Archive for the ‘Posting Prices’ Category

How to Respond When Clients Ask “How Much Do You Charge Per Hour?”

A week ago I promised my mailing list community that I would share with them a script for responding to prospects when the first thing out of their mouth is “What’s your hourly rate?”

I feel you! lol

It can be the most irritating question in the world when it’s pretty much the first words they utter right out of the gate.

But guess what? You have a lot to do with why they are asking that in the first place.

And no, it’s not because you don’t have pricing on your website. Pricing for professional services doesn’t belong on your website. But we’ll discuss that in a moment.

First, I want to preface things by saying that the response to that kind of question is different depending on the context.

For example, selling products is a completely different ballgame than selling professional services. There’s a completely different context and a different process and conversation involved for each of them respectively.

Now, on my blog, we’re always talking about retained ongoing monthly administrative support. This is what is known as a collaborative partnering relationship. It’s not the same thing as selling products or piecemeal project work (i.e., secretarial services). So understand that the scripts I’m going to share with you are for the context of retainer clients (i.e., clients who pay a monthly fee for ongoing, monthly administrative support).

Unless you are selling a cheap commodity, clients need have context in order for your fees to make sense. If there’s going to be any kind of mutually beneficial relationship, you can’t answer that question off the cuff. There’s a bit more to it than that.

There are simply things you need to find out first from the client before you can even begin to understand their needs, goals and challenges, and then devise your support plan recommendation for them.

When the first thing a prospect asks is “What’s your hourly rate?”, that’s a clear sign a) they have not bothered to read your website (and, thus, are not a good prospect), or b) your website has not properly educated them and failed to provide them with enough information (which is more commonly the case)

When you don’t provide your site visitors and prospects with thorough information, you don’t give them any other criteria with which to evaluate the value. They will always resort to the pricing question when that’s the case.

And that’s something you can correct by:

  1. Stop parroting the same tired, boring, homogeneous (and ineffective) party line that EVERYONE else in the industry is reciting chapter, line and verse. You’ve GOT to stop this people, seriously! This is your business, not a high school clique where you’re only allowed to belong if you conform with the crowd. Blending in is NOT what you need to do in business; you need to STAND APART from the crowd, come up with your own message and speak in your OWN voice).
  2. Adding more thorough content and information. Because you don’t want them asking “How much?” Instead, you want them saying, “I”m intrigued. I can see you understand the profession and business I’m in and the kind of challenges and issues I face in moving forward. I’d like to schedule a consultation to find out more about how you can help me achieve X, overcome X or solve X.”

Now, in the context of your business, you’re an Administrative Consultant who works with clients in an ongoing support relationship and so you’re goal is to find retainer clients.

What you need to do in that case is gear all of your information toward that goal, educating clients about what you’re in business to, how you help them, how it works, how you work together, etc.

Think of your website as a form of mini or pre-consultation itself. Have it answer all the questions a potential client could conceivably ask you or want to know.

The more information you provide, the better you prequalify your prospects (because the ones who are not a fit will weed themselves out) and the more likely your ideal prospects will take the next step (i.e., scheduling a consultation).

So you want to provide a nearly exhaustive amount of information on your website… everything except pricing.

There are many reasons why pricing on your website works against you as a professional service provider:

  1. You are not a cheap commodity that can only be quantified by price. When you portray yourself as nothing more than something on a shelf that they can get at one of a thousand other places, the only differentiating factor being your rates, you actually create price-shopping mentality.You want clients who are truly interested in the value of the work in helping them move forward, achieve their goals, overcome challenges and grow their business. By insisting on that standard and holding yourself and what you do in that esteem, you weed out the cheapskates and those only looking for quick fixes. If you make people who can’t pay, don’t want to pay, or who are impatient with your process your clients, you will be the engineer of your own business unsustainability, unhappiness and poverty.
  2. You cut your nose to spite your face. Some people argue that posting prices helps get rid of the price shoppers who waste their time. But when you do that, that’s the thing nearly every visitor to your site zeros in on to the exclusion of everything else that’s more important—including all the information that conveys your value. There are far better ways to prequalify clients, my friends.
  3. You throw the baby out with the bath water. Here again, when you try to get the price-shoppers to weed themselves out, you’re also scaring off all kinds of other perfectly suitable client candidates who may simply misunderstand what things would really cost and mistakenly think they can’t afford this kind of support relationship. They need context, but they’ll never get that far if you scare them off before that can happen.
  4. It’s not the time and place. Ongoing administrative support is a bigger relationship. It requires more of an investment and commitment from the client, and, therefore, requires a bigger conversation. Prospects need context in order to make sense of your fees and that only happens in consultation, not on your website.

