Stop Lowering Your Prices

Start negotiating on value, not on price.

"Is there any way we could lower the price?"

Ugh…not the best response to hear from a client after sending out your proposal. Time to negotiate.

With many freelancers, lowering their prices is the knee-jerk response that kills negotiations before they ever begin. And truth be told, I did the same thing for a long time.

Negotiating is awkward and unnerving. You don't want to lose the potential gig, but you also know you need to charge more. But how do you get paid what you're worth, without lowering your cost?

You start by negotiating on value, not price.

Negotiating on price always has you negotiating on the cost of your work and yourself. Negotiating on value has you negotiating on the value your work will bring the client.

Say your client wants to build a website to sell a new niche product. You know that this website could lead to $5,000/month in revenue (the value) for your client. You're looking to charge $2,000 for the website (the cost), but the client only wants to pay $1,000. You know that no matter the cost of the work you do, the value you're bringing to the client is $5,000/month.

The value your work brings does not diminish simply because the client wants to pay less.

So…how exactly do you negotiate on value?

If you've sent the proposal, and the client wants to lower the overall cost, it's time to schedule another meeting. In this meeting, you'll be asking the client for more information on what's most important for them and their business goals. Are they looking for more sales? More leads? A better brand identity? 

Take that new knowledge, and start creating a new re-prioritized proposal. 

This new proposal will be written out to hit the goals shared by the client. Instead of just having a checklist of items to be completed, this checklist will get the client one step closer to where they want to be.

Your new proposal goal is to remove items from your overall task list to reduce the client's overall cost, so you don't just lower your pricing to match the client's budget. You get paid for the same amount of work you were always going to do, and the client walks away happy knowing they got the result they wanted.

Re-prioritizing the Proposal

The new proposal adjustments will re-organize everything based on your conversation with the client. Each line item will have a direct positive impact on what they're trying to achieve.

If they want to increase sales, your proposal should show which items will do that. If they want more leads, highlight the proposal tasks that will bring more traffic to the site. Move every "nice-to-have" to the bottom of the list. 

After re-organizing the prioritizes, you'll assign each line item a price (if they didn't have one already). The client doesn't need to see this list and the prices; it's more of an exercise for you.

With the line items priced out, you'll see what you can remove to reach the client's budget price. In my experience, I start by removing items from the bottom of the list since they represent the lowest priority to the client's goals.

I cut and slash whatever isn't necessary from the proposal, and get as close to the client budget as possible. Sometimes this even means being a few hundred over or hundred.

TIP: For any items, you remove from a proposal, transfer them into a future task list. After most great client experiences, they'll come back to you with more work. Having this future task list ready means, you can easily transition into creating a new proposal and more work.

Presenting the New Proposal

With the re-organization complete, check back in with the client to present the new proposal. Re-iterate to them their goals, and explain how and why you re-did the proposals to match.

For example, you removed the logo redesign line item because improving the e-commerce checkout experience would lead to more sales. And you could always do the logo redesign down the line.

During the conversation, start with your original proposal's price, and end with the new proposal's pricing. Negotiating in this way sets a precedent in the client's mind of before-and-after pricing that can further validate the negotiations.

TIP: During promotional sales, websites and grocery stores almost always list the original price, then the new reduced price. This tactic is called anchor pricing.

Getting to Work

If all goes well, your client will gladly accept the new proposal! You've successfully negotiated a new proposal where you're getting paid what you're worth, maybe having to do less work, and the client is getting the same value overall. You've nailed the win-win situation to look for when working with clients.

Negotiate Less, Get Paid More

With practice, you'll start negotiating less often and getting paid more than before. By asking the client their budget and business goals before sending the first proposal, you'll be able to create proposals that are accepted more often, with fewer negotiations. 

And those proposals that are just never accepted or heard back from again? Be grateful, truly! Those clients weren't the right fit for you, and you narrowly avoided a terrible experience.

Have you found a negotiation tactic that worked wonders for you? Please reply to this email and let me know!

– Greg Barbosa
twitter.com/gregbarbosa
instagram.com/gregbarbosa

PS: There is only one time I ever recommend someone negotiate on price versus value. That's when the actual value you get as a freelancer will far exceed the cost of you lowering your price. This can happen if a good client relationship means more long-term work, more opportunities, or more experience.

At the start of my freelance career, I charged one client 50% less for a project than usual. That relationship lead to a long-term work contract totaling $10,000.

This skillset improves as you go through the freelance experience. 

App of the Week

This week's app, Timemator 2 ($39, macOS), is an automatic time tracker that makes calculating hourly client work a breeze. It also helped me discover what apps and websites I was wasting most of my time with.

Website of the Week

I love working from home, but sometimes I miss the background buzz coffee shops have. Coffitivity is a site that plays ambient coffee shop sounds to bring you back to a pre-pandemic time. 

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