How to counter proposed price cuts from clients

​There are ways to make both parties happy
 
It’s happened to you more times than you’d care to recall: You submit a quote for your services, and the client comes back to you, asking you to cut your price, when you haven’t even done anything yet.
 
Not fun.
 
There are ways to deal with this. Some are a matter of degrees; others are a matter of proper preparation.
 
You want me to what?
 
Oftentimes, a client (or prospect) will seek—sometimes subtly, sometimes not—to change the scope of what you’d bid on. In other words, they’ll want you to do more work, for the same price: “Can you throw in a…?” This is, on its surface, a request for you to lower your price. Beneath the surface, it’s a slight: it suggests that your work simply isn’t worth all that much.
 
Thicken your skin, ignore the unintended insult, and proceed professionally. Actually, of all the situations we’ll discuss in this article, this one is the most straightforward. It requires your calling a spade a spade. But take the high road. Be cheerful: “I would love to do some extra projects for you! Let me bid on those for you separately.”
 
They’ll get the message. Instantly. Want to look like a hero? Bid on the new project, and toss in a little discount. They’ll appreciate the gesture. They come away with extra stuff from you; you come away with more work, and income, than you’d originally anticipated. It’s a win-win.
 
“Is that your best price?”
 
Ever been asked that one? It’s another way for clients to probe if there’s any “fat” in your pricing. Again, if you’re thin-skinned, you’ll perceive a subtle insult in that question. It says, “I know you’re trying to gouge me; perhaps you could gouge me less.”
 
Don your thick skin again. And think of the times when you’ve been the client, perhaps buying a car. Did you simply go with the asking price? Of course not. So appreciate that the client is simply doing their job, negotiating.
 
Now, the answer to “Is that your best price?” may vary. It, honestly, depends on how you’ve priced the project in the first place. We don’t advocate “fattening” up any pricing. You’ll get called on it, especially if it’s out of line with industry norms. And once you concede on the “fat” issue, all of your subsequent pricing will be suspect. It’s a lousy path to embark upon.
 
What’s the payback?
 
Sometimes you might have a long-term client with whom you have a strong working relationship. They may toss you lots of good, lucrative projects. So ask yourself this—and ask them, too: “Is this business development for this client?” That is, if you help them win a new account, would there be more work in it for you when they do?
 
If that’s the case, consider discounting the work. They’re effectively acting as your agent, bringing you work that you might not otherwise get. Agents typically get ten percent. Use that as a starting point for your discount. But you can go deeper—much deeper—depending upon the size of the prize, the odds of your client’s winning it with your help, and the strength of your relationship with that client.
 
Prepare in advance
 
Many times, a client will ask you to bid on a project with insufficient information for you to bid on it.
 
Again, don’t get mad. Put yourself in their shoes: They’re not trying to withhold information from you. They simply don’t know it yet. They probably are trying to get that exact information from their client, but haven’t been able yet.
 
Not a problem. Simply craft your bid appropriately.
 
Here are three approaches to consider:

• The ballpark bid: Rough it up. Consider a price range. And include the caveat: “This is a rough estimate, subject to re-bidding, pending receipt of updated input.” The client won’t get mad. They’ll thank you for helping them work up pricing, quickly, when they need it.

 

• The “menu” approach. Carve up the potential services you might offer on a project like this into discrete line items. Include everything you think might be needed, and toss in a few that might be needed. You won’t include a total for the project; you can’t. Simply write “Total varies depending upon scope of project.”

 

• Hourly. We generally prefer to bid on a per-project basis. But sometimes that’s impractical. We recently were given the heads-up on an assignment that would require review and analysis of reams of pre-existing research from our client’s client. But the number of “reams” was a mystery when our bid was due. So we worked up an hourly rate for that, and added it as a line item.

 
When you work this way, no one—neither you nor your client—will be surprised when the detailed specs arrive. You can simply go about your business, do your work, and get paid appropriately.
 
When to walk
 
Sure, you can negotiate, and you can give, but there are times when you need to do neither. If you can’t make a profit on a proposed price, or if it would set a dangerous precedent for you, or if it simply under-values your services to the point where it’s untenable, say no. Politely. It’s the right thing to do. A good client (or prospect) will take no offense, and respect you for holding your ground. And quite often, that same client (or prospect) will come back to you before long, because you’ve boosted their professional respect for you. And that’s something that money can’t buy.
 
Need help with a proposal, RFP response, or anything else that requires pricing of your services? Contact us. We’d love to help. 

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