer for whom he’s creating the business.

The Technician, on the other hand, first looks within at his skills and abilities—and only then does he look outward to ask, “How can I sell this?” To the Technician, the product is what he delivers to the customer. And since the creation of that product required his time, the customer is always a problem because he never seems willing to pay the Technician’s price (i.e., time).

But trying to justify your price based of the amount of time it takes is not a winning value proposition. That’s because the client isn’t interested in paying for your time—he wants a result produced or a problem solved.

I pay $30 each time my lawn is treated, and it takes Russ, my lawn care technician, about 15 minutes to apply the fertilizer and weed control. Based on the time he spends, I could make the case that each treatment ought to cost me around three dollars—not $30.

But my lawn care company could argue that I’m not taking into account the cost of chemical, gas to drive the truck, and other overhead. Yet, oddly enough, that’s a conversation the company and I have never had. The bottom line is, which do I value more: my hard-earned cash or the time I’d spend doing it myself and the peace of mind I get knowing I’m not going to inadvertently damage my lawn?

The answer, of course, is I value my time and peace of mind more, which is why I pay the money and don’t concern myself with how long it takes Russ to do the work.

Whenever we buy something, it’s because we expect more back in return. But that “return on investment” isn’t always simple math. Intangible, emotional benefits like “peace of mind” play a greater factor than we often realize. And if those benefits don’t outweigh the cost (in your client’s mind, that is), then your price is too high. Value, like beauty, is in the eye of the beholder.

So how to you become more valuable in the eyes of your prospects? Simple. Help them get what they want. That means setting your Technician hat aside and donning the Entrepreneur hat. Forget about your skills and abilities and ask a few simple questions:

  1. What pain or problem are you trying to alleviate for your intended customer base?
  2. How do they feel about this problem?
  3. How do you want them to feel instead?

So instead of asking “How can I sell this?” you ought to be asking “How do I want my customers to feel after they’ve bought this?”

I’ve written a lot recently about the commoditization of web design. That happens when clients are confronted with too many choices because supply is plentiful and everything seems the same to them. Like it or not, the low barrier to entry has made that an unpleasant reality in the web design industry.

As The Technician, the product you deliver—a finished website—is the commodity. But as The Entrepreneur, the final question you must ask is, How do I want them to feel about me and my company, not the commodity I’ve sold to them?

Answer that, and you’re well on your way to getting past, “Your price is too high.”

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  • Patrick

    Did you really just write “piece of mind” three times?

    The phrase you were looking for is *peace* of mind. Obviously.

    • http://tommuseth.com Tom Museth

      I believe “d’oh” is the term here. Fixed. Thanks Patrick.

  • Jim

    “Piece of mind” is not an emotional benefit. Lots of people are willing to share that with you. “Peace of mind” is much more beneficial.

    • http://tommuseth.com Tom Museth

      Point taken Jim! I was thinking of passing this off as a deliberate error … something about the benefits of removing an actual chunk of one’s brain. And then I just figured, eurgh, my bad, admit you’re wrong :)

      Thanks for picking it up. Piece be with you.

      • http://smallbusinessmarketingsucks.com/ John Tabita

        Not deliberate, unless you consider penning an article at 2AM after a crazy work week deliberate.

  • http://webninjamobile.com Keithics

    If a client thinks my price is too high, I would always explain the reason why. And of course a promise that I won’t disappear like other freelancers together with my good reputation online. Most of them would go away at first but later comes back because the other didn’t do the job well. Just like the article mentioned – it’s all about peace of mind!

  • http://code.ikreator.com Neal

    Good article. This is the key to overcoming the industrialization of web design. You have to make people feel good. This is an emotionally driven society. “Playing with emotions” is done through product advertising all the time. Especially with products that aren’t that special, like the iPhone 5 (I just pissed a whole bunch of people off) LOL.

    The iPhone 5 is just a smart phone like all the rest, but the marketing and the message behind the phone say otherwise: “You will be cool, if you own this phone. You’re sexy, sophisticated, classy, you’re cutting edge, you embrace the future…” etc, but at the end of the day the phone does pretty much what all the other standard smartphones do except for one more thing: iPhone makes people FEEL awesome about themselves.

    So Apple has learned that if they want to sell products at the price they want, they better cater to people’s desires and emotions and explain the emotional benefits beyond the hardware/software. We as web developers need to do the same when we market ourselves.

    • http://smallbusinessmarketingsucks.com/ John Tabita

      The iPhone was special when it first launched—there was nothing like it. Despite that, Apple still focused on how owning one makes you feel, rather than its features.

