What to Do When a Client Won’t Budge on the Budget

budget

It’s easier for big companies to be firm with their fees. But for small businesses, startups and budding entrepreneurs, budget negotiations can be the most dreaded part of interacting with a potential client.

If you’re selling tangible products, it’s usually not so bad because these normally go for a fixed price. But if it’s a service that you’re offering, many clients often assume that there’ll be some leeway with what they should spend on you.

Well if you and the client have different prices in mind, you have a few options:

Give In

I know—this is not the most desirable course of action. Definitely not good for one’s morale. Unfortunately, it’s the choice that many people go with, for a number of reasons. Desperation sets in when you’re just starting out, if the business is doing really badly, or if you’re just not as strong as the competition. But consider this before you give in:

If the proposed price is insultingly low, or does not make sense for your business goals, the wiser decision would be to walk away. If you do accept, you could be shooting yourself in the foot for future deals/jobs. And, ironically, giving in to the client’s demands does not necessarily reflect well on you in the client’s mind. It could also set a precedent for further work with that same client.

But if you have no choice but to give in, there are some conditions that you could set so that it doesn’t feel like your pride has been completely ripped to shreds.

  • You could agree to the client’s preferred price for just the first milestone or first job. State that this lower fee is for the “trial period,” while you and your client get to know each other. Then if the client is happy with the work that you do (and wants more), the price will go up.
  • So that you’re not giving your all for free, restrict your offering to the basics. This is not to say that the job you’ll do won’t be as good; it’s just that now there are limits to it. So if you usually sell a package of services, for example, you could let the client know that because of the reduced price, you’ll have to take a couple of the “perks” out of the deal. Let the client have only the most essential parts of the service.
  • Do not go the extra mile for the client (obviously, though, this isn’t something you’ll advertise to them). This shouldn’t be an act of passive revenge; no matter what, you should always do your best. But save that “wow factor” for clients who truly value your worth. Do this carefully, however, as sometimes that wow factor is what will convince a client to pay more the next time you work with them. The bottom line is this: don’t kill yourself for the low-ballers.
  • If, after the job is complete, the client expresses genuine satisfaction with the work that you’ve done, ask them for a public review of your business. Testimonials boost your reputation and help earn more clients, so this is a good way to turn less money into a win-win.

Compromise

This is the best option if you really want to work with a certain client, but are not willing to cheapen your business. This is also the one option that involves actual negotiation.

Before you negotiate, though, collect all the information needed for the bargaining to work in your favor. This includes standard market rates, your USP, and so forth. Prepare to convince them why paying more can only benefit them.

You should determine the lowest you’re willing accept without feeling worthless, and go a little bit higher than that as the bottom figure of the pricing range that you’re offering. Then make the figure on the high end of the range as high as possible without being ridiculous (who knows—the client might have a pretty big budget). Reiterate to them that the more they’re willing to give, the more they’ll get out of the project.

Similar to the previous option of giving in, if you’re offering a discount, some other part of the deal should be to your advantage. For example, there should be less work on your part, so let them know up front that because you’ve compromised, they should only expect X and Y of you, not Z too.

Don’t let the negotiation turn into a battle. The very fact that you and the client are willing to compromise should establish the basis for an amicable discussion. But be realistic: if the figure that they have in mind is drastically different to yours, it probably won’t work out. If neither of you can agree to a mutually beneficial price, then forget it and don’t waste any more time.

Stand Your Ground

Wouldn’t it be great if all businesses were in a position to do this? However, you can’t get to such a point unless you’ve worked really hard for a long time, or are just plain brilliant.

If the client eventually does accept your price, be very clear—from the get-go—about the scope of the project. You’ll often find that clients who (reluctantly) give in to paying more try to compensate themselves by getting more out of the job than was originally agreed to (also known as “scope creep”). This is fine if you offer a per-hour service, but not so good if you work on fixed-price projects.

If you go the “stand-your-ground” route, ensure that your credibility has already been established. If they’re not already on your website, have customer testimonials and a great portfolio of work on hand in case a potential client wants to see them. These work as incentives and will show the client what they might miss out on and consequently, they’ll be more reluctant to refuse your services. Also be ready to answer the question, “What makes you better than [insert name of your competition here]?”

You can also walk the client through similar past projects to demonstrate and justify all the costs involved. Then convince them why your solution is the only viable one. At worst, you’ll have educated a client about what this sort of job really entails. At best, you’ll persuade them to pay your fees…

However, if you’re one of those fortunate few who can afford to not have to explain your prices, then you really don’t need to be reading this post!

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