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have any of you faced such a situation where everything starts off well and when it reaches the stage of cost discussions, they become very annonying?
What is the best way to solve this problem?
I learned a long time ago to start with 25% higher initial quotes to give yourself bargaining room. For instance, if you think the job is worth $10K then quote $12.5K. Best case they take your price as-is and you make more money, worse case you haggle no lower than the $10k you originally wanted and the customer thinks they got away with something and everyone is happy.
There have been a couple of special circumstances where I gave them my best estimate up front and had no haggle room, so when they started haggling I started chopping items off the project. This is an interesting play as the customer either decides what's really important and cuts out items that are more frivolous, or they just say OK and sign the contract as-is.
As IncrediBILL says, an excellent defense is to cut functionality: "Yes, of course we can reduce price by this amount, but if we do, we'll have to cut the xyz and pqr features..."
In a previous existence I was part of a team that negotiated multi-million $ software development contracts. Providing we stuck to our guns (and were a little flexible around the edges), this approach almost always worked.
Reputation and referrals eliminates a lot when it comes to someone thinking that haggling is to be expected.
There are a number of downsides to haggling. You can imagine what they are, though they needn't apply in every case: Bargain once and be expected to bargain again. Give up your authority. Being viewed as someone whose word doesn't always mean what is said. Etc.
2 schools of thought. I know plenty of people who take the "I don't haggle approach". It may cost you some customers but I find that hagglers can be prone to thinking that they can haggle everything else in the relationshop, including - in my case - legal strategy. That type of mindset just complicates matters even more. No thank-you. The haggler can be expected to take the same approach to issues of web design, SEO, etc. if you aren't firm from the outset. You're the pro. Let them know you will make the final decisions on all matters technical.
Tell new clients - the ones that want to tell you how to conduct your business - that if they wish to perform brain surgery on themselves then they ought not waste time or money consulting with the neurosurgeon either (or some variation of that idea). ;0)
I disagree with stating a higher figure so that there's room to negotiate. This just trains the prospect to always expect a discount, and that's not how I want my clients to behave. ;)
IncrediBILL is absolutely on target - if they can't afford to pay what you're asking, ask them what they can afford, and then tell them what you're able to do for that money. This usually shakes out the cheapskates pretty quickly. When I've done that, people either set priorities and pare down the job specs, decide to find more money in their budget and do it all anyway, or disappear and never return.
I personally never haggle with clients. I feel my work has value and I have a reputation and set of skills that took me a long time to build up. I am pretty hard nosed about it and it has cost me some clients, but I don't care. Couple of stories to illustrate...
Story 1: I had a prospect tell me what they wanted and I wrote up a proposal and gave it to them. He looked it over and said I pay you $1,000 (The original was $1,800). No explanation, just cut $800 off the price. Now this was when I was just starting out and I wasn't sure how to act. I sat there for a moment a little dumbfounded. Finally, I counter offered and said $1,500. He replied with the thing that totally set me off. He said "I don't really play the negotitation game so I will offer $1,000". At this point I was peeved so I looked him straight in the face and said "I don't play the negotitaion game either, I was just being generous before. My price is $1,800 take it or leave it". I said it with absolute conviction and while there wasn't a mirror in front of me I am sure my face said don't even try and argue this. He said "I will pay $1,500" and I told him that price wasn't good anymore the price was $1,800. He took it.
Story 2: I had another prospect showing me web sites he liked and wanted, but as I looked at them they were complex e-Commerce, database driven sites with amazing designs. I told him those sites were probably 50-100K each. He was floored and said he thought they were only $1,000. I almost laughed, but managed to refrain. I told him for that price he was going to get about a dozen static pages and he would have to provide the content. He wanted more. I explained exactly the value I brought and why. He said he would think about it and when I called him back he said that he had found someone who would do it for substantially cheaper then my $1,000 price, but if that didn't work out he would "entertain" the idea of talking to me again. I simply told him no that wouldn't be possible because I wouldn't take him on as a client. I told him he obviously didn't understand the value I was proposing and I couldn't work with somebody like that. I said if things didn't work out he could call me and I would be happy to refer him to somebody that would work with people like him, but I wouldn't take him on as a client. He was so shocked all he could reply with was a weak "ok".
I know this sounds like I am being totally hard nosed and I probably am. I just feel like my work is valuable and I don't like having it devalued by people who somehow feel it is their right to get something for nothing. So I stick to my guns and it has cost me some business, but in the long run I have also had people who call because they hear I am the best. I got this reputation because I don't take crap from people like the ones above. I know what my work is worth and I don't take a penny less.
Fortune Hunter
They are also often not as appreciative of what you're doing; they don't understand what it takes to do the job. For instance, when someone tries to lowball the price, they'll say something like "Well, I COULD write it myself, I just don't have the time." That's an attempt to devalue the work.
Eileen, I am learning the hard way too....lately I have come accross a lot of people who state that the only reason why they are getting their work outsourced is that they do not have the time right now to do it them selves.....does that justify their rotten attitudes..?
I am quite unhappy with people who try to put me and my work down...saying that they could have done it themselves......
