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|Why do people think that they can get things for free?||Views: 2683|
|Apr 04, 2006 11:45 pm||Why do people think that they can get things for free?||#|
|I have run into a problem, and I am wondering if any other small business owners have encountered the same situation. I am a small business owner of a Virtual Assistant Business.|
I recently had a client (who I have worked with for 2.5 years) ask for a quote for a tri-fold brochure. Upon receiving my quote, she indicated that she felt the price was too high. I told her that it was based on an hourly rate with a time frame of 2-2.5 hours. (By the way, my pricing is competitive with other Virtual Assistants). She told me that she felt I could reduce my price since I was a "work at home" business with no overhead. I told her that I still had to buy equipment, software and supplies, and I had to pay taxes. She said that as a Home Based Business, I should be able to charge her half of the price I gave her and still make a profit.
I politely told her that my price was firm, and she in turn politely refused it.
This was not the first time I encountered this situation. I designed a website for a client, and he accepted my quote with no hesitation. However, he kept adding on additional features that we not included in the pricing. I did a couple of the additions as a courtesy, but when they became outrageous, I told him that I would have to charge him. He got upset, and told me that as a home based business I should want to please my clients.
I told him that pleasing my clients was separate from making a living.
Has anyone else encountered this sort of situation? If so, how do you handle it? If you have not run into this sort of thing, how would you handle it without losing clients??
Clark Business Solutions, Inc.
"One Company. Many Solutions."
Private Reply to Bonni Clark
|Apr 05, 2006 12:58 am||re: Why do people think that they can get things for free?||#|
|Hi Bonni, |
I fully understand what you're going through. When I first started out, I did run into the same problems that you are facing.
Over the years though, I've learned to handle these issues. Here's what I think are a couple of tips that might be useful for you to handle this kind of issue:
1. Know whom you're going to work for
You should evaluate your client before taking any project, and make sure you're comfortable working with them. This will really save you a lot of frustration(feature creep) or not getting paid.
2. Bill On Time
Once you take on a project, make sure you send your invoices out in a timely manner. Create an invoice that looks as professional as the rest of your work, and send it within 12 hours of completing a job to the clientís satisfaction.
3. Donít make assumptions too quickly
If you donít receive payment on time, give the client the benefit of the doubt for a few days. Then follow up with the companyís accounting department. Be pleasant and courteous, and ask what the payment status is. Anger and nastiness won't speed up your payment and will only make future contact unnecessarily stressful.
4: Establish late fees, penalties up front
At the start of any project relationship, make sure your client understands that you charge late fees for delinquent accounts. Your invoice paperwork should indicate this information.
5: Handling a deadbeat client
If, despite all your professional billing approaches, the client still hasnít paid, itís time to send a formal debt collection letter before you turn the matter over to a collection agency or take the client to Small Claims Court.
Hope this helps, and I wish you success in your business.
Private Reply to Ghazali Ridzwan
|Apr 05, 2006 2:39 am||re: Why do people think that they can get things for free?||#|
Debbie Fortier-Success Leaves Clues
I to understand some of your frustration.
May I ask you "do you have to inform them of the fact you are a home business?
An office is an office is an office no matter the location and you do have overhead as you stated.
Private Reply to Debbie Fortier-Success Leaves Clues
|Apr 05, 2006 6:11 am||re: Why do people think that they can get things for free?||#|
| Hi Bonni ~ |
I understand your frustration completely. I recently signed a contract with an organization that provides support to families of deaf children in British Columbia. I will be doing monthly teleclasses for them as well as private coaching to the parents who are referred to me. When I gave my price for the teleclass, the person I was in conversation with, felt it was much too high. I explained to him that most of my colleagues who offer teleclasses for a fee, charge per person and can get up to 100 people on a call. What I'm asking is a FRACTION of that.
As well, as I'm a parenting coach I get people asking my advice all the time and I'm happy to offer it. However some will continue to ask and I am put in a position to say that parent coaching is my job and they might want to consider working with them. I have had many clients who are grateful for what I am able to offer and are more than happy to pay for my services. There are others who appreciate the service but don't see it as something they would pay for.
We all have to stand firm and be prepared to walk away if someone is not prepared to pay or feels they're being overcharged.
Private Reply to Barb Desmarais
|Apr 05, 2006 6:43 am||re: re: Why do people think that they can get things for free?||#|
Running a business out of a home office or having an office in a commercial
building accounts for very little difference in overhead.
I have done both. The commercial office only added a couple of hundred a month.
(Advantages of living in a small town perhaps).
However I do have a significant investment in equipment.
2 computers, 5 monitors, printers, scanner, furniture, and other peripherals
cost a lot to purchase and keep up to date.
