Avoiding CHEAP Clients
mariagudelis | January 11, 2010
Many of my students struggle with the question of, “What should I charge?” In fact, sometimes they feel downright uncomfortable about charging $500 for a service they only pay maybe $100-200 for. Especially after they talk to some smaller businesses whose marketing budgets are almost non-existent.
Well, a student of mine–with the same question in his mind–introduced me to an article I think really clarifies this subject very well.
Would love to get your thoughts on this one!
I can understand why the low budget clients can be a royal pain. They are usually stressed out and are counting every dollar. Im sure we can all relate.
I found that dealing with friends can be even worse. This is because you have to give them the “insiders price” which seems to be a never ending supply of time. (It does feel good to help though)
Its much easier to fire a cheap business owner than it is to fire a friend.
Ladies and Gentlemen, take my advice -
Dont work for friends and increase your price!
Andrew Douglas
“Im from Canada eh!”
Twitter: mariagudelis
says:
Totally agree on your advice Andrew:
Great to see a fellow Canuck here!
Price on the high side. If the prospect thinks your program is too much for his budget, don’t drop your price ask them which services they want you to omit.
You would be surprised how they squirm when you start talking about omitting services that they think are vital (they will think all the services are vital if you sold them right). The prospect will often change their mind and go ahead with the whole project as you first quoted it.
If sold right they will see the value and know the package is worth what you are asking. They don’t want to short change themselves by dropping some of the services.
Once again great info Maria. Low budget clients are very easy to find, and we have a boatload of them right now, but as you have taught us, you better have the so-called “rinse and repeat” product to put them into. Too much customization and they will kill your profit. Thanks again for everything!
Twitter: mariagudelis
says:
Thanks Rodney – yes -the only time it is no ‘rinse and repeat’ is if the overall project is over $25,000 – then some customization can be done…
e.g. publishing a book on Amazon for them for domination in their marketplace
Twitter: http://www.marketinghuddle.com
says:
MAria,
Great article! I find that it is indeed tough to know how to price my services because if I set a price just a tad too high and they say no….then it looks like I’m groveling to come back and lower/negotiate.
I think that in time when there’s plenty of clients in the bag and more prospects in the pipeline it becomes much easier to draw the line.
Mike Saunders, MBA
Twitter: mariagudelis
says:
Thanks Mike! Also – it is great to TEST prices out too on services…that is one of my 2010 goals – to test out combination of upfront price + percentage of increase in sales vs big upfront price.
Option 1 is more lucrative for both sides!
Hi Maria,
I like this approach, Upfront price+% of profits as it shows all have a long term stake in the clients business and I’ve bee approached many times about doing this in Joint Venture arrangement. However, how would you track the % increase in sales from a client as a result of your campaign?
I know some others have said just have the business owner tell you but I would prefer to have some kind of automatic tracking mechanism in place that all parties can view so there’s no confusion to who gets paid what.
Any suggestions?
Twitter: mariagudelis
says:
When I’ve signed a JV deal with a ‘major company’ – it was very ‘legal ease’ and what we did is appoint a 3rd party accounting firm to track that –
When dealing with smaller clients, you can first
1. Ask for existing P&L statements (audited or submitted to gov.)
2. Ask for copies of monthly reports from their bookeeper
3. Go with your gut – it is still easy for a dishonest partner to ‘s__w’ you…so if you sense they are not a good player – say NEXT
4. if a real big deal – you could also hire an investigator to do some due diligence for (that one was a David Chambless idea he gave me when I was interviewing him)
The minute you lower your fees it is over. That client will nickel and dime you to death and bitch and moan about just about everything he can.
What works best for me is to “show him the money” and look him right in the eye and quote my rather hefty fee.
Twitter: mariagudelis
says:
Thanks Jim, create comment! Your style of advice reminds me of Dan Kennedy!
Sorry to go against the grain here but I love cheap clients! I do not seek, nor do I want, high end 4 figure a month clients. My average invoice is less than $500 and I don’t have a single client on retainer that pays more than $97/mo. My services (90% outsourced) are a commodity and I sell them as such. I have a laundry list of services with low fixed prices. They are extremely easy to sell (no PP presentations required) and I sell a ton of them! I set expectations up front and never let a client steal my time. My business plan has always been to seek quantity over quality. In the past I have had “affluent” clients but my life was simply too stressful. The affluent client many times, not always, thinks they know more than you, demands too much and are always complaining about high fees. So, I hope you guys continue to seek the “big guys”, I’ll take the low hanging fruit every day as I have for the last 7 years.
Hi Linda,
Well, your post certainly got my attention! I am a HUGE proponent of the “low-hanging fruit” mindset, but hadn’t stopped to apply it yet to my marketing consulting business.
I don’t know if you work nationwide or stay local, but if you would be willing to talk this idea over with me, I would greatly appreciate it so that I can craft my business into the best possible business for the lifestyle that my family and I are pursuing.
Thanks!
Todd
Twitter: mariagudelis
says:
Hey Todd! do you have my flagship product that helps you get started in online marketing, the consulting money mindmap?
It is here:
http://www.OfflineMoneyMindmap.com – just click here to get it..
let me know if you have it or not and I will also have one of my team give you a shout!
Hey Maria,
When I saw the subject line in your email, I thought you were addressing a question I posed on the forum yesterday. I’m not necessarily grappling with what to charge. The issue I’m having is being lumped into the category of web designer or SEO person vs consultant (most people in my area view them as a cheap service because they are everywhere). I’m actually pretty knowledgeable in marketing & I try to differentiate myself but most people have a hard time with the distinction. (I think because when they hear Internet, they think web designer & now SEO). I’m also running up against “competitors” who call themselves “marketing experts” (it’s obvious from the websites they design that they know nothing about marketing) but they are willing to do EVERYTHING so cheap. I refuse to compete on cheapest price. You get what you pay for.
