Q. How can I get my clients to pay my standard rates? How do you avoid the trap of offering reduced prices, regularly or occasionally, and then finding out that your customers won't buy unless you offer those reduced prices again, or even reduce them further. Thanks! 
A. Marketing expert, Joe Gracia, responds: The first thing I need to do is rephrase your question, since the way it is phrased assumes that offering discounts is at the heart of the problem -- that may be the case, or it may not be the case. Here is a better way of phrasing the question: ----------------------------------------------- What am I doing that may be making it difficult for me to get the fees I want and need? ----------------------------------------------- I have to say that we have never had this issue arise in our business. That's because early on in our business we eliminated all of the obstacles that would create resistance to our prices. Here are a few of the areas you may need to consider. YOU MAY BE TARGETING THE WRONG PEOPLE If you are targeting people who have limited budgets and are pressing for lower and lower prices, then you must target different people -- people who can afford the rates that you need to sustain your business. Often we will hear business owners say, 'My customers won't pay those higher rates.' And they are probably right. Their current customers may be conditioned to paying them a lower rate, and if they try to raise their rates substantially, they will be met with resistance. Who wants to pay more for something they were getting for a lot less? The answer is -- to find new customers that aren't already conditioned to paying lower rates. Target higher level prospects. When Maria did hands on organizing, her rate was $75 an hour. That rate eliminated a vast market of lower income prospects. She only targeted people who saw the value in her services, 'and' who didn't have a problem paying her rate. YOU MAY HAVE POSITIONED YOURSELF IN THE WRONG CATEGORY There are three marketing categories you can take: 1) The Low-Cost Leader 2) Average Cost 3) High-Cost Leader LOW-COST LEADER Of course as the Low-Cost Leader you will get many more customers, and they will be easier to get. But you may not be able to make the level of income that you want by taking that path -- unless you can service high volumes more efficiently than your competitors. We would never recommend that a client take the Low-Cost Leader position unless they are experts in processing huge volumes of customers at low cost. AVERAGE COST By its very nature there isn't a Leader in the Average Cost category. You would charge the standard rates. You'll have lots of competition in this category, and you'll have to work harder to attract business than you would with the Low-Cost Leader position. HIGH-COST LEADER The competition is much less at this level, but you must work much harder to attract the correct prospects to your business. In order for these higher level clients to pay the higher fees, they must perceive that you are worth the higher fees. You have to set yourself apart from your competitors. Image has a lot to do with this. Higher credentials help. Superior service is certainly vital. One of the reasons that Maria wrote her first book was to provide her with the higher level credentials she needed to attract the higher level clients she wanted. Her free workshops helped to establish her as an expert in her field. You need to make the decision about which category you want to take -- and then stick to your plan for achieving that goal. YOU MAY BE PRESENTING YOUR FEES IN A WAY THAT GENERATES HIGH RESISTANCE One mistake we often see service business owners making is in how they quote on a project. One sure way to generate resistance is by merely quoting your hourly fee without a specific time-frame commitment. What we mean is something like this, 'I charge $45 an hour. And I really won't know how many hours it will take until I am finished with the project.' To the client this means she may get a bill for $45 or $4,500, or more. While I said earlier that Maria had a $75 an hour rate, she always quoted her jobs as a specific total package price. The $75 rate is to let people know that she is in the Higher Category of providers, and also to make it easier for her to calculate a project fee. People want to know up front exactly what something is going to cost them -- if they don't, they will resist. We always recommend to our clients that they quote by the project. A specific number relieves a client's anxiety about the price. They now know how much the project is going to cost. Now the only question is, do they feel the cost is reasonable. Yes, you can provide your client with a range depending on unknowns -- but the more specific cost you can provide to them, the less resistance you will get. YOU MAY NOT BE BUILDING IN A SUFFICIENT CUSHION Human nature is the same everywhere. People want to feel like they are getting more for their money -- they want to feel like they got a good deal. You have to become proficient at making your clients feel good about the deal you are offering them, while still maintaining your profits. One way of doing this is to build enough of a cushion into your fees to absorb discounts when they are needed. (For instance when you are trying to bring on a new client). That way you can provide clients with a discount so they feel good about the deal, but still get the fee you need to be profitable. When I used to take on new marketing consulting clients, I would spell out that my monthly services were 'worth' $3,000. But if they would sign up within 10 days, I would provide them with a very favorable rate of just $2,000 a month. A savings of $12,000 annually. Now imagine if I had just said, my rate is $2,000 a month. Period. (Even though I knew my services were worth at least $3,000 a month.) Which presentation would make my client feel better? Obviously, the one in which he or she was going to save $12,000 a year. Of course, I knew that my services would be more than worth the $3,000 a month, and many in my field would have charged them much, much more than that, for less than I would provide to them. So this was a 'real' discount offer. Also, once I made an agreement with a client, I 'never' increased or cut my monthly rates with that client. They always knew exactly what their fee would be every month. Clients hate surprises, this system eliminated all surprises for our clients. The issue 'never' came up after the agreement was made. And most of these clients signed on for two or more years. Make your clients feel like they are getting preferred treatment from you, and you will eliminate resistance. YOU MAY NOT BE SPELLING OUT THE VALUE OF YOUR SERVICES Never assume that your clients understand the value of your services. You must spell it out for them, in writing if possible. Whenever I made my offer to a prospective client, I spelled out in writing everything that this client would receive. I would spell out how much our consulting services would save them over other methods. Once I had the account and was into the actual projects, I spelled out the value of each project. If we helped them put together a new marketing system that made them an additional $500 profit a month, we spelled out that value over a 10 year period. $500 a month times 12 months = $6,000 times 10 years = $60,000 in increased profit from that one project that they may have paid $2,000 for. Always in writing. You see, a client will never do that. They never look at things like that. But that is reality. So we help our clients see the total value of what we just provided. You can do that in any profession, and you should. You can spell it out in increased money, money savings, time savings, increased productivity, etc. YOU MAY NOT BE MAKING USE OF PERCEIVED ADDED VALUE When someone purchases our Give to Get Marketing Solution, we always include valuable additional Bonuses at no extra charge. Adding value to a purchase is an excellent way of increasing the perceived value of that purchase. Include something additional with your services that your clients will perceive as highly valuable. Perhaps a free report, or a book, or an additional service, etc. Of course, you must ensure that your prices are high enough to absorb any additional cost that you may have in providing the bonus. This is where cushioning comes in. This is part of your marketing costs and must be built into your business. If you want to eliminate resistance to your prices, you have to give people what they want. They want to feel like they are getting a deal, that they are receiving preferential treatment. Do it with honesty, and sincerity and their resistance will melt away. Make sure you are targeting the correct prospects for the category you have chosen. So much of marketing is about human psychology. There are many, many more aspects of pricing beyond what I have provided here, but I hope this has given you a few areas to consider.
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