Thursday, April 23, 2009

Price Negotiations

If you consider that anyone who is trying to lower the price you are asking is an "enemy", then, the old adage that applies is "know thy enemy."

I am not talking here about people who have not clearly spelled out an assignment, and you are thusly over-estimating it, or people who are trying to work you into their budget, but instead, I am talking about people who are looking to cut your fees to keep money in their pockets. While I don't see clients as enemies at all, I do need to understand their perspective when estimating a job, and also, have them understand mine. Knowing what a client is thinking is helpful in coming to a satisfactory solution for everyone.

But let's get one thing straight - people who price shop will always want a lower price, and studies have shown are far less loyal to you, and far more loyal to the bottom line.

(Continued after the Jump)

Over at The Consumerist, today's piece is titled "Do You Haggle", and they outline the perspective of the person doing the negotiating. So, I thought I'd do a counter to that (what they wrote is in italics), from the sellers' standpoint:
1. Never ever let the salesperson take over your shopping experience when you're buying expensive items, or when the store offers a certain discount. You must control the bargaining process.
Often a client does not know what goes into that price. A shoot fee, and then licensing? 'I thought I owned it', or 'what is this post-production charge, what do you need to do to the photos, I thought you didn't have to fix your photos?" These, and many others, are a part of educating the client on the value your images have.
2. Know that the posted price for a big ticket item can be brought down. This is especially the case now, in these difficult times.
Yes, you may be willing to negotiate in these tough times, but if your rate is $2,500 for an assignment, and you accept $1,800, it is likely you'll never get that $2,500 figure from that client when times improve. Be sure to "take away" something from the shoot. Say, shooting fewer images/set-ups, using a single person for hair and makeup/stylist, or limiting the rights package a bit more.
3. Never ever let them know that you really want something.
This is the true power of "no." When you tell the propective client, in a nice way, that you can't do it, if they really want you, they'll now want you more. If they see you as a commodity, then they may move on. So be it. You want clients that really want you.
4. Force yourself to leave if the merchant doesn't give you a lower price.
The contrary to this is "stick to your price. Thank the client for considering you, and tell them that you look forward to the opportunity to work together in the future, when price and budget are not such an issue. Further, let them know that if something goes wrong with the lower-priced photographer, you'll try to help them out with a re-shoot, if you can."
5. Remember, you are the client, you have money in your checking account which the seller desperately wants.
Yes, they are the client, and they called you. When you as the photographer are, in fact, desperate, you will do foolish things, so don't ever be, or even come across as, desperate. When the propective client becomes the client (i.e. has signed the contract) then, of course, do everything you can to make them happy.

REMEMBER: photography, no matter what anyone tries to tell you, is NOT a commodity.

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8 comments:

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Vasiliy Baziuk said...

Great post John, just what i wanted to read this morning. Especially "Be sure to "take away" something from the shoot." I'm on the right track. Thanx!

jm said...

i agree that photography may not be a commodity but photographs are.

Rakesh said...

This applies to other fields also, like software development. If the budget and/or timetable are too tight, reduce scope rather than your rates.

I think this is my first comment on your blog since I discovered it a couple of months ago, so thanks for an informative blog for the aspiring photographer :)

Alfred said...

Great post, I fully agree with you!
When you lower your price you automatically lower the perceived value of your product or service.
Offer a less expensive package if price is an issue, but never discount.
Thanks!
Alfred

shawnpix said...

John,

In regards to your response on # 4, I think you forgot to mention that if/when they have a problem with the cheaper photographer and they come back to you, don't you also want to raise your price at that point? Part of this is because now your deadline to get the shoot done is probably much tighter than before. Second, because it will help remind them of the value you bring to the shoot as a professional.

I think I remember you making a point like this in the past. Perhaps you could shine more light on this for others.

Thanks!

Shawn

Gary Crabbe / Enlightened Images said...

I think you can negotiate downward without forever damaging your perceived value to the client. The way to do that is get something of value in exchange for your reduction in fee. This way, the cost can go down, but the value remains the same or even increases. It's not easy, but it's not impossible either. The key as stated is that if you can't get something of value for the reduction in fee, say "No."

Brandon D. said...

John:

Believe it or not, I've actually had to apply all of your counterpoints towards clients in the technical photography business that I operate.

1. Enlightening clients, even briefly, helps them understand how reasonable your price is. I've had to go through that several times before.

2. I try to give a little more than what they pay for, but if they want to take away chunks from the price of the estimate, then it's obvious that services have to be reduced, too. Otherwise, you'll begin to start paying for expenses out of your own pocket, probably without even realizing the extent of the damage. Been there, done that, and got the T-Shirt.3. This relates to the first counterpoint. I've found that I'm priced a little more than the client wants to pay, but from my perspective I'm priced a little less than I'd like to make. I think that's a good balance.

Before I have to say, "No, I'm sorry we can't work things out this time," I do my best to make sure that they understand that I'm priced as cost effective as I can possibly be. About 50% of the clients I tell "No" typically end up calling me back to reconsider, and miraculously they end up hiring me at full price. So, when you degrade the value of your services for a client, I think it means either A) you're desperate or B) your prices aren't extremely honest and they aren't somewhat objective.

4. Yes, for me, it was tough to realize that not everyone can afford my prices. That's tough to accept when you'd like to help as many people as possible. But who really wants to be that photographer that absolutely everyone can afford? I think Quality trumps quantity on this issue. I find that when I'm way too busy, everyone suffers because I don't have a lot of time to cater to everyone. When I can focus a lot of attention and energy into a few things, I'm usually able to crank out higher quality results.

5. Yeah, my policy is to never, ever come across as desperate even if I think I need the money.

...

As a result of the tough times of this recession, I've lost nearly all of my normal clients due to their budget restraints. But surprisingly, I've been able to replace them with some enthusiastic new clients, who seem to be great people and have been very easy to work with so far.

And the most important thing I've discovered with respect to "client relations" is emphasizing the fact that I'm in the [prospective] client's corner and that I'll be there for them with all of my enthusiasm. So, I try to make everything about what they want, but in that they understand that everything has a "fair" price. The more sincere and straight-forward I am to them, the more that the price becomes a non-issue for them. But they have to know that you'll be in their corner hardcore!

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