When Should You Cut Your Price?

Three weeks ago, a long-standing client asked me for help. She wanted to hire me for 90 hours of copywriting work over six weeks.

That troubled me; I don’t price by the hour. Pricing by the hour is a bad idea because:

  • It interferes with your efforts to ‘price to value.’
  • You stop being a trusted advisor, and start being a wage worker.
  • It gets in the way of budgeting — if you take more time to do something, you’re forced into an unpleasant conversation.
  • It often turns into a nickel-and-dime discussion. You’ll be compared with copywriters who make $20/hour.

So I gave her my hidden, super-secret consulting rate. She gulped, thanked me for my time, and hung up.

Oh, well. Can’t win them all.

Last week, she and I sat down for coffee, and I did something unorthodox. After a more detailed discussion, I cut my hourly rate by 50% and won the project.

I know you’re shocked. I was shocked. I went against the standard advice we get from AWAI.

With good reason, they warn that price-cutting is a short path to the poorhouse; it diminishes your value in the eyes of the prospect, it will wreck your satisfaction, and gets in the way of your long-term success.

All that advice is sound and true IF you use price-cutting as a knee-jerk tactic with every prospect. You’ll undermine your business by always cutting your price. But in this case, cutting my price was the right thing to do. Why?

  1. I negotiated fewer deliverables. Basically, she now wants three white papers. Each is six or seven pages long. I tallied what I’d charge for three white papers and tailored my revised hourly rate to fit.
  2. The project fits my business strategy. It’s going to stretch me in new directions, give me new samples, and connect me with a few new prospects.
  3. She still sees me as a trusted advisor. At one point, she told me what she paid other writers. I got her to agree to a rate that was 200% more than her other writers. That’s because I have credibility — she sees value in me. I’m her consultant — and being paid as such.
  4. The project is lucrative. Yes, I’ll be spending more time on the project than I’d like, but it’s still a nice, five-figure project, with plenty of potential upside in 2013.
  5. I negotiated better payment terms. We agreed on weekly billing and Net 15 terms — a departure from the past. That lets me have constant cash flow from the project, quick turnaround on payments, and a very direct link between effort and reward. If she wanted to pay me on Net 60 terms, I would have been disappointed and possibly less likely to negotiate and commit. Cash in hand, especially in November and December, comes in handy!

Basically, I crafted a win-win scenario. She gets the support, advice, and deliverables she needs, I get cash flow, samples, new prospects, and business development out of the project.

Most importantly, we both get a better relationship. I focused on what she needed. As I said, she’s a long-standing client. I want 10 more projects from her next year. After sitting down for coffee, I realized that I valued my relationship more than my pocketbook.

Many new copywriters see themselves as selling a commodity product — it’s cheap and cheerful, do a project and find another client.

But copywriting ISN’T a commodity product. It’s a service that becomes better over time as your relationship with the client grows. So making a compromise to serve the long-term relationship is important now and again, just as it is in marriage or friendship.

That approach got me a valuable project with short-term benefit and long-term upside. Has this approach ever worked for you? Has cutting your price ever been the right thing to do? Did it work out? Did you get more business afterwards?

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Published: November 16, 2012

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