The computers alone cost well over $3000 and the monitors close to another
$2000. Heck, my mouse cost me over $80 good Canadian dollars. (Logitech MX1000
Laser Wireless Mouse).
Then there is software, man is there ever software.
MS Office, web design software such as Dream Weaver, Adobe GoLive, Front Page,
Net Objects Fusion.
Graphics programs, Corel Draw, Paint Shop Pro, PhotoShop, Print Shop Pro, Quark
Express, ($1200 alone for that one).
Computer and office security, back up software, firewall, Anti Virus, cPanel
server management software and it doesn't stop there.
I could list a couple of dozen more industry related software programs and/or
If you are a professional, your investment into the tools of your trade are
going to be high.
Just because you work out of your home does not mean that it is cheap.
It means that you have chosen that type of work environment/lifestyle for the
benefits not the economy.
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Private Reply to Reg Charie
|Apr 05, 2006 2:02 pm||re: Why do people think that they can get things for free?||#|
Frankly it's nobody's business how you calculate your fees. And you should not feel as though you have to justify them to anyone -- even a current client. Just don't do it.
One of the ways to nip that type of questioning in the bud is to clarify the anticipated budget in the prospect's / client's mind prior to providing a quote. It's as simple as asking "What's the ballpark you had in mind to spend?" or "What is your planned budget for this item?" Knowing the answer to this question up front can help you determine if you even want to proceed further with them. Not knowing the budget in advance wastes your time and theirs. (Hop on over and read "I Should Take My Own Advice!" at http://www.allbusiness.com/blog/JustForSmallBusiness/3357/000700.html )
That said, a client sending the message that yours did may be on the way to being a fired client (in my book).
Get your daily dose of business tips at
Private Reply to Denise O'Berry
|Apr 05, 2006 5:03 pm||re: Why do people think that they can get things for free?||#|
Eduardo R. Montesinos
It happens all the time, and all over the world. Itīs part of the way big companies see you, small.
Do not pretend to be a giant if you are not, it is better to be honest, but you could make some little efforts to market your image much stronger and bigger than you really are.
Private Reply to Eduardo R. Montesinos
|Apr 06, 2006 2:33 am||re: Why do people think that they can get things for free?||#|
My favorite technique for dealing with "feature creep" - get it in writing!
If a customer calls me and requests changes in a phone call, I will either ask for the details be sent to me in an email, or I will write up my notes of the call and send them in an email to the customer.
Doing this documents the changes, and also allows me to attach a price to those changes.
If the customer objects to the price I quote, I tell them I will requote the project if they will indicate the pieces to leave out. Or I simply say "I'm sure you'll find my prices to be competitive. Feel free to shop around!"
Usually this isn't an issue, however, because I try to convince the customer to use my services regardless of the price. My knowledge of their industry, my technical competence, my communications skills, and my personality all come before the price of my services.
P.S. Never talk about how much anything costs! Talk instead about how much value you provide!
Private Reply to Kurt Schweitzer
|Apr 06, 2006 4:01 am||re: re: Why do people think that they can get things for free?||#|
| Exactly! |
I agree with Kurt... all the way around!!
Keep in mind the extreme importance in describing your "features and benefits." ( yet another Mission Statement / Elevator Speech for us to memorize)
Having this information handy will be of great assistance in unexpected situations.... especially when a client feels an indifference ...
The goal to re-describing your "features and benefits" would be to move the buyer to emotionally reinvest in you....
A push without pushing...( very important) Like a good waiter.. there, but not intrusivly servicing your table...
We want the client to re-evaluate the reason why they came to us in the first place! That way, you can move them into the next step.... "Close"!
Ask yourself the features and benes to working with you...
write them down.
Hone them into a few short sentences.
Memorize it and practice so it flows in all methods of communication!
Good to look in the mirror... if on the phone, smile... it will make you sound more pleasant, especially if in a flight or fight mode...
Private Reply to GiGi Gaggero
|Apr 06, 2006 4:46 am||re: re: re: Why do people think that they can get things for free?||#|
| Correction: In last paragraph.. I meant to write: "Good to look in the mirror while practicing your speech." |
Private Reply to GiGi Gaggero
|Apr 06, 2006 5:19 pm||re: Why do people think that they can get things for free?||#|
Some great advice here. I also work from a home office but have never had anyone question my quote because of that. I think you handled it perfectly by not compromising your integrity. I agree she sounds like a problem client.
I have also had clients that try to add work to the project, especially web site development. I also do user interface design and have had clients ask for more design revisions than agreed upon. I will usually do a few things for free but then say I will have to charge for additional work and stick to that.
I always include in my work agreements specific information about what is included in the cost. In the Scope of Work section, I'll state how many revisions are included in the cost. Then I'll add the sentence "If more changes are necessary due to client revisions and/or additions other than designer error, they will be billed additional to the cost listed below."