So this is what you’re going to say when the first thing out of a prospects mouth is “What’s your hourly rate?”:

I can’t answer that question off the cuff because my goal is to ensure you get the best support you can afford. Your business needs, the challenges you face and your underlying goals and dreams are unique. We need to meet first in a consultation where I can gather more information and learn more about those things before I can create a support plan just for you and tell you what it would cost.

There is a way to provide a frame of reference for potential clients that doesn’t promote price shopping. And that’s by simply letting them know the minimum monthly investment they would need to make in order to work together. So what you would add onto the comment above would be this:

What I can tell you is that the minimum monthly investment any client would need to make in order to have my ongoing monthly support is $X per month.

And on your website, instead of listing fees, you would instead talk about your pricing methodology and its benefits, how and why you bill as you do, and include that statement about the minimum monthly investment they would need to make.

Remember, the goal is to get them in consultation and talk to you further, not your website, so that you can provide needed context for your fees. When prospects ask the rate question, the other thing they’re trying to determine is whether or not they can afford it. Letting them know the minimum monthly amount helps them do that in a way that gets them to look at fees from a more value-based perspective and encourages the opportunity for further discussion.

Now, my wish for you would be to get away from billing by the hour (selling hours) entirely because it cheats you and cheats the client by putting your interests at odds with each other. It’s a very archaic, UN-beneficial way of charging for your value, for you and the client and actually discourages prospects from seeing your value.

Your goals for getting paid for the value of your time and expertise should be in sync with the kind of goals and results the client is looking for from the work and how that work achieves their objectives and helps move them forward in their goals and the pursuits they’re aiming for. And you don’t want that question boiling down to how fast you can kill yourself doing the work so that the client doesn’t have to pay as much. That will be the death of you and your business.

When you employ my value-based pricing methodology, here’s what you get to add to all of the above:

I don’t charge by the hour and here’s why:  hourly billing cheats you because it puts our interests at odds with each other. Billing by the hour, I obviously make more money the longer things take, and you, naturally, prefer things to take the least amount of time possible so that you don’t have to pay so much. That’s a horrible dynamic for us to work together in! And so I don’t. The work that’s going to truly get you results, move you forward and keep your business humming along smoothly can’t be dependant upon a clock. And when you work with me, it doesn’t. I want to achieve real results and progress for you. That can’t happen by selling you hours. Your needs, goals and challenges aren’t cookie cutter and so I don’t offer cookie cutter solutions. Instead, what I do after we meet in our consultation is come up with a support plan recommendation. From there we can hone it until it’s just the right fit. And you will pay one simple monthly fee for that support. That’s it. No worry about hours running out. No overages. It’s easy to budget for and all our focus will be on the work and accomplishing your objectives, not on the clock.

There’s much more to learn and understand when it comes to pricing and how to talk about fees with clients. And I’ve packaged all that up for you in my Value-Based Pricing and Packaging Toolkit, which I encourage you to check out because it has the power to transform your business—and your life! (Be sure to read the testimonials and success stories!).

Dear Danielle: Should I Post Pricing on My Website?

Dear Danielle:

Quick question. Is it good business practice to place your price list and hourly fees on your website? Talanda Ferguson

It’s always the “quick” questions that are anything but, lol. Whether or not to post pricing on your professional service-based business website is a frequent topic of conversation and debate. It takes a bit more in-depth learning and education to understand why it’s not really a good idea when it comes to professional services.

I write about this topic frequently so I’m going to point you in the direction of a couple of my previous posts that will help you better understand the pros and cons and the reasons I advocate against posting rates:

Price Is NOT the Bottom-Line
Screening the Tire Kickers

Andy Beale, a well-known marketing consultant and blogger at Marketing Pilgrim, also wrote an excellent article on this topic. His article is directed toward the marketing industry, but the advice is relevant to any kind of professional service and consulting business, including Administrative Consulting:

Why Marketing Agencies Shouldn’t Publish Their Fees

I also want to mention that I’m not an advocate for hourly pricing. I didn’t invent the methodology, but I did introduce our industry to the concept of value-based pricing, and I originated the process for how to employ that methodology with ongoing support, which is what I really recommend you look into. You can visit my Value-Based Pricing Toolkit product page to view a video and learn more about why selling hours is actually killing your business.

Let me know if this helps. And do post your comments and questions so we can keep the discussion going. I’m particularly interested in hearing the reasons and concerns any of you have about why you think you need to post your fees. I may be able to shed some light and give you some info to see things from a different perspective that ultimately will help you earn better and gain better clients.

