Quoting Rates and a Failure to Learn
January 6, 2020
Do you want to be a commodity or a problem solver? If you want to work with clients who are a better fit for you and earn higher prices for your engagements, then the answer is clear, right?
If, however, when someone asks the “what are your rates” question and you respond by quoting figures and sending out a price list, you are in the "red zone" of positioning yourself as a commodity.
My answer to the “what are your rates” question is to go straight to the “we’re not a good fit” answer. In my recent appearance on the “Decision Vision” podcast, host Mike Blake and I discussed this question in depth. He pushed back on my approach to this situation, arguing that it’s better to offer a quote. If the client passes out on the quoted price, he suggested, no amount of value exploration will bridge the gap. I get Mike’s point.
Here’s where my approach to this situation, though, potentially shortchanges me in another, more subtle way: I could be passing on an opportunity to learn.
There’s something to be learned in any conversation with a client which focuses on the needs, hopes, problems, and values of that prospect. If you’re asking the right questions, you get more data points which can be applied to other clients and situations you encounter. You’re learning, and you’re becoming that much better at whatever professional services discipline you practice.
Pye Jirsa, Founding Partner of Lin and Jirsa Photography and SLR Lounge, makes this point in a blog post which I highly recommend: “It’s your responsibility to dive into the client psychology to figure out what they want and what they value and to help them find a product that is going to suit their needs. In doing so, this process will make you a better photographer . . .”
Even if you find out that the person sitting in front of you is a miser who will never pay based on the value you deliver—and hopefully you’ii turn down that engagement—you’ve learned something about their problems which can be applied to clients who are a better fit. You’ll do a better job for those future clients.
There are some clients, of course, who are so price sensitive that they’ll refuse even the most basic conversation over their needs and problems. They’ll refuse to sit with you and share anything until they know what you’ll charge. For me, there’s no point in engaging with someone so focused only on price.
Whatever your approach on the “what are your rates” question, view every interaction with a client as an opportunity for professional development. You’ll be a better problem solver and earn higher fees for your services as a result.
©Ray Business Advisors, LLC and John Ray
About me: I’m enthusiastic about how changes in pricing strategy can significantly change profitability for a business and enhance life choices for business owners. I live this passion through Ray Business Advisors, my outside CFO and business advisory practice, in which my pricing is exclusively value-based, not hourly. I work with business owners on how they can change their pricing not just to increase their profits, but better serve the wants of their customers. Click here to learn more or call me at 404-287-2627.