      Now that the smartphone has become a commodity, Apple maintains its edge not only from how people feel about the product, but about the brand itself. (They were recently named the #2 brand behind Coca-Cola.) Being an Apple user has a special meaning. Write them off as mindless fanboys if you like, but you’d be missing the point.

      Apple has a lot of money to spend branding themselves. You and I must do that within a 45 minute client meeting. The emotional benefits are always tied to the end result, not the product or service we provide. You can get anything you want in life if you help others get what they want.

  • spanatko

    not agreed – a lot of people on the market simply push the price down via bargaining and pure speculation – they want to save their money nothing else – they do not value the knowledge and time and don´t embrace the most fundamental principles of the market and the society we all live in – work for no pay is slavery always was and always will be. People out there do not care how you feel about working for free – they want your product and would take it for free – no problem! Strongly disagree the customer is not always right – this is a very fast spin into becoming very poor and exploited.
    I want something I pay for it the price requested – if I am not interested – I´ll buy elsewhere. Simple as that.

  • Florian

    Sorry, that’s no valid example.

    1. A client can mow his/her own lawn which is not the case in say, programming or web design.
    2. A client can estimate the time and effort it’s going to take to mow that lawn which is also not the case in more sophisticated professions.

    I feel bad for falling for that populist and arguably wrong READ-ME-PLEASE headline of this article. He’s obviously not “right”, but “uninformed”.

    • http://smallbusinessmarketingsucks.com/ John Tabita

      1. Anyone can build a website today with DIY solutions, and all you need is a “widget” to add some functionality. You can argue why these solutions are inferior to what we can provide, but to the vast majority of small businesses, these solutions are more than sufficient.

      2. The DIYer is more concerned about saving money than time, so not being able to estimate the time is usually not a determent, from what I’ve observed.

      • Florian

        1. Noone can build web sites without learning the required programming / markup / script languages. And no non-designer can design a web site. Otherwise, we would all be unemployed. The “DIY solutions” you mentioned would be WordPress? CakePHP? They require knowledge of web technologies for anything but a static text page.
        2. I’m not sure why you’re talking about DIYers here. Your article sounded like you were talking about the normal client who contacts a web agency to get his site done. Those clients are no DIYers, and DIYers wouldnt contact web professionals in the first place.

      • Florian

        I would recommend you (and anyone else who thinks web projects are overpriced if the client says so) take a look at the so called Project Management Triangle btw:

        http://en.wikipedia.org/wiki/Project_management_triangle

        Any client in any business area has to decide: do I want my project to be cheap? Or good? Or fast? If I want to pay little money and have it done in no time, the result is not gonna be ground breaking. If I want it to be good quality and fast, the price is going to be high. Those are project management basics, not limited to the web.

      • http://smallbusinessmarketingsucks.com/ John Tabita

        Florian,

        I mentioned DIY because you said my lawn care analogy was not valid because, and I quote, “a client can mow his/her own lawn which is not the case in say, programming or web design.”

        A non-designer can build a website; I know of several who’ve done so. The only reason we’re all not unemployed is because not everyone chooses to do so.

        As far as DIY solutions, a few that come to mind are Wix, Intuit, DevHub, WebNode. Then there’s hosting companies like HostGator and BlueHost who provide sitebuilder tools. All of these are geared towards the non-designer and can produce a decent small business site.

        To your last point. I never said web projects are overpriced if the client says so. My entire point is that, if you want to escape the “your price is too high” trap, you have to understand value from the client’s perspective, not your own. (Didn’t I say that in the article’s last sentence?)

        As interesting as that Project Management Triangle is, it does nothing to communicate your value to the client. You cannot prove value by talking about how long it takes to build a site or your costs involved. The client cares about his bottom line, not yours. Unless you can address that, you’ll never understand why the client thinks your price is too high or be able to figure out what to do about it.

      • Florian

        “A non-designer can build a website; I know of several who’ve done so.”

        Well, everyone can draw and paint and decorate but that has nothing to do with design. ;) If by “build a website” you mean writing the actual HTML and CSS then yes, many people do that. They still need a webdesigner for *professional* webdesign though.

        Anyways. Like I said, DIYers wouldnt contact web professionals in the first place so we’re talking about a non-audience here.

        “I never said web projects are overpriced if the client says so.”

        The headline reads: “If the Client Thinks Your Price is too High, He’s Right”

        “As interesting as that Project Management Triangle is, it does nothing to communicate your value to the client. You cannot prove value by talking about how long it takes to build a site or your costs involved.”