In the Terms section, I include this: "Quotes are estimates based on information obtained from client. Should the scope of the project or type of work be revised, this quote is subject to revision."
I realize she was questioning your price even before you wrote up an agreement, but this helps with feature creep.
JM Design Inc.
Private Reply to Joanne Meirovitz
|Apr 11, 2006 5:43 pm||re: re: Why do people think that they can get things for free?||#|
| This is a more generalized answer, but in my experience, people usually expect to get things for free because they are conditioned to do so. If you use a free offer to get customer's to use your services, then beware because you are feeding their appetite for free products and services in the future.|
A better way to get new customers to try your products/services is to set a good precedent up front and charge for products but use a 100% Money-Back Guarantee to take away the customer's risk in buying. This has the same effect as a free offer (i.e.- no risk), but it does not condition the buyer in a negative way.
In effect, you are putting your money where your mouth is. This increases the customer's confidence in you and encourages them to give you a try. It also conditions them in the proper way to expect to pay for something that is worthwhile to them, but they won't have to pay anything if it doesn't meet their needs. And trust me, if you meet their needs, they will not ask for a refund.
I hope this helps.
The Business Market
Private Reply to Tom Parsley
|Apr 12, 2006 9:52 am||re: Why do people think that they can get things for free?||#|
|Good advice Tom,|
I would add to this the use of time and function limited trials when selling software/information products.
One of the major obstacles in the digital market-placeis the inability for people to see and touch your product.
Believe it or not, just by seeing a well presented jewel case or box around a CD/DVD in a store dramatically improves the sale of products many-fold. The customer is actually none the wiser regarding the actual product, and indeed, would find out a lot more on-line than on the disk packaging, but the 'touchie-feelie' factor accounts for a lot.
By offering a time or function limited free-trial of our products, the customer gets to enjoy the product, check it's suitability etc. By developing a trial product, say 2-3 chapters of an ebook, or a cut-off date for software is straight-forward and has 'primed' the customer to want more.
'First Impressions Count'.
Update yours today.
Private Reply to Andrew Barnes
|Apr 13, 2006 9:21 pm||re: Why do people think that they can get things for free?||#|
Boy have you been given some good advice here. I have little to add except perhaps a personal coach's perspective.
You handled this client perfectly except you allowed her to engage you in justifying your price (equipment, software, supplies, taxes...). Denise is right. It's none of your client's business.
So when I saw that you justified yourself to her, I wondered if perhaps you need to better believe in your services yourself. Or maybe you have some personal doubt about the perceived professionalism of a home-based business. Doubting our value is common. Believe me, we've all been there. But if we doubt the value and benefits we offer, we tend to attract the kind of clients who will walk all over us. Remove any doubt you might have about your offerings and you'll be amazed at the new kinds of clients you start to attract. Who and what comes into our life is just a reflection of the way we're feeling about ourselves and our products/services.
Yup, there are a lot of people who want to get things for free. But those same people seem to have a sixth sense about who they can pressure. Upgrade your opinion of your biz offerings and you'll automatically upgrade your client base.
"Sometimes I've believed as many as six impossible things before breakfast."
Private Reply to Deborah Martin
|Apr 14, 2006 12:51 am||re: re: Why do people think that they can get things for free?||#|
| I think customers should always be handled with respect even if they are out of line. |
That way you won't have a finger pointed at you. And you can feel good about what your response was after the fact.
I believe the customer is not always right... however; a customer is always a customer.
Private Reply to GiGi Gaggero
|Apr 29, 2006 4:08 pm||re: re: re: Why do people think that they can get things for free?||#|
Norma's Bath & Body
|Some People just don't Understand that you Just can't do something for Nothing. You Have to Be able to Pay Yourself.|
Stick with what you Say. and If that's not acceptable with your Clients.. Then they have to move on.
I understand how we don't want to Lose any clients. I'm still going through this. But we can't do one thing for one Person and do something else for another client. we have to stick with it no matter what.
and Rejections arn't a Good Feeling. But There will be Others who will accept your service with the Price that you put out there to offer.
Norma's Bath and Body
Private Reply to Norma's Bath & Body
|May 09, 2006 12:43 am||re: re: re: re: Why do people think that they can get things for free?||#|
|This topic is on my top ten pet peeves list. I deal with it all of the time and each time it gets a little bit more difficult for me to be nice and "professional".|
But you do what you have to do.
Bold Business Talk
Unconventionally Honest Business Talk Radio
Private Reply to DJ Nelson
|May 23, 2006 10:03 pm||re: re: Why do people think that they can get things for free?||#|
Thank for sharing this advice - I had not heard of H.E.A.T.
and this is great. I will write this down for future reference.