Screening the Tire Kickers

Getting back to the topic of this post, which talks about the wisdom of putting your rates on your professional service site, I want to address a common sentiment.

One of the biggest complaints I hear from Virtual Assistants and other independent professionals is having tire-kickers and price-shoppers waste their time. That’s usually the rationale they have for posting their fees. They figure if they post their rates, the ones who can’t or don’t want to pay will go away and not waste their time. The problem with that thinking is that without providing context for your fees that only a consultation conversation can provide, you will lose perfectly great client candidates large and small who have mistaken or erroneous beliefs.

There are lots of ways you can screen the price-shoppers and prequalify prospective clients without posting fees.

For one, simply having the standard that you have a consultation process and require consultations to be scheduled will eliminate looky-loos who aren’t serious about hiring a real professional.

This also helps you manage client expectations from the get-go. It shows prospects that you have a system behind the solutions you provide, and allows you to set the quality and pace of the relationship, if there is one to be established.

You can also use a contact form to help pre-screen prospects. For example, you can offer checkboxes for prospective clients to select that indicate their interest level (e.g., “I’m in the research phase” and “I’m in ready to partner with an administrative expert NOW”). Depending on which box they check, knowing the level or character of their interest will help you determine what starting point to take in your initial contact with each.

One indicates someone who is ready and actively seeking someone to work with, and therefore someone you may want to give priority access to your consultation time and attention. The other indicates someone who is more or less curious and possibly price-shopping. With those prospects, you may want to direct them to further information or other resources on your website rather than spending time in a consultation.

So don’t think you have to list your prices and put all your cards on the table (and thereby miss out on the opportunity to provide context) just to eliminate the tire-kickers. Because what you’ll really be doing is throwing the baby out with the bath water.

Price Is NOT the Bottom-Line

Jakob Nielsen recently published his annual Top Ten Mistakes in Web Design for 2007. Most of his advice is spot on… until we get to #10 (Not Answering Users’ Questions).

Nielsen avers that “the worst example of not answering users’ questions is to avoid listing the price of products and services.”

Nielsen may be a web site usability expert, but he’s not an expert on marketing and negotiating professional services.

Over the past several months, I’ve been talking to many, many business experts, and this is one of the questions I always have for them since it’s such a point of conversation and debate in every professional service-based business. Nearly every single expert essentially says the same thing:

Posting professional rates on your website is the quickest way to lose business.

Says Rob Frankel, branding expert, author of The Revenge of Brand X and frequent guest commentator on CNBC, CNN and NBC Nightly News, “Posting prices works for low value stuff, commoditized products–not professional services. Clients need to be educated about what you do in order to really understand the value.”

Frankel further states, “If you show prospects your pricing without any education, you’ll lose far more business, actually drive prospects away. And the ones you DO get will be price-driven, always looking for the cheapest way out. They do not make for good clients because they’re focused on cheap, not what you produce. You have to focus your clients on what’s important. If you don’t, they’ll make it up as they go along, and then everything is out of control.”

Clients simply aren’t going to get that information until they talk with us, no matter how we frame it on our websites. Once a rate is on the page, that’s the thing they zero in on to the exclusion of everything else. And you both lose out on an opportunity in the process.

I conducted a little experiment on this, too.

I typically average 3-4 consult requests a month for ongoing administrative support with no pricing listed anywhere on my site.

Once I’ve had the opportunity to talk with clients in a consultation, I pretty much have my pick of the ones I want. But during the month that I posted a pricing page, I saw all my site traffic immediately going to that one page, and got not one single consult request.

I also noted that my site visitors were spending dramatically less time on my site overall. Every bit of other information about the value and benefits and solutions was ignored.

Once I took that page down, I literally overnight saw a huge increase in not only page views, but in the amount of time visitors were spending on them. You could actually see that they were reading all of the information presented. And the phone started ringing again.

And trust me, there’s no guilt or whispered discussion about the investment–once I’ve learned what I need to know and gone over the important things clients need to know, I’m very direct about what it’s going to cost to work with me. But they need the context of our consultation conversation in order for that cost to make sense. And I can’t even begin to tell them anything about cost until I have gained an understanding about what their needs, goals and challenges are through our consultation conversation.

It should never be your intention with your website to elicit calls about price. Your website’s purpose is to establish rapport, educate about the value and how and what results are achieved, and compel prospects to want to learn more about the solutions you offer from you–a real live person–in a consultation.

It’s not the job of a website to “close the deal.” Negotiation happens between PEOPLE–not between websites and strangers.