        You’re right about communicating your work’s value. Thats an important conversation we should have with a client. The purpose of the triangle is to make a client realize that awesome work, in no time, at low cost is not possible.

  • jotrys

    Another thought provoking article. Well done John!

    And for me it’s now time to figure out how I want my customers to feel about me & my company.

    • http://smallbusinessmarketingsucks.com/ John Tabita

      Thanks, glad you liked it.

  • Tim

    What I have found from 20 years of freelance work is that client that inquire about your price being too high are absolutely not worth dealing with. It is better to tell them to use a college student or 99designs or something. These people will simply cause you headaches in the future. They feel that they are paying too much, so they start nitpicking everything you do and you end up spending three times the amount of time you normally would on a client that understands the value you are offering.
    You can try to make these clients understand your value, but it is extremely rare that your words of explanation will take hold in the long run. That is just my experience.

    • http://jonathanmarvens.com Jonathan Barronville

      That is SO TRUE! You nailed it.

    • http://smallbusinessmarketingsucks.com/ John Tabita

      I agree. When you accept the fact that, from the client’s perspective, he’s absolutely right when he says “your price is too high,” it allows you to get over it and move on. Simply dropping your price every time you hear that isn’t the answer; nor is trying to justify it because of the student loan you’re paying back.

      But I don’t automatically dismiss every client who says “you’re price is too high.” I want to know two things first:

      1. Is this client a commodity buyer looking for the lowest price, or a value buyer who simply doesn’t understand the complete value picture? If it’s the latter, it’s worth continuing the conversation.

      2. By understanding his business model further, can I provide additional value that he’s not seeing? If yes, I’m more inclined to pursue the opportunity a bit further.

      As a former sales manager once told me, “You have to know when to fish and when to cut bait.” I don’t fish, but the analogy wasn’t lost on me.

  • Tunji

    You know, its one of those things you’ve always known somewhere at the back of your mind but never really knew how to articulate or express it.
    Once again thanks for another great article. I’ll surely keep these pointers at the fore of my mind when dealing with future clients.

    • http://smallbusinessmarketingsucks.com/ John Tabita

      You’re welcome.

  • http://www.pricklypearmedia.com Angelos

    Depends on the client. I try to price myself fairly so I do not have this problem, but on many occasions some clients seam to always be unhappy with the price as a ploy to reduce the price further.

    In terms of ‘paying for my time’. No client will willingfully do this. They are much more happy and accustomed to paying for results. How will a custom coded website help them, what results will it give them? If the answer is not many, then clearly they money they are paying is wasted on fancy technical jargon which could have been used to reduce the cost and focus more on the budget on the SEO and marketing factors.

    The main issue is that web designers (including myself) think of a website like a fine piece of art carefully constructed and crafted to give that wonderful end product. Now, the main problem with this is that fine art costs money, and in terms of their ROI a customer/client might not see it worthwhile paying all that money when he can do with some more boilerplate.

    We have to put ourselves in the client’s shoes, and if we cannot think like they think, we will ultimately fail in selling what we want.

    • http://smallbusinessmarketingsucks.com/ John Tabita

      “We have to put ourselves in the client’s shoes, and if we cannot think like they think, we will ultimately fail in selling what we want.

      Absolutely. By accepting the premise of this article’s title, you are forced into asking yourself some hard questions:

      Are my prices too high?
      Am I completely missing what the client finds valuable?
      Am I failing to communicate the value I provide?
      Am I targeting the wrong type of client?

      It’s too easy to write off the client as being the problem, how they don’t value our knowledge and time, or value good design, or how they think the computer does all the work, or that they’re a bunch of cheapskates that just want to save money.

      But when you do that, you’re thinking like The Technician, not The Entrepreneur. Unless you can think like a business person, you will never understand their motivation and intentions, and selling your services will be an exercise in frustration.

  • http://www.tyssendesign.com.au John Faulds

    If a prospective client thinks your price is too high, it’s because you haven’t demonstrated your value to them adequately. Now this could be because your presentation isn’t up to scratch, or it could just be that the prospect and you are never going to see eye-to-eye on the value of your work.

    If it’s the latter, then you shouldn’t be too concerned about not winning the job, because as Tim said, they’d probably end up being more trouble than they’re worth anyway.

    • http://smallbusinessmarketingsucks.com/ John Tabita

      You’ve summed up my point nicely, John. Thanks.

  • http://travelondesigns.com Taiger

    There are basicly two types of clients: one that needs and values your services and the one would be better off with a Facebook fan page.