Xocai Healthy Chocolate
Private Reply to Amanda Martin-Shaver
|Jun 06, 2006 12:53 pm||re: re: re: Why do people think that they can get things for free?||#|
I had the same thing happen to me a few months ago with my first client since leaving full time employement to work for myself. I ended up with my rates been discussed in the open office by the client for all to hear and being taken into an office by 3 people to talk (that's one word for it - it felt more like a bullying session)about my rates!! Not a great experience.
I learnt a few things not least about having a clear terms of reference at the begining. For me the BIGGEST learning was that they were just reflecting my own belief about the charges. I knew I was charging a competitive rate and yet did I really think I was worth it? If I listened to my internal dialogue the answer was "no" what ever I was saying to people or myself.
So I worked on a few things - my relationship with money (It's just energy and it's ok to have it)and my beliefs about myself (I do add value and do have something to say). Since then it's as if I'm dealing with a different client and different world out there. Money is coming to me easily and effortlessly and without any need to negotiate. For example one client just sent an email saying invoice me for 2 days work @ x/day when we'd agreed I was doing the coaching in lieu of future work!
Love and light
Private Reply to Alison Smith
|Jun 20, 2006 5:53 pm||re: Why do people think that they can get things for free?||#|
|I've run into the whole "feature creep" thing before. I ended up only getting paid half of what I asked for, which was already half of what I normally charge. After that, I made a strict process for dealing with contracted clients that I stick to every time.|
1. Get every requirement they want, in writing, up front
2. Don't do any work without a contract in place
3. Nothing is FREE! If they want to feel special, build value in what you're giving them rather than giving them something else, or a discount.
4. Make sure that they understand (up front) that if they want to add anything else, you will charge them for it. They need to understand also that your first estimated price quote for your services is not a concrete one.
5. Set up a project review meeting about a quarter of the way in. This way, you can tell them if they need to pay you more for what you're doing after you've already taken count of what needs to be done for the project.
6. Finally, make sure they understand each of the previous steps, and make sure that you include the review meeting step in the contract, and say that prices are subject to change.
After creating these steps and following through with them, I've never gotten gipped, or ripped off (doing too much work for too little pay) since.
Private Reply to Nathaniel Gibson
|Jun 24, 2006 7:50 am||re: Why do people think that they can get things for free?||#|
Nothing is free in this world, often times however there are things masking the true price.
You know in your case lowering your fee would mean lowering the quality of the work you can do.
I recently coached a VA into firing all her old clients and charging $60 an hour. She is now enjoying working with less people, earning more money and is valued for what she does.
The biggest mistake anyone can make is to appologise for their prices.
Someone who disputes your fees from day one is not an ideal client and the conversation should stop there, you are just wasting your valuable time and energy, when you could be pursuing much more profitable persuits.
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Private Reply to Krissy Jackson
|Jun 28, 2006 3:01 am||re: Why do people think that they can get things for free?||#|
This really hit close to home today.
I ask that alot too!
Why do people think the world is going to drop in their laps?
I was calling leads for my company and i swear 10 people said they didnt have any investment but that they wanted to make over $5k a month!
They wanted their own business but had no $$$.
What are people thinking.
I learned at a early age... nothing in this world is given to you.. you have to take it..
I paid for everything i have and would never expect to get anything for FREE!
You should check out www.danijohnson.com
She talks about this..
I like to call it welfare minded....
Just remember ..you are qualifying and disqualifying people to work with you.
Dont go less on the prices for your work.. you are worth every dime!
Katherine Kalolo Ahching
Independent Associate Pre-Paid Legal
Private Reply to Katherine Ahching
|Jul 12, 2006 3:44 am||re: Why do people think that they can get things for free?||#|
| Hi Bonni,|
I agree that it shouldn't matter if you are a home based business or not. You are a business owner and you set your prices not your clients. That being said - I personally offer discounts & freebies for clients that a) I like and b) are trying to get their business off the ground but in your case the client was an existing client for 2+ years - not the same thing.
The only thing I can offer is to make sure that all "quotes" are in writing and that the quote covers all foreseeables (eg: in the case of your web design client set out your fee for any changes or add ons - making sure the client understands that changes are above the intial quoted price).
That's my 2 cents from a fellow VA
Martin Management Virtual Professionals
Private Reply to Jill
|Jul 12, 2006 3:55 pm||re: Why do people think that they can get things for free?||#|
I have only read your original post and not the responses, but your post touched on SO MANY of the pains that weíve felt that I had to just start writing. We've overcome many of these obstacles and I hope our experiences will help you.
First, you have to stop referring to yourself as a home-based business owner or small business owner RIGHT NOW, and start referring to yourself as an entrepreneur. The difference is psychological but so important. You're taking a risk, seeing opportunity where others don't, and those are the definition of entrepreneurship. This slight difference in your own perception of yourself will rub off on clients, who will start to see you as the professional you are - which will go a long way toward stopping this nonsense about your prices.