I sometimes feel that if at a certain point of time I have a lot of work and am not desperate to get more work, I should not leave any room for haggling....it's more like a "take it or leave it situation"...However, when I am hard pressed for work and want a new project desperately...I should be ready to negotiate..Don't know if this is the best thing to do...but I have to take a stand someday...Any thoughts?
I've faced this situations so may times that when I make a client who doesn't haggle over the price I feel ackword. ;)
I always try to be upfront with the client. If we think there is any scope of price revision, we definitely do that keeping in mind the long term business we might get from the client. (You should be quick enought to gauge this in the relationship i,e, the long term repeat business)
If there is no scope then still we do that. HA!HA!
Just kidding...
...when they started haggling I started chopping items off the project. - incrediBILL
I agree with this. If a client starts cutting down your payment then cut down what you offer.
Trying to double-guess and add a % to cover client's haggles is on the road to madness.
Be clear and be upfront - even if they are not.
It is difficult to walk away from potential work but some clients are not worth the time and effort.
zoo
Yes, it did feel good in both instances. However I am a person who generally doesn't like confrontational situations so it was also hard to do. At the end of the day I just have to realize that I spent a lot of time and effort getting where I am and building up my skills.
Not only did I spend a lot of time and money getting an MBA, but I worked for years on technical skills I didn't learn in school. I still take seminars and courses to keep up on changes in the field so my clients get the best person for their money they can get. I love what I do, but I also want people to recognize value.
I figure with all the time I have in school and continuing education as well as all the experience I have gathered that I have as much schooling and skills as a doctor, although just in another field. I figure most people wouldn't go to their doctor and when he/she tells them a procedure is going to cost $10,000 most people (although probably not all) aren't going to argue and try and haggle with the doctor to get the reduced price!
I can picture the seen...
Doctor: You will need brain surgery and the procedure will cost 120K
Patient: Doc, that sounds awful high, how about we do the whole thing for 20k and you can leave off the bandages, I have some at home.
It is all about value and sticking to what you know you bring in terms of value to the project and the client.
Fortune Hunter
I agree with you totally.....love the example of the doctor and the patient!
Writer and brain surgeon meet at a cocktail party.
Normal exchange of "what do you do?" questions.
Brain surgeon: A writer, eh? I've often thought of taking off six months or so and writing a book.
Writer: Isn't that a coincidence? I've often thought of taking off six months or so and doing brain surgery.
Since this really happened, I don't want to alter the profession in the story, but I'd think it'd apply at least as well to those with professional technical skills.
Many specialists publish a lot mre than you would imagine. I expect that most of them would be limited by the requirement to dumb down their language more than the ability to write.
I suspect that a lot of those people that say that they could do it themselves, but just don't have the time, are telling the truth.
I've done a lot of plumbing, and I need a new gas line run in the crawlspace under my house. I could do it, but I don't want to. I could not do it as fast as a plumber that does it all the time, and the results would not be quite as nice, but I could do it.
But how far do you think I would get trying to talk the plumber down in his rate with the argument "I could do it, but I hate crawling around down there"?
It seems to me that they should then be willing to pay you more, if they know the real amount of work that goes into something.
I'm amazed that I pay the same amount of money per hour for a plumber working in the comfort of new construction as I do to have him crawling in my attic in summer or crawling around and working in the discomfort of the crawlspace.
BigDave...yes you would expect them to understand what the work is worth...but it just does not happen...I am not saying that everyone that I have come accross has behaved unreasonably...but many do...the whole experience of interacting with someone like that beomes quite bitter and not worth the efforts!
We'd all like to think our work has value, but the bottom line is, value is in the eye of the beholder - it's whatever the client thinks it is. Unfortunately, he doesn't base that on how long we say the project is going to take us at whatever price we claim we're worth. He's basing it on what he thinks he'll get back in return.
So you have to turn the discussion of value off of yourself and your skills and onto what the client finds to be valuable. As Fortune Hunter has illustrated by his stories, some clients value getting the cheapest price as possible. Others value accomplishing a specific objective. The trick is to find out what that is. Part of the value equation involves increases and/or decreases. If your services can increase or decrease something that the client wants increased/decreased, then it has the potential to create value. Can the website you build increase sales or sales leads? Can the copy you write increase conversion rates? If it's not about money, what other positive thing can you increase, or negative thing can you decrease?
If you determine what the objective is, demonstrate how you can accomplish that, and figure out how to measure it, you'll have gone a long way towards establishing value and have a lot less client "haggling" over price.
Here's an article that may help: www.yellow-tie.com/articles/archives/client-cheapskates.asp
Some people will try to devalue whatever you do--no matter what it is. They see someone do something really amazing, and they'll say (in a dismissive tone), "Oh, I could do that too." Yeah, surrre they could. Some people are just jerks like this.
I know I'm coming from a different perspective here, but when asked to do some work for someone else, I'm thinking, "How much is this worth to *me*? Is it worth the bother?" I don't give a flying you-know-what if the client thinks I'm quoting too high of a price. If they don't want to pay it, that's fine. I have a ton of other personal projects (many which have some hope of making me money) and if they aren't going to pay me something that compensates me adequately for being away from my money-making pet projects, well, that's okay. Bye now.
Well, obviously I don't do a lot of commission work these days. ;-)