  • Hashpoint

    That was a great description of the basis for free-market capitalism! Our time is worth more to us than our money, AND we don’t want to/can’t expend the time it takes to become proficient at a myriad of tasks. Therefore, we are willing to pay someone who has committed the time needed, and laid out the capital needed, to become proficient in that area. We both win and receive a return on our investment. Mine may be “peace of mind” and the business owner’s is called profit.

  • droll

    Excellent article; gave me a number of things to consider doing differently when approaching potential clients and dealing with existing ones. Thank you.

    As an aside and a personal reaction: a couple of folks jumped on the unfortunate “piece of mind/peace of mind” error. Come on, people – we all know what John meant, and the error didn’t really diminish the value of his article. In my opinion, if the only thing you have to offer is criticism of this inconsequential mistake you’re not adding anything of value.

    • http://smallbusinessmarketingsucks.com/ John Tabita

      Thanks. I have much more piece of mind knowing someone understands. ;)

  • http://www.omniweb.com/wordpress Joe

    Ah yes, “piece of mind” a FANTASTIC album!! But your clients are probably not as into Iron Maiden as we are and would most likely prefer “peace of mind” :)

    • http://tommuseth.com Tom Museth

      Was that the one that had Number of the Biest? Top album!

      Again, thanks for your eagle eyes Joe.

  • http://www.salyris.com Sean Cook

    Do you know why some clients consider you too expensive?

    Sure, it’s easy to chalk it up to them not having enough money, but that’s not what’s happening in many cases. Most of the times the number a prospective client gives can change for the right company.

    You see, many times this number was set by one of your competitors; one that will “design” an entire website and host it for them for a ludicrously low price. What you’re experiencing here is something called “arbitrary coherence.”

    Arbitrary Coherence

    This basically means that the act of making a decision (or simply considering it) will influence the way similar decisions are made in the future. So once a prospect considers making a buying decision, they will use that price when comparing bids for the same project.

    How to fight this

    The good news is that there are ways to fight this. The key here is to avoid having people refer to some other source for the anchor — you want to be the one setting that anchor.

    Dunkin’ Donuts and Starbucks are a great example. For Starbucks to be able to charge more, they focused on making the experience feel as different as possible to avoid having people refer to an anchor set by another coffee shop.

    Everything about the Sarbucks environment is a deliberate attempt to create this different experience. Everything from furniture to the lighting, sounds, and smells was designed with this in mind. And let’s not forget the sizes; it’s short, tall, grande, and venti when you order at Starbucks.

    So what’s the lesson here?

    Craft a different experience for your users if you want to avoid having them refer to someone else’s pricing as an anchor.

    Good article.

    • http://smallbusinessmarketingsucks.com/ John Tabita

      Sean,

      Great insights. You’re absolutely dead-on with the concept of Arbitrary Coherence.

      The magic number I always seemed to run into was $300. But I learned that the key to turning that type of client around by increasing the value of my offering. You do that by uncovering a benefit the client didn’t realize existed, not by trying to justify your priced based on the time involved or some other factor that’s meaningless to the client.

      I’ve also found that you can’t turn every such client around. For some, the value is simply not there. So when they say, “Your price is too high,” they’re right. Marketing is about values; and being successful and well-paid means connecting with clients whose values align with yours, and walking away from the rest.

      Good comment. Thanks!

      • http://www.salyris.com Sean Cook

        You’re correct John. I have had to learn that the hard way! Engaging in a dialogue with the client and keeping them saying YES to your questions help, such as, would you like to rank #1 in your industry on the SERP’s? Keep getting positive responses and showing you know what your are talking about gets the ball rolling in your direction. Some free advice is also a good idea, just be careful not to go on and on with free advice. The strategy is to garner trust. This is always my number one goal, then keeping it long-term.

        As you talk to a potential client, you get a good idea of what kind of client you are truly dealing with. You are both essentially pre-qualifying each other. Never be desperate for a client, that will only lead to your frustration and be paid poorly for your hard work. A value proposition is tricky, but deserves the time to dedicate to it or you will only be in a never-ending price war with cheap alternatives.

        Just remember this:

        Quantum Meruit – in contract law, is defined as “the reasonable value of services”.

  • Verve

    Strongly disagree. There are many tiny business clients who think that computer does all the job and you only have to click a couple of times. The type that thinks you can erase cars in Photoshop and recover what was obscured by them. Why pay 3-4 people with experience and portfolios to prove it if a college student claims they can do the same? Those peeps want to pay for a website as much as they would normally do for a newspaper advertisement.
    Don’t want, don’t buy; those clients are more trouble than they’re worth.