Second, how on earth are you doing brochures in 2.5 hours?!? A good brochure takes anywhere from 8 to 16 hours - and that's just a regular tri-fold. You have to do some research on what others are charging and go with it, so a couple of reasons. One, if you don't charge enough people won't see the value of your work. They'll see cheap/inexpensive and think the same of your quality. Second, when a few people charge less that the rest of us it hurts us all. Clients don't know the work and creative effort that go into a brochure and assume that if you can do it in 2.5 hours I should be able to, too. As a professional copywriter and designer I'll tell you a great brochure cannot be made in 2.5 hours.
Third, more pricing. Do your research. Get a worksheet to help you set your prices. We worked with a business coach to reevaluate our pricing, and realized that we should be charging $75 and hour rather than $60. Since making that change we've gotten TONS more business, and from the type of clients we want - those that pay willingly because they value our time and expertise. Check with SCORE about getting a free business coach. Itís a great organization of retired CEOs and executives who offer their expertise free of charge Ė you canít beat it!
Fourth, more pricing again! You canít quote on an hourly rate Ė quote on a project basis. Itís really none of their business how long it takes you, and all their concerned with is the bottom line, anyway. When clients see hours on a quote they think the time youíve quoted is negotiable, and itís not. It takes as long as it takes to make quality work, period.
Fifth, you do NOT need to be in a position where you argue about your pricing. Our pricing is based on our overhead, expenses, and the profit we want to make. The minute someone starts to argue with me about the price is the minute I say "I don't think we're a good fit for each other." Because not only will they argue about price - they'll want work done immediately, will take forever to pay, and will generally be a pain in the butt! So, fire those clients ASAP!
I hope this helps you - I know since we've made these pricing changes and stopped being afraid to turn down the wrong type of clients we've been much more profitable, and a lot happier.
It's IMPERATIVE that your prices are based on science and the facts of your business - including profit margins - rather that picking a number out of the air. Your confidence in your prices will increase, and again this will come across to your clients.
Private Reply to Mandy Minor
|Jul 16, 2006 6:22 pm||re: Why do people think that they can get things for free?||#|
|Hello Bonni, |
I can sympathize with your problem totally. I've been a VA since 1998 and I have fired several customers for exactly what you are talking about. The main problem is these clients are looking for the cheapest and not the best.
When I closed in April 2005, I thought my troubles with difficult clients would be over. Imagine my surprise to find myself back in business in another state nine months later and under very taxing conditions.
Did I hope that nine months and another state would make for better clients? To a degree, yes. Did I find that to be the case? Unfortunately, no.
My policy now is no price bargaining. If you can't afford my prices then you and I can't do business together. I've had several clients ask for bargain rates even though my rates are as low as I can make them.
I've got a person who owes me money right now from June who refuses to return my calls, disregards emails and letters. Now you would think this person owed me hundreds of dollars. Actually, the invoice was for less than $100 but that just makes the extra time and efforts to collect all the more insulting. The sad part is I was looking forward to helping this person rebuild their business and become the success they described being.
I've spoken with several VAs who have the same problem. The general consensus is to work on retainer alone. If you don't get the money up front then don't do the work. It's sad to have to go to such lengths to be paid but it's become an epidemic.
So, no you are not alone in this problem. Perhaps the best thing to do is just fire this client and move on. I have fired one client already this year and I'm having problems with another looking for something for nothing.
I love my work and enjoy doing it to the best of my abilities but I can't and won't work for people who don't appreciate quality over cost. I pay more for things that work well for me, what I need is clients willing to do the same. Take care, good luck and God bless.
Gazelle Simmons, Virtual Assistant
Let me help you!
Private Reply to gazellems
|Jul 17, 2006 2:51 pm||re: Why do people think that they can get things for free?||#|
|Unfortunately it's not limited to your industry but permeats many service industries! I hear it all the time from webmasters, printers, coaches... It's the misunderstanding that many "employee minded" folks have about people with a particular talent or service. THey don't understand that their time is valuable and they don't fully equate their time with making a living. They don't see how bizzarre it would be for their boss to ask them to work for free. |
If you were to ask them if they would expect to have a dr give them free exams they would probably say no but that's about the extent of it.
Another issue is that there is so much free information on the internet that many have come to expect that they shouldn't have to pay for something if they find it on the interent or find YOU through the internet. It's a misperception.
One of the things I teach in my eBook is to be careful the way you present yourself as a small business owner and this will minimize the Moochers! People don't expect to get a product for free, but they do expect to be able to get some amount of information for free. IF they see the whites of a hungry amateur small business owner eyes, they WILL haggle!
