How To Handle Clients Who Want Lower Rates

Here's the situation. You've been working with a client for a while and you're getting them good results. Their social media channels are growing. Their website is getting more traffic. The email list you built for them has become their main source of leads. Then you get a call from the client. They want you to lower your rates because feel like they could hire someone to do what you're doing for less. What do you do?

Rates For Web Design and Online Marketing Are Dropping

The truth is, the rates for technical services are falling. I talk with web designers who have been in business for years and they're saying that they can't win new clients at their current prices. They can't even keep the clients they already have unless they agree to lower their rates. This is bananas because they are better now and deliver higher-quality services than when they first landed the client. So, they are feeling very frustrated because they are investing in developing and advancing their skills but they are making less money than before. That's upside down.

The reason for the fall in prices is easy to understand. The supply has gone way up – especially over the last year. More people are working from home and getting into web design as a business they can run on their own. The market has gone global with easy access to people all over the world through Fiverr and Upwork. There are easy DIY options available. And then there is you trying to compete with all of that.

Why You Are Justifiably Frustrated

You're correct in believing that you do better work. You've been honing your skills for longer. You're able to generate better results than all the newbies just entering the space. So you shout at the email your client just sent you in disbelief wondering how they could be making all this money – money that you are generating for them – and it is way more money than they are paying you. How could they possibly ask for you to lower their rates?

Looking Through Different Lenses – Rates vs Results

The problem is the client and you are looking through two different lenses. They are looking at your value through the lens of hourly rates for services. You are looking at your rates through the lens of results.

They see your rates as being higher than other people's rates. Therefore they conclude that you're too expensive.

You see your rates next to the awesome results you've created. Therefore you conclude you're giving them a very fair price. If anything, you're probably undercharging.

How NOT To Fix The Problem

The temptation is to write up a new proposal with lower prices. Maybe you remove some of the services or reduce the number of hours so you're not just doing all the same stuff but for less. But this isn't going to solve the problem of you and the client looking through different lenses. This approach just means you voluntarily toss your value-based lens aside you agree to look through the client's “rates-based” lens. Don't concede your value-based position. 

Unpack The Client's Goals

The only way I've seen situations like this resolve favorably is for you to have a “goals conversation” with the client. You have to figure out what they want. Then you figure out what achieving those goals are worth to the client. Finally, you price your work in relation to the value of achieving those goals.

To make this work, however, the goals have to be specific and measurable. For example:

  • Increase sales of new organic face cream by 10% over last year
  • Increase the number of leads from 30 per month to 40 per month
  • Reduce time spent on support calls by 15%

If you have been working with the client for a while and know their business, you can even suggest some goals based on what you know they are trying to do. This will further underscore your position as a consultant.

Summary – 5 Steps To Fix The Problem

  1. The problem is you are using the lens of results, they are using the lens of rates for services.
  2. The wrong solution is for you to give up your results position so both you and the client are looking through the lens of rates for services.
  3. The correct solution is to get both you and them looking through the lens of results
  4. The way to do that is by having a goals-oriented conversation to establish what it is they actually want.
  5. Present a new proposal that value prices your work in relation to the value of getting them what they want.

Now you and the client are looking through the lens of results and the results come from you, not the low-budget competition that doesn't know what they're doing.

 

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