  • Thomas Hall

    Like a ATT rep once told me when I worked at RadioShack “show them the value.” People don’t want to hear a verbal quotes. They want to see numbers on paper. They want to see what that gets them. So show them a website you have done for that much. One more thing you can do is have a itemized list. On that list have how much changes are. And always remember you can’t stop time but you can slow it down by being productive.

  • http://www.nine10.ca/blog/ Richard Podsada

    I think that the article and the commenters here have both brought up excellent points. There are clients who are capable of understanding the true value of a (properly built) website, and some that aren’t. Some people simply are only looking to get the lowest price possible, without care or consideration to how this impacts their business and the success of the project. You don’t need to worry about them because surely the website isn’t the only thing in their business that’s going to be half-assed.

    So the real issue is not just knowing how to sell the value of what you offer, but knowing very precisely who you are selling it to. These problems really start to go away when you very clearly define who your ideal customer is and how you are going to position yourself to attract that kind of customer. From there you can set up a qualification process that filters out the bad fits for your services. You have many tools at your disposal, the most powerful tool is price. It speaks the loudest. If you are attracting a high end client to high end solutions, set prices accordingly and communicate them as early as possible. Provided that you can demonstrate the value clearly, pricing will not be an object for the right client.

    This is where pricing is a tricky subject. On one hand, pricing is a form of compensation. But in another school of thought, pricing is primarily a brand positioning tool. Do Armani jeans really cost, or provide enough value, to justify paying $200-300 a pair? Maybe they do, in terms of the feeling of status it provides their customers. But perhaps more importantly, Armani wants a certain type of customer to wear their clothing – affluent or aspiraional customers – and if they priced them at $25 they would attract a much different crowd. Likewise, for a professional firm, pricing clearly delineates the crowd of customers who are a good fit for that business. And attracting them to your business tends to attract more like-minded clients to it as well. What you focus on grows.

    By defining your ideal target customer and setting pricing and other qualification factors properly, you can eliminate many of the headaches involved in dealing with the wrong fit. This even works the other way – maybe as a freelancer you can’t handle a high end client (it takes a lot more resources than one person can usually handle.) So in that case the same thing applies in the other direction.

    • http://smallbusinessmarketingsucks.com/ John Tabita

      Well said, Richard. The point many web designers seem to miss is that the amount of time required to produce something is a function of cost, not value. For the client, value doesn’t lie in how long its going to take you to make the site, but in what they’re going to get from it in return.

      A pair of celebrity-endorsed sneakers cost less than $20 to make, yet people will pay hundreds for a pair. In that cause value far exceeds cost. But in our case, oftentimes cost (i.e., our time) exceeds the tangible value to the client.

      That happens most often when you define your ideal customer as “small to medium sized businesses.” Why not define your ideal client based on size, annual revenue, and other such firmographics? Or by targeting a specific vertical and becoming that industry’s expert? There are many ways to attract your ideal client. Those are just two.

  • http://pegley.com Kevan

    Sooooo pleased I’m not the only one to think “piece” of mind? He means “peace”. Literacy is not dead!

    • http://tommuseth.com Tom Museth

      Wow guys. At this rate I’ll get no piece, eh?

  • http://RobertPerrett.com Gold

    I once ask a 150 photographers for a price to photograph something in their part of the country and the first thing I told them their price was too high. 60% or the photographers did the job for 50% less than the originally quoted. Why should I have paid them more???

    • http://www.moghill.co.uk Fi Fi

      Way to play on an uncertain economy. People like you devalue industry.

      • http://smallbusinessmarketingsucks.com/ John Tabita

        I once chose a roofer who charged $4,500 to install a new roof over one who quoted me $7,000. Did I devalue the roofing industry by doing so? I regularly buy pizza at Little Caesars instead of paying twice the price at Pizza Hut. Am I devaluing the pizza industry?

        Any time you chose a lower-priced option, you’re devaluing someone’s industry. The consumer’s function in a free market system is to naturally regulate prices. The consumer’s not to blame for choosing a less-expensive alternative.

        If you’re a photographer, then blame yourself. Technology is disrupting many industries. You need to either get another business model, or go into another business. Adapt or die. Complaining or blaming the consumer won’t help.

  • http://www.alvinmilton.com agdm

    I tend to price based on functionality and value offered. If a client doesn’t see it my way, that’s fine. I like working with people that understand what is at stake.

    • Jai

      I agree with you and always follow this approach.

  • http://mrhoai.com/ Hoai Nguyen

    I think it depends attitudes of clients and their financial situation, so you decide which one is the discount two is convinced them.