I sell products as well as provide several services. I do notice that when folks want my eBook or my children's curricula, they tend to expect to pay. However, when they ask me to teach a seminar/workshop or come speak to their internet group or write an article, some have the idea that it will only take a few moments of my time. Or when they ask me to help them with a communication issue they are having with their spouse or children...
I usually handle it one of two ways. I do tend to give away a lot of free advice, articles and so on, but I do so when I have time, the need is great and I think I can make a difference, or it is good advertising for my company or will brand me more as an expert in my field. If I don't feel this way, I will tell the person that I just don't have the time. And that is usually true because aside from my website, I have a Yahoo group, an annual online convention, a blog, two homeschooled kidlings and I write for various publications.
Mostly I feel that what I give away freely comes back to me in blessings of one sort or another but sometimes I do have to put my foot down and not do what someone is asking of me.
In His Service,
Communication Skills Taught with Humor & God's Word
Endorsed by The Old Schoolhouse Magazine!
Check out the Misadventures of Foot in Mouth Man!
Private Reply to JoJo Tabares
|Jul 21, 2006 7:31 pm||Here's the Deal!||#|
Nancy Houle TrainingBusinessPros.com
What kind of "offers" have you designed that worked for you (that generated leads and/or sales)?
I read all the wonderful insight shared on the previous thread " Why do people think that they can get things for free?"
In my experience, people think they can get things for free - Because they can!
In North American culture, we have taught consumers to expect things for FREE! Buy now pay later...culture. Immediate satisfaction. In fact, most (not all) marketers are so hypnotized by this "FREE" mentality, that most are doing it...well, because it works.
buy now and get this free dvd,
open an account and get a free ipod,
buy today and get over $400 of free bonuses,
buy this cell phone and get this # of minutes free,
free weekend calling,
free coffee with that meal,
2 for the price of one - (someone eat free!)
children eat free,
free points with that purchase,
free rewards for your business,
free seminar, free tele-seminar
free access, free parking
1 month of free newspapers, free ebook, free magazine
and now FREE long distance
and whatever free stuff you can offer to get them in the door to convert them into long-customers, it's the price of customer aquisition.
Well, you see what I mean. The list goes on and on.
So, in a culture that likes FREE things, plus added value on top of the free things, you can see why a customer finds it difficult when someone shoots straight from the hip and gives a "straight cost".
From the original post, it sounded like someone was looking for "the deal". They tried to leverage the fact that because the service provider is a home based business, they should get "the deal". Truth is, the customer would come up with all kinds of things to get "the deal". Be it you (the home based business), or the WalMart or the Microsoft. And why shouldn't she expect one? She's been trained by our consumer culture to expect a deal!
Okay, now that I've focused way too much on the problem, I'd like to offer a solution!
How about saying "the brochure is $300.00".
She has an objection and says "its too expensive (a.k.a. i want the deal) ".
Instead of defending your price you say "tell you what, because I value your business I'll give you $100.00 for every referral that signs up with me as a result of you. That way, my service pays you! Oh and, I'll make your brochure a priority to make sure you get it on time.
How would you like to pay for that, visa, mastercard or check?
That's just one way of dealing with that specific situation. However, the person in sales must be aware that structuring the 'offer' or "the deal" is very important in closing any sale.
But don't take my word for it. It's just my little rant on today's business and consumer climate. If you understand how to design your offer - "the deal"- it's easier to cope with the folk that want "the deal".
What kind of "offers" have you designed that worked for you that generated leads and/or sales? How do you deal with the cost of customer acquisition?
Private Reply to Nancy Houle TrainingBusinessPros.com
|Jul 21, 2006 7:47 pm||re: Here's the Deal!||#|
| Nancy Writes:
Instead of defending your price you say "tell you what, because I value your business I'll give you $100.00 for every referral that signs up with me as a result of you. That way, my service pays you! Oh and, I'll make your brochure a priority to make sure you get it on time.
How would you like to pay for that, visa, mastercard or check?"
Nancy- I enjoyed reading your whole post. You really hit the nail on the head! Just wanted to say: "I could not have said it better myself!"
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Private Reply to GiGi Gaggero
|Jul 26, 2006 4:59 pm||re: Why do people think that they can get things for free?||#|
| Hi Bonni,|
I'm sure you've read all the posts here, and while I waited a while to respond, I felt it was important as I used to have that problem, but thankfully haven't in the past 5 years. Here's why:
1. EVERY project (big or little) gets a project proposal outlining every detail of what I heard the client wants. There is a place for them to sign before starting a project.
2. EVERY project with a new client is charged a half up-front deposit. This tells you who's serious about moving forward or not. If they don't want to pay the deposit, you don't even think about the project. If they pay a deposit, they are less likely to be the type of client to jerk you around.
