6 Things to Do When Your Prospects Say, 'Your Price Is Too High'

By Mike Schultz, Publisher, and John Doerr, Founder

How do you respond when your propsect says, "Your price is too high"?How do you respond when your prospect says, "Your price is too high?"

"Your fees are too high; can you do it for less?"

In the highly competitive marketplace we hear dreaded phrases like that all the time. The easy thing to do is to offer a discount, but that cuts into your profit margins and sets a precedent for the future. You don't want to become a victim of discounting gone wrong.

So, what do you do when clients push back on your fees?

The glib answer is: focus on your value. Trite, but true. If it's worth it to the client, they'll pay for it. But when faced with price push-back, many are at a loss for what to do in the moment.

Here are six guidelines to follow the next time a prospect says, "Your price is too high."{C}

1. Don't backtrack: I was playing golf with a bunch of old friends last summer. One of these gents is an attorney who was speaking about his services with another old friend who runs a hedge fund. Without being asked, he got to price and said, "My fees are $300 per hour, but if you need me to, I'll work for less."

Here's an example of backtracking before even getting push-back. (I'd hate to see him in court, "Members of the jury, he's innocent! Unless, well, you don't think so. OK, we'll plea bargain with opposing counsel...")

The fact is, it can be tempting to respond right away with, "How much can you spend?" or "Let me see what I can do to lower the price." Don't just fold. Follow the process outlined in Turning No into Yes: How to Handle the Most Common Objections. Only then will you get to the heart of the issue and find your way around it (while also maintaining your desired fee).

2. Confront competitor pricing head on: Folks are tempted to backtrack when the buyer says, "But I can get it from XYZ provider at a lower price." At this point, many sellers give the indication that they're willing to negotiate prices.

Instead, acknowledge that other sellers' prices are, indeed, all over the map and leave it there-you're basically saying, "I acknowledge other providers' prices are lower than mine, but my fee is my fee." Then ask the buyer, "Is there a reason you haven't already rewarded them the business?" Some buyers will share why they'd prefer to work with you, and you can leverage these reasons to maintain your price.

It's true, buyers might walk-that's a risk you take. Many times, however, you'll simply set the foundation for continuing the sales process at your preferred fee level.

3. Don't start talking cost structure: Imagine your firm has proposed a $15k / month retainer. Some clients will ask, "Well, how did you come up with that price?"

The seller then pulls out a scope sheet and shows how the technology costs are X, the implementation rate is Y, and the monthly service fee is Z, so here's the fee. Heading down this path is a slippery slope and leads to nickel-and-diming here, there, and everywhere.

In our Fees and Pricing Benchmark Report, we found that firms of various price and profit levels use retainer pricing. However, firms that achieve premium prices and profit levels do not share the underlying fee structure nearly as often as the other firms.

Think of it like this: if you went to buy a car and asked what the exhaust system cost or how much the dashboard set them back, you would probably get laughed at. In the same vein, you should not lift up the hood simply because you're asked what your costs are.

4. Ask, "Which part don't you want?": When selling consulting services, consultants are tempted to cut fees when they get push-back, especially for large deals. The logic goes like this, "Well, it's a $120,000 deal, but if we get it, we can get by with $110,000 and be OK. That would be better than losing the whole thing." So they cut their fees.

This is a bad precedent to set if repeat business is important to you. You'll always end up playing the price-cut game at contract renewal time.

Instead, when a client is considering a $120,000 deal comprised of five major components, ask them which component they don't want. You might find yourself going component by component, and as the client realizes they want the whole thing, you don't cut any of your fee.

Also, going component by component forces the client to consider what it would take for them to do that particular component of the work (if they could even do it). All of a sudden they realize how much they'd prefer to pay you to get it done.

5. Don't dismiss the buyer when they push back: I often hear this comment: "If they push back on price, we don't want them! Pushing back on price is an indicator that a client will be high maintenance or worse down the road."

That might not be the case. Buyers are often taught to challenge price in multiple ways. Just because they challenge you doesn't mean they are bad people or are destined to be bad clients. It also doesn't mean they're challenging your value personally. (I've seen many salespeople react viscerally and personally to fee pressure. Bad form.)

It often means they're trying to figure out how to engage you and your solutions. Some providers discount; others don't. They're just asking. Hold your ground and treat them reasonably in the process, and oftentimes they'll just come around.

6. Offer financing and payment terms: For many buyers money is an issue right now, and they can't buy because of the payment terms. Sometimes simply adjusting the payment terms is all the client needs to move forward.

