When people seek to defend premium fees or prices, they often do so in terms of their costs, their qualifications or their experience. I saw a vivid example of this recently, in a passionate social-media post written in defense of freelance workers:
“If you ask yourself why the self-employed charge so much for their services…they don’t get paid vacation. They don’t get paid sick days. They don’t get bonuses for outstanding performances nor for Christmas. They don’t have insurance plans nor do they qualify for unemployment. Also, the skill set they have is expensive and needs to be compensated for along with their invested time to prepare for you or your affair and the time they have to spend on your affair. So next time you ask, remember that the self-employed love being their own boss, but that love doesn’t pay debts…”
Now, isn’t it extraordinary that this (widely-shared) eulogy entirely misses the most compelling reason of all to pay for a premium freelancer. If you were to hire such a professional, the main reason you would pay premium fees is the impact they can make, the benefits their experience brings (or the risks that they help you to avoid). Would you really care how they funded their training, insured their healthcare or managed their holidays?
In other words you would judge value primarily by their “outputs” (ability to meet deadlines, speed, pitfalls avoided); not by “inputs” (time spent, qualifications). Ok some of these might be relevant (like their availability) but still surely not a reason to pay premium fees.
It’s not just freelancers who fall into the trap of justifying value by inputs. I have worked with global organisations who did the same, citing reputation, years in business or size as sufficient justification for premium prices. More often than not, the response of their customers – spoken or unspoken – is “Who cares?”.
Traditional professions and consultants are currently undergoing a wholesale challenge to their fee structures, particularly in London. There is less and less tolerance for the Bullshit Economy, or people whining about their costs. What counts is value. As Warren Buffett put it, “price is what you pay, value is what you get”.
Pitfalls to avoid
So what should a premium freelancer do, if seeking to justify a top-end fee to a cheapskate client who is claiming they can always find a cheaper alternative? Let’s begin by what you should NOT do:
A) DON’T try to price-match the competition. Discounting encourages more discounting. Just don’t do it.
B) DON’T express surprise. On the contrary, it’s better to respond as Magnus Josephson does when told that his client had found several cheaper alternatives: “I certainly hope so….”
C) DON’T give explanations. Instead ask them why they think others are cheaper? You can even ask them why they think others continue to engage your premium services, in full knowledge that they too could have bought cheaper?
D) DON’T panic or lose faith in yourself. This is when self-worth really counts (hyperlink to self-worth page)
Things to do instead
If you are going to set the stage for premium fees, you have to begin several steps before the issue of price comes up.
First: Describe the specific challenges of the customer’s world: “You know how many xyz organisations are currently battling with issues like….” This shows you are current, credible and relevant.
Second: Describe the complications (or the risks or pitfalls). This reinforces your credibility, differentiates you from others and most of all tables the most compelling reason of all to pay you top dollar… i.e. The consequences of not doing so, the penalty for buying cheap or outdated approaches.
Third: Describe the benefits i.e. The prize for those who get it right – higher revenue, lower costs, reliable systems, agile growth, increased market share… which is all about them and not about you.
Fourth: Share your insight (but not your solution): i.e. show how your approach delivers value and avoids the pitfalls. Give an example or two.
Fifth: Intimate that you only work with certain types of organisations or people: not for reasons of arrogance or ego, but simply because your approach requires a certain type of client. For example, underline what they have to do to make the project a success, not what you have to do.
Sixth: Ask them what they are experiencing. In this way, you find out how to position the rest of your story and whether you even want to quote for the work.
—- if you are both still talking after this…
Seventh: If they are opening up about their needs, explore why these issues are important, what impact a good approach can make, where the low hanging fruit is etc. Put Euro / dollar / pound signs on both benefits and risks. “What’s the cost of replacing a customer?” Etc.
Eighth: Reframe their requirements, before you specify any solution. For example, “it sounds like there are two objectives here: train the new people but also re-engage the old hands…. Is that correct?”
—- Have they accepted your reframe? If Yes…
Nine: Talk about options and budget guideline. Get broad agreement on this…. And double-check you are still talking to the right person. “Whose support will be vital to the success of the project”?
Ten: Now you can do a quotation. You know the real objective and the £/$/€ implication of getting it right and wrong… and of doing nothing. You have agreed an approach and budget-guideline. If they don’t go ahead, they are probably idiots: it’s no reflection on you.
Is this approach just for high-end consultants? Not at all. With just a few tweaks of language, I’ve seen this work for accountants, personal assistants, therapists, book-keepers, interim-managers and all manner of business professionals.
Need some help to sharpen your insights, or practice your reframing skills? This is what I do on coaching calls: equip my clients to raise the value of their work and avoid being treated as merely the customer’s servant. To schedule a 30min no-obligation call email Pam at firstname.lastname@example.org
Typical challenges I advise on:
- Writing more compelling quotations
- Dealing with difficult customers
- Developing a more powerful story: for meetings, presentations and website
- Making space for value-oriented questions in very technical or operational conversations
- Reframing requirements – creating value in advance of the sale
- How to open meetings with more impact, particularly with senior people
- Managing your own energy and feelings of self-worth