3. EVERY addition to the project gets written up as a "Change Order" on a new piece of paper BEFORE the addition is done, and it gets approved by the client via a signature which includes an estimate or actual price of the addition. I do this if someone want to purchase a piece of stock art, make additional web pages to their site, do another round of edits on their brochure content, or even make a 3rd round of edits on something that we agreed would only include 2 rounds of edits.
4. Do not mention you're a home business with clients. If asked, say you have an office space with all the computer equipment necessary to do the task. If pressed, you can tell them what you like, but don't elaborate too much. If they challenge you on price, say your prices are competitive and if they can't see the value in using your services, then perhaps you're not the right fit for their needs.
5. No matter how you feel on the inside, you NEVER let the client know how much you want to work with them. I know this sounds a little silly, but you need to act as if you don't need this project. You are there to do business with this person, not become their friend. If you are not the right fit, then you are not the right fit, period. You don't want to go thru heck with someone on a project just for the money. The sooner you learn this, the better off your life will be. It's rare these days that I turn away business, but in the beginning, I had to learn who my target market was, and really turn away business that wasn't a fit for me. It was very difficult, but my life has been much easier as a result.
6. I would recommend that you use QuickBooks for your business for invoicing. You are able to track your invoicing very easy, and able to email or print out invoices as needed. When someone is one day late with a payment, they get the first warning letter. After a week, send them the late fee invoice. MAKE SURE that at the bottom of EVERY invoice there is legalese describing your terms and late fee structure. This is the ONLY way a case will hold up in Small Claims or larger courts.
If you are professional in demeanor, appearance, and delivery of products/services, you will start to see your clients will take you seriously. Until you believe in yourself, stand up for your products/services and rates, you will not have success stories. And, before I forget, a final thing to keep in mind that if you're talking price before value, you've already lost the sale.
Make sure you're talking about all the things you can do to HELP THEM. You should be speaking in the WIIFM tongue. Meaning, "What's In It For Me?". If you're not showing the prospect the benefits you offer them before you talked price, then you've already lost. You need to show value first, then when it's necessary to talk price, it's like this "And you get all that for just $xxx". Then they'll sign on the dotted line and give you a deposit if you're the right fit for their needs.
And use that phrase...I'm sorry then, I don't think I'm the right fit for your needs. Or, I'm so glad that we're the right fit for your needs. I look forward to working with you!
There's so much more to say on this topic, but that will get you started, along with all the other great advice. If you ever want to PM me, I have vast experience in this area, and vast success at this point. Please don't hesitate to PM me with questions, and I'll be glad to help.
Oh, and by the way, I'm a home-based business!
CoCo & Associates, Inc.
Private Reply to Colleen Connery
|Feb 27, 2008 5:00 am||re: Why do people think that they can get things for free?||#|
|Bonnie and those viewing,
There is an ancient proverb that goes like this:
"It's worthless, it's worthless!" the buyer says, but after he is on his way, he gloats."
Here is a daily reminder:
If I, the consumer, find your product/service is not worth the price you place on it, then it is worthless to me. And I might go as far as telling you so.
Or so I may lead you on to believe that I think it is worthless. But you won't know that.
If I can get you to go down just $1 or add something more to your offer, then I have won and go about my day knowing I succeeded in getting you to give me what I wanted.
It has never been about type or size or where your company is located. For 1000's of years the public has always belived that they should get something for nothing.
They will elevate their reasons why they are entitled to a discount, regardless of how ridiculus they sound, and will try and get you to defend your pricing/fees.
Never take a defensive approach with a client, for it is but yet another tactic to get you to reduce your price or add more then what was agreed upon.
Your offensive move should be simple and to quote a wise women, "Keep it short, sweet and to the point!" Thanks Mom. Your client will realize you provide no room to negoitate your pricing.
For those that are existing accounts, do not defend, offer packages that are in their price range. Meaning, if "A" offer is $$$, but your client has a $ budget, offer them a "C" package.
Never take away from your offers. Have multilevel offers such as "A" = $$$, "B" = $$, "C" = $, and so on.
For those that call in for pricing/fees do not give any. You have to gather all the information you can and then put together three package choices.
Now this person will decide based on choices offered and will remove the need to argue or discredit your prices.
Remember you are a business equal.
Private Reply to Woody Quinones
|Feb 27, 2008 6:09 am||re: re: Why do people think that they can get things for free?||#|
|I had to pipe in here. I have worked from home for over 10 years and I hear you completely Bonnie. It is awkward, frustrating, and it can hurt your feelings. You want to do the best damn job you can for them but they under-appreciate your services. Worse, you work from home, they know it, they wish they did or they could, and you are the bad guy. Or in your case lady, and a lovely one at that I might add.|
I have found the best thing to do is exactly what you did - don't do it. It kills to lose the business but if you conform then it causes many more problems. You will grit your teeth the whole way through and then things never seem to go right.