Clients will, in the end, pay more for your products and services if they see you offer more value than the alternatives. And as much as you might disdain the thoughts, buyers will continue to pressure price and other consultants will continue discounting to win business. But if you follow these four guidelines when you get price pressure, you'll find yourself winning more deals at your asking price.

Photo by: AMagill

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Mike Meikle

Very good points. The reason why very few follow this strategy is because they don't have the confidence in themselves or their skills. They feel that if they receive push back on fees, that they must not have the "gravitas" to command such a price.

Alan Weiss has written extensively about "value-based pricing", which this article alludes to.

I know I fall short of following Mr. Weiss' guidelines and the points brought up in this article.

March 21, 2011, 2:04 PM
Patricia Lane

Great article, Mike and John. Silence, too, is a good tactic when entering into the fee negotiation stage. When the other "blinks first," you gain insight as to where the negotiation space might be. Most people are terribly uncomfortable with silence and when you can make friends with it, it's an edge.

Last year, most of my new clients were prospects who had initially refused my proposal. Re-framing the scope of services ('what part don't you want?') or modulating payment terms (which in France are already, at best, 30 days) didn't change anything.

They went with the cheaper/quicker offer. Then they came back once they realized the result and *service* didn't cut the mustard. They ended up paying for their project twice. Fees are no longer a subject of discussion - availability is :) When the relationship is based on trust and respect, everyone benefits and it brings out the best in all team members.

March 22, 2011, 1:31 PM
Mike Schultz

Thanks for the comments, MIke. And nice work, Patricia.

With services, some people don't know what they're going to get until they don't get it, or until they get something they think is going to work for them, but doesn't. Until they have the bad experience they don't know what good is.

This is one way that services markets regulate. Some of your best customers will be people you don't win at first because they try something else, and then, when it doesn't work out, they come back to you and never want to leave.


March 22, 2011, 2:22 PM
Veerawong Pipithsuksunt

I love this article... It's Great!

March 24, 2011, 3:36 AM

Great points, I wish I had seen this before yesterday. I had a client trying to reduce my quoted fee, but I managed to tell her that I am aware of the lower fees but my fees remain. The mistake I made was to try and explain my cost to her.

Now that I have read this article I know what to say to the next person.

March 24, 2011, 9:04 AM
Dr. Joel Parker

Great pointers Mike. I like your information as it is instantly applicable. I am forwarding it on to our sales team. Thanks.


March 24, 2011, 9:20 AM
Mike Schultz

Thanks Joel and Robert. I'm glad you're finding the content helpful.

Best to all.


March 24, 2011, 9:26 AM
Courtney Ramirez

Excellent article! I always flounder when it comes to pricing, and I've been in the "this person is going to be high maintenance" camp. I never thought about the fact that as I buyer I always try to find the best price. I am definitely going to try the "which part do you want to drop?" tactic. Thanks for all of the great resources! As an SEO copywriter, there are plenty of resources for writing and managing projects, but very few resources in those fields go into pricing and negotiation. I'm finding a lot of your content applies to my field - and best of all - very few copywriters are doing this.

March 24, 2011, 1:49 PM
Mike Schultz

Thanks, Courtney.

One thing that's always difficult, I think, to get just right is the "tone" in an article, of how something should sound. As you're selling, be careful about, tone, too. Push too hard on the "which part don't you want" just like that and you could end up in a standoff.

Take the approach of, "We'll, let's take a look at it. Do you mind if we walk through the deliverables and see if we got it just right. Perhaps there's something we can tweak?"

That way you walk through it all, and often they let you know they want the whole thing, and you reaffirm the value in the process. As well, sometimes they say, "Let's leave that part out." You go through the plusses and minuses of leaving it out and then they ask for it back in. Sometimes they say, "OK - let's make that tradeoff, and leave it out." Then, at least, you can move forward with the sale.

And you never know when they'll add it back in 2 months later...

March 24, 2011, 2:46 PM
Perry Norton

Hi Mike--

Great article, as usual. I've passed it along to some of my groups.

Perry Norton

PanRight Productions

March 30, 2011, 5:46 PM
Lisa Rice

Excellent points made here. Love the practical advise you've given.

August 16, 2011, 10:22 AM

I usually don't budge on pricing too much.

BUT, I will offer to add free music or an additional service for free

if they are on the fence. This usually stops them from going to another


There are always the type of people that want discounts.

Most of them are tough to work with, so

i don't worry too much if i lose one of them to a competitor.

July 23, 2013, 7:34 PM

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