I had a very interesting conversation with a colleague the other day that really struck a chord. The two of us began our businesses around the same time and as a result, have had the fortune of bouncing start-up questions off each other, which have now transformed into more management and business direction chats. This particular discussion has stayed with me since because it applies to any business, but especially those in their infancy.
When a business breaks ground and starts sourcing out their first clients, more times than not, things don’t go as planned. We think to ourselves, “I have a great product, I have an extensive network, this shouldn’t be any problem.” Unfortunately, as many quickly find out, your dreams cannot be attained overnight, in a month, and more often then not, in 6 months. You will work your tail off for little to no reward. Especially those with little capital to throw at marketing efforts such as print media, radio or SEO services. After some time passes we have the topic of this post. You will undoubtedly compromise your right to be fairly compensated for a premium product or service.
I certainly cannot claim to be innocent of this, and my guess is you can’t either. But, lucky for us both good and bad can come of this. Let’s explore the negatives first.
What you may not realize, by accepting low ball offers not only are you setting a standard, but you are devaluing your business. Your head is telling you, I need to make a sale, and for now this is the best I can get. Instantly, you have given the client control, and a savvy shopper will walk all over you. Instead, try and remember this: I have a premium product, and I cannot be afraid of making a profit. You try to keep your prices as low as possible, but unless your goal is to be the cheapest provider in town, you should not be afraid of saying “Here is the money we’re willing to work for. If not, here’s the next guy who will.” This might come off harsh, but in most scenarios, taking this route will at the very least show the shopper that you are very serious about what you do, and they will respect you for it.
There are also various positives when offering your services at deep discounted prices. Firstly, this is a great way to get new customers to try your offering. By discounting you limit the consumers risk and therefore they will be more likely to take a leap. Also, few start ups will be in the position where they can discriminate too much. Restricting yourself to only accepting the big clients, in my experience, will land you in a hot mess. Once you are established, you may want to do this, but when you are new you never know when one of your smaller clients will send a big client your way. Next, it is a good idea to have a good understanding of your potential clientel and their pain tolerance. If you are going to offer your services at slashed prices, you are going to want to make certain that when you raise them, they won’t all go elsewhere. So, if you must, slash your prices, but not so much that when you have to raise them, the spike sends them running for the hills. Especially since you just exhausted every nerve to be your customers champion.
Something really neat happens once you make it over this hump. Up until now, you have slept very little, worked so many hours that your family wants to disown you and on several accounts you’ve asked yourself “What the heck am I doing?” All of a sudden, and without knowing it, your tone will change from “oh please, let me have your business” to “this is what I charge, it is probably not the cheapest in town, but I am good. If you want quality, this is the price.” The tables turn very quietly, and all of a sudden, you have control. People will be knocking at your door begging you to take their account. Okay, I might be exaggerating, but think about this: why would a highly skilled individual be begging? It is the same reason why it is easier to get a job, when you have one. You now have much more leverage and credibility.
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