Let her find someone else to do it. Only 2 - 2.5 hours? Good lord. Like you charge 5K an hour or something. Like you are going to create that brochure and sit on a beach for the next year.
But I do have one suggestion to offer if you can do it - try and only work for existing businesses that have been around for a few years. Preferrably before the Internet began. Small corps are the best. They never do this. It is one thing I wish I had concentrated more on earlier in my careeer because things like this always pop-up with very small businesses and especially entrepreneurs. You gotta fight for ever penny with some of them and deal with all their cry-on-my-ass BS. Then they become a big company with multiple employees and it is not like they send you a check for 5K and say, "thank for keeping those invoices down".
You ever had a client who calls you up to argue about $20.00 on an invoice? I know you have. People like that drive me nuts. It is just unappreciative BS.
Tell her to go hire a full-time developer and see what she says :)
Private Reply to Rob Taylor
|Feb 27, 2008 3:13 pm||re: Why do people think that they can get things for free?||#|
|Good for you for sticking to your guns. Keep in mind we teach people how to treat us by what we allow. Also remember that when people get things for free there is no value. I always remind people I would not want to go to the moon on the wings of the cheapest bidder. If you can discount then your work is of lesser value.|
So why would someone want to do business with you? What makes you and your service different from others? What added value do you offer your customers? What makes your customer service different?
These are important for the customer to know. What is your area of expertise? If they think you should charge less they do not see value in what you do, so what is your value? Is it your experience, your fast delivery, your custom work, your ability to work different hours?
Do be firm in the fact that you have done your homework on what the going price is for your service, and that you give excellent service. If you were to charge less the quality of your work would go down because you would have to make up the difference in quantity and not quality. You refuse to do that because it is your reputation. Which do they want?
Just my thought,
Private Reply to Barbara Tyler
|Mar 17, 2008 7:43 pm||re: Why do people think that they can get things for free?||#|
|Yes, I believe anyone who has ever been in business has had the unfortunate experience of dealing with people who don't understand the value of the products we offer. It will happen time and time again until you learn to "graduate" from the lesson.|
Here are some thoughts...Perception is the problem, not value. Try turning the tables on your customer, it really is fun...Consider the fact that if your customer is asking you for something then it is safe to assume that they have customers as well. Ask them if they are the lowest vendor for their services and ask them to defend their product. Ask them if the vendor who is the lowerst is always the best value. If they answer with a resounding "yes" then they are full of it.
Invite your customer to shop around to see what they get for their money. Stand your ground and let them know that they have built a relationship with you and that is worth something extra...if they don't believe that, then let them shop elsewhere...but make sure you leave the door open for them to come back. If you do this correctly, 9 out of 10 times, your client will come back and you will not be having this conversation ever again. If you give in and collapse your price, you will be forever defending your value...Just a thought.
Rob...you can always tell them to buy my book...Suck it up, Buttercup!
Have a great day and good luck!
Private Reply to Robert Cass
|Mar 18, 2008 1:17 am||re: re: Why do people think that they can get things for free?||#|
|This was a great thread to resurrect! Good ideas, everyone. |
Have you noticed though, that it isn't just customers who want a deal? How about the people on Ryze...do they want "free" too?
I've had accountant clients, complaining about not getting enough referrals. "How many people have you referred to your business clients in the last month?" Silence. Ah huh.
It can be useful to observe - are we doing the same thing we are complaining about from others?
Someone raised an interesting point in the thread above, that was well stated, and pointed to what might be the real issue, and that is that closing the deal is sometimes the difficult issue for business owners. Making objections, is a customer's "job". Dealing with objections, is part of the territory. Mostly it happens that the real issue may not be the one that they say.
"Too expensive" - is a reflection of their values, not necessarily the value of your product. Behind "too expensive" objection, may be an underlying fear "I don't think I can afford this and I am not sure that it will work anyway." They may not really understand how important it is to get the brochure out there, or undertake a written marketing plan, or spend money on advertising, or whatever. They may not believe they need a brochure... or they may be leery about getting one because that commits them to take action and face possible change. Scary!!! ;-)
On the other hand they might be just yanking your chain, and that's because they think that is part of the game. That's about what it is too. And it helps to recognize that there are things that will happen in running a business that will stretch our comfort levels. Getting your dime out of those clenched fingers might be one of them.
But hey, you got us, when it's all over.
Just another Story Along The Way, eh?
I saw a speaker once, who owned a bakery in a very small town. 3000 people lived in the town. He turned over $2million each year in stock. His view on discounting was simple. He sold retail. When asked for a 20% discount on one large regular bread order, he said:
"Sure. I can make it, but
you probably won't like it much.
Which 20% of ingredients do you want me to leave out?"
Private Reply to Lindy Asimus