Twitter: phillipblackwel
says:
Everything you say about cheap clients is true. I have been on the verge of getting rid of one who isn’t too cheap, but very reluctant to spend any more money. It gets bad when they start buying e-books and questioning your methods, wanting to know a lot of details instead of just expecting results.
No more long phone conversations and email!
Maria,
Very timely words. I have learned to use this phrase, “It’s not for me.”
No explanation…it is just not for me.
Then I recommend someone else.
Kenneth
I have pretty good instincts and if a prospect is focused totaly on negotiating price as opposed to the value of the service, I’m out of there.
I go into the presentation by explaining that I will be taking on a limited number of new clients at a special introductory price which is already discounted.
Life is easier when you choose to work with clients who value your expertise and not the nickle, dimers.
This is a very nice article and is very true.
Low price jobs are often a hassle in that you know you’re giving good service, but the client is expecting more and more, yet they are not prepared to pay for it.
When I’m coaching clients on fees, I simple ask them to calculate their cost to achieve their skills, and not just training costs, but the social cost too. Once they do this, they realise that doing a cheap job is costing them money
since they could be earning more from a higher fee-paying client who is happy to pay.
This is a great topic.
Thanks
Geoff
Twitter: mariagudelis
says:
Nice tactic Geoff…
I never thought of doing that as I go after the ROI/results and work out with them
their customer lifetime value
Great stuff Maria.
Good to see you watching Russell yesterday. I was the wiseguy with the busman’s holiday comment.
Twitter: mariagudelis
says:
Hi Neil – yes – I like to watch what Russell is doing next for sure – did your video play ok on it from ustream – mine was freezing up alot….maybe just my connection.
I’ll take a look at the vids you mentioned…they seem long so not alot of time I have now to watch…the beginning looks a lot like the craigslist tactic I teach in my 14 day challenge…you probably already know that
…but yes – consulting is all about the talent arbitrage model…I intereviewed Willie Crawford on my radio show about that…
Click here to listen in on the Willie Crawford Arbitrage Model!
thanks maria, this was a wonderfully timed piece. I was fretting over this when I opened your email tonight. that little birdie in you have sent to me at the proper time.
Twitter: ajsilvers
says:
In my experience a key mistake many new entrepreneurs and marketers make is confusing cost with value.
You could be like Walmart and charge unit cost price + a tiny percentage but then you need massive volume to get anywhere.
An alternative (and my preferred choice) is to price on value.
For example: Selling leads to a law firm for $5 that are worth $50 to them means both sides are getting a great deal. I get $5 per optin to a squeeze page and the law firm thinks they are getting the deal of the week!
It is easy to construct deals like this if you look for the value and stop focusing on cost.
Just my 2cents.
AJ
excellent article and it is one that I think we could actually mold into something that could be said to a potential cheap paying client, my time, experience and value is worth a lot, if you don’t want it then that’s up to you. Never sell yourself short
In talking with people lately, I’m noticing that those who are just looking for “a web site” really don’t have any kind of strategy in mind. The ones who already have a web site but no strategy don’t have any sort of context to evaluate your fees, whatever they may be. So I find myself leaning towards discussing “strategy” (marketing-wise) and “value”. It’s not too hard to come up with ideas they haven’t considered, and they start to see YOUR value!
For example, I met a lady tonight at a meeting who’s a hairdresser with a local (one-person) shop. I’m trading her a 1-hr consult for a haircut.
But I think she’s already on board!
She knows her promo efforts aren’t working, but isn’t sure what to do.
Now, get this….
Turns out she’s from a little village in Mexico down near Guadelajara. When she started doing hair, there were 4 shops in her village, and she worked in one. She had a local family who all loved her and came to her all the time. This is the family that created the “El Patron” brand of tequila. She knows them all personally!
I asked if perhaps she could get some testimonials from them and photos, suggesting it might make a great angle for a promotion campaign. It had never occurred to her!
Also, she has spent a lot of time teaching hair, makeup, skin care, etc. It never occurred to her to make instructional videos for promotional purposes.
Ideas are easy to come up with. Once you can attach some perceivable value to them, they get hooked on the results and aren’t so concerned about the costs, as long as you can show a positive ROI.
-David
He!
You work is profesionaly.
Today I have time for thanking you for you time.
Once again thank for cooperation.
I just picked up a huge client in a very affluent local mall who is MORE than willing to pay a premium with $600 a month recurring.
Last week, I got rid of a client who owed me hundreds of dollars and took up more of my time than any other client of mine and was only paying $50 a month for my services.
‘Nuff said.
Thanks for this, Maria… nice 6am read
John Dennis
Twitter: mariagudelis
says:
Congrats on ‘Firing’ your client John and getting a new affluent one!!!
In my experience, it’s easy to weed out the cheaper clients by quoting high
I have found over the years that the few cheap clients you do get, manipulate more of your time than the ones who pay a premium. That alone was enough to convince me not to work with people with no budget.
When budget is low expectation is always high. Any freelancer should learn to run from the situation.
Great post and great article
Twitter: mariagudelis
says:
Thanks for the tip Brad – yes – I had to ‘fire’ some of my clients that really became as Dan Kennedy would say “Time Vampires” and it was the best thing I ever did for my mental spirit and my business.
You are so right. The no/low budget clients are always the ones that give you the toughest times. When I first started I did a couple of sites on the low end to get my portfolio started. Two of the clients are simply the best and appreciative of the “deal” they know they got. However, there were some that I ran away from like my hair was on fire.