You have seen this play out many different times. You send a proposal to a promising client and they come back to say your price is too expensive. They make you to work at a low ball price. The problem is that you want the work. More accurately, you need the work. But you are afraid that you can’t make enough profit at that price to support your company. What should you do?
First, think if this is the type of customer that can be profitable long term. There is nothing wrong with taking the first job at a lower price if you can build them to a regular customer at a higher profit margin when they learn your value. However, if this is just a job to keep cash coming in the door, turn down this low ball price.
You will be wasting your time servicing this customer when you could find a new customer at the higher price where a profit can be made to build your business. Remember, you don’t need customers that are not profitable.
Alternatively, counteroffer to the customer that you can do part of the proposed job at the lower price. It is important to cut some things out of the original proposal so less is done for a less money. In this way, you have lowered your price, but also lowered your level of service.
There is also a sales technique call “low-ball” where you agree to offer a low price in order to “first attract a buyer, but then adds on additional expenses to make the purchase less of a bargain than originally thought.” This is the technique often used in car sales when the salesperson quotes a low price for the car, but then tacks on options to end up with a much higher price. I don’t subscribe to this technique but I have seen it used successfully many times.
Remember that all customers will pay for value to solve their pain. You can also ask the customer, “what would the results need to be for me to get paid the original price in the proposal?” In this case, you are building value instead of cutting services. Remember, if they are offering a low ball price then either they don’t have the pain your service solves or they don’t have the money to solve it. Neither are your perfect customer. Therefore, low ball price offers from prospect is an indication that you are either talking to the wrong prospects or your solution is not as valuable as you think it is.
