Pricing and Negotiating
by Maria Piscopo
This column is not about what to charge, instead it addresses how to
get the money. Much has been said about the changing client/creative
relationship and I agree we are not in the same game anymore. As
individuals and as an industry, we have let a lot slip by us. We need
to try new and different techniques. If you truly feel you are losing
ground on pricing and negotiating with clients, then it is time to try
something else. In many ways, we have to reestablish ourselves as professionals instead of just craftspeople and work hard to create or renew a profitable relationship with clients. I will look at specific actions you can take, attitudes you can change, different questions you can ask—all towards a goal of improving your pricing and negotiating skills.
At the risk of sounding like a broken record: Become a member of a professional association. Many of you have let those renewal notices lapse or believe joining is still in the get-around-to-it category. There has never been a time when professional membership is more crucial to your business. I am not only talking about the program discounts or the access to insurance (though they are definitely great benefits), this is about your positioning in the marketplace and your attitude towards your work. If you can’t bother to identify yourself as a creative professional, how do you expect your clients to treat you? Membership says you choose a “business first” attitude.
What else can you do to change a client’s perception of your worth? Go back to being a partner. One of the biggest changes in our industry that hurts your pricing and negotiating position is the lack of alliance. The bond is created between you and the client when you are creating a solution together working in partnership. Today your challenge is to present clients with solutions, not just images and with results, not just commodities.
Communicate better, differently and surprise clients with an intelligent comeback instead of the usual “sure, OK, fine” response to negotiating issues. Plan and practice what to say in different, difficult pricing negotiations you will encounter. Without planning what your responses are, it is very hard to gain (or regain) control of a pricing situation.
Here are two of my favorite responses to plan and practice. First, focus on a different question; instead of discussing “What do you charge?” ask clients, “What is the project budget?” This works because most budgets for creative projects have not kept up with the technology you are capable of delivering. For example, a line item budgeted by the client for illustration may not include other services you can deliver including pre-production, post-production and delivery media. When everything is separated in the project budget, your challenge is to figure out how to talk with the client about these different line items. The term “project budget” seems to work and help clients understand that there is more to your work. The sum total of several of these budget line items can be made available by the client for creating and delivering your illustration. You only have access to this additional money—if you ask for it.
The second technique I call a “no fail” script. Use this when you need the client to work with you (and not against you) in a pricing or negotiating situation. A common example occurs when a client asks you for a quote without giving you the proper time to estimate and deliver the information. Try this question, “Since I am sure you want an accurate quote, what time tomorrow is good for you?” Putting the responsibility for accuracy back on the client will usually result in getting the time you need to work out your price. When you do run into a client that can honestly reply, "“No, I don’t need an accurate quote, just toss me a number,” maybe it’s time to rethink your marketing strategy for finding clients.
Getting the money sometimes means being ready to negotiate. There are many techniques you can learn, but you only absolutely need one: Never agree to less money without some change or consideration to the project description. Not only is it unprofessional, it plants doubt in your client’s mind of the value of your work in the first place. Here is your bottom line: To pay less, the client gets less or you get more. Next time your client names a price lower than what is acceptable, you can reply, “Let’s take a look at how it can be done for that price.” Then look at two lists: one is a list of the considerations the client can get less of to lower the price, and the other is a list of things you can get more of to lower the price. For example, the client can get less usage rights, fewer consultations or you can get more time or better payment terms. Work on this now. The negotiation is easier and faster when you have lots of items to choose from on your two lists.
You can tell the client that your price for the illustration is the average, normal and industry standard price but if any negotiation is not going well for you, you may need to find out what is really going on with the client. One of the most common things to go wrong is when the client tells you, “I can get it for half price from someone else.” To keep the conversation going, ask, “How?” What you are really asking is, “How can it be done for less money?” The client will stop and think, primarily because they have not considered what they would get less of at a lower price.
Finally, stay in a selling mode because selling does not stop when the client asks, “What does it cost?” I have often found the key to getting your price is to package it as a sales presentation. This can be the difference between getting the illustration job or not. A meticulous and highly visual presentation of your price demonstrates your professionalism, expertise and abilities. It will help the client decide to hire you instead of a competitor. It will help you get the work because it explains to the client the value they will get for the price they will pay. More importantly, the person you call client probably has to get this approved and needs something to show around and help get you the job. Today, many estimates are delivered electronically, so creating a PDF of all the parts will make sure the client sees the entire package and can't lose any of the pieces. The best way to package your price is to be prepared-plan ahead—to have all four parts of a more effective cost proposal ready to put together: the contract, the cover letter, samples of your work and your third-party proof.
For the contract, use the industry standard forms with customary contract law to protect you and your client. A good cover letter warms up an otherwise cold-looking contract. It will help your client (or the client’s committee) decide to hire you. Include samples of your work related to the proposal. Never assume the client will remember the work they saw in your portfolio or go back to your Web site when they are deciding whom to hire.
Finally, you can add credibility by submitting third-party proof of your capabilities. This is testimonial to your value. Examples of third-party proof include: testimonial letters from satisfied clients, awards you have won, exhibits, a list of clients, client references and professional organizations to which you belong, anything you can do that will give you additional trustworthiness and help the client make the right decision—to hire you! CA
© 2010 Maria Piscopo