Rating: +0
You sell professional services, repeatable in nature (e.g. seminars or focused consulting). Now, you have the chance of acquiring a new important client. Do you start with a low fee and then raise it in case of repeat business (i.e. after having gained the client's trust and explained to them your first time's fee was too low to be hold over time) or just apply your usual fee and discount it in case of repeat business ? - the latter option maybe makes more sense from the client's perspective but you could get no first service at all).
Which side are you on ? (well, keeping the same fee is the obvious third option). Thanks.
Antonio,
Lowering prices should never be done in the manner that you are considering. Price is based on many factors of which a few are; what is the average street price for similar service offerings in your market, if you are either to high or to low from that base line deals are harder to close, sales cycles are longer, and you get inspected closer than others; the price differential “without justification” causes concern to your prospects. If there is justification for the extra fees or lower prices then it makes sense.
If you are lower than the rest of the market, your service offerings can be looked at as "cheap", if you are to high you can appear to be "out of touch" with the market that you are supposed to giving advice on. When ever you lower or raise, either or, it should be done with some real tangible reasons.
My price is higher than our competitors because our people are full-timers, not 1099's, we have more experience and successes and bring more best practices to the table, we offer X, Y and Z which differentiates us… Or, our price will be lower for this engagement, if we can count of a 3 year commitment to buy a minimum of 200 additional consulting hours a year. With out that commitment our rates are return to our normal market rates. We are willing to lower our rates to forge a long-term partnership with your firm that will increase both of our revenues, allow us to be a real extension of your business. We are willing to put our skin in the game, can we count on you to do the same?
Always have a rhyme and reason for lowering and increasing prices, something that makes sense, never lower prices on the hope and promise of future business-that’s bad business and de-values your services.
Good Luck,
Peter
November 2008