Transcription
You're probably feeling a lot of anxiety when you have to justify your prices. I'm going to give you two different strategies that you can apply today so this becomes an issue of the past.
Have you ever been in a position where a client who's interested in working with you, and that you're also mutually interested in working with, has asked you this very painful question: "Why does it cost this much?" or "I can't afford this." And you start to go into panic attack? You get that cold sweat, your heart starts racing because you think, "My God, it's so long since I've heard from a prospect, a live lead, and now they're asking me this very difficult question." I feel compelled to capitulate, to compromise, and lower my prices immediately. And I, I, I don't know, my my brain freezes.
Or maybe have a really strong negative emotional reaction like, "How dare you? Why would you say that to me?" You want to hit them back. It's like, "That's an insult to me as a human being, to my training, and everything I've ever done. How dare you? It's indignant for you to even ask that question." And you give an unprofessional outburst. Have you been in that situation?
I want to tell you a little story. There's a friend of mine, he called me late at night in a little bit of a similar situation where he was panicking. A prospect that he really wanted to work with, because this person, this guy was very influential, high net worth, high net worth person. It's like, "I really want this gig." And this friend of mine called me and like, "Chris, they asked me like, 'We can't afford this, it's too much money,' and I really want to work with them. What should I be doing?"
And here's how I counseled him. So, first of all, take a deep breath. All business is a negotiation. Take your emotion out of it. They're not insulting you. It's just how two business people talk about a thing. It's a price. It's not you. It's a price. It's not your self-worth. It's your price. It's not the quality of your work. It's none of those things. And you need to remain super objective here.
And I've been in situations like this. I was counseling this friend of mine in the exact same way. I've handled this very specific thing, which is this: If we know they want to work with you and you want to work with them, this is a very good thing. Because when two parties are mutually interested in working together, anything can happen, and you can negotiate your way through all of it. It's when one party doesn't want it that there's really no point. So you want to work together and you see mutual benefit. This is what a deal is structured on. This is the foundational layer.
You get to use this line, and I'm going to say it to you, and hopefully you can use it in your own business, which is: "Hey, it sounds like we want to work together, which I'm very excited to do. I can't do it for the price that you're asking for. How can we get really creative and design this in such a way that you get what you need, the have-to-have, and then we can talk about the nice-to-have? So let's start there. What is it that you have to have?"
So if you're a videographer, it could be like, "We have to have the shoot. We have to have to finish edit that's color graded. Those are the have-to-haves. And it has to be delivered by this date. We get that." So with that, that, that's the MVP. This doesn't work at all. What are the nice-to-haves? Well, it has some title design, has a 3D animation, product demo, and it has some extravagant locations. If we say that the basic that you want can be delivered for this price, I can possibly give you one of those three. Which of those three are the most important and critical to the success? And based on what we talked about, I feel like it's option two or option three, but not option one.
So you can guide them through this process too, to say like, "Based on what you want, you can spend money on these other things, but I'm not sure that you're going to get good ROI on that." And you guide them through that process where the client reaches out and says, "You know what? We love that you're flexible. We love your transparency, your style of communication. We actually think we want all three. We'll go find some more money. How much more is it going to cost?" That's a wonderful outcome, right? You can say, "Great, fine, we'll do that."
Or if they're like, "You know what? We got what we got for a budget," which is more likely the case, "There of the three, which one do you recommend?" Then this is where you can really lean in on your expertise and be an advisor or trusted on the project and say, "Look, as much as I want to make it look like that, that's going to be a lot of unnecessary money being spent. Let's save a couple bucks, but this is where I think you're going to feel it and when you're going to get the best results given the objectives you're after." And you can do that.
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Now, this may be overwhelming for you because maybe you're still new in your business, you're not used to sales, and especially you're very conflict-averse. I hear you, I feel you. But I want to point out a couple other things that might help you see this from a different perspective, from a human psychological level. You've heard me talk about this before, so let me talk about this.
There's something I need to clarify with all of you, and I know there's a lot of emotional energy around this, that some of you think the position that I take and the thing that I'm advising to you is very pompous and arrogant, and it's the fastest way to go bankrupt. But I just want to check in with you about the logic and how I'm looking at this. What am I talking about? A little while ago, and we'll link that video right here so you can see it, is I said in a workshop: "Never justify your price because justification is a sign of conceding the higher ground to your prospect."
And if we just map this out to other things, then you'll see why it makes sense. No, your initial reaction is going to be very emotional, like, "Of course, your clients need to know how you charge, why you charge, you got to tell a whole story." But if you just pause that thought for a second, and I want to look at things and introduce this concept to you, and I've talked about it before, it's called, it's called the symmetry of logic. Where if it works one way, then it should work in most other ways. But if it only works in one instance, and every other instance in your life it doesn't work, maybe you have to question whether or not this is a truth or just something you want to hold on to be true.
Let's talk about human dynamics because sales is human dynamics. It's social relationships. It's a construct, right? So if you meet somebody, somebody of the opposite sex or whoever you're attracted to, you really want to get together with them, and you have some esteem, you have some self-confidence, you think you have something to offer the world. It's not like you're some kind of simp, okay? So you're an equal in this relationship. You're not like a serial dater where you're just looking for body count here. You're looking for a long-term relationship. You think, "Is this the one?"
So you meet them. If the first thing they say to you is like, "Why should I date you?" They're asking you to justify to them why you're worthy of even having this conversation on a date. Now, many of you are say, "Hey, no problem, let me explain. Well, I have a good job, and I, I have good credit, or I have a nice car." How does that make you feel about you? And what they're interested in, are they interested in something other than you? Or these markers for them? Is that the way you want to begin a relationship? Okay, maybe you're comfortable giving those answers.
But let's try it the other way. Where you come up to someone that you're really attracted to, that you like, and the first thing you say to them is, "Tell me why I should even talk to you. Why should I date you?" Would you ever do that? And you're probably going to say, "No, that's insulting, Chris. Why would I do that? I'm the one who's interested in them."
So we want to enter these relationships as equals. We don't want to see the higher ground when they ask these kinds of questions. And in most industries other than the creative services space, people do not justify their prices. You go in and ask a car dealership, "Why is a car priced this way?" Try that. Go to any supermarket and ask, "Why does a can of beans cost 78 cents? Why does that head of lettuce cost $0.54 or $3? Why does this green juice cost $9?" Go to the car wash, ask them, "Why is it $9?" Some of them will explain, some of them will not. But many of them, you're like, "This is uncomfortable to even ask."
So if it's uncomfortable for you to ask, why do you think it's good for you to answer this kind of question? Your prices are your prices. And through a series of your own calculations in terms of overhead, profit margin, cost of living, everything that you need, your level of experience, your level of quality, you've determined this is your price. And at this point, all you can do, and all you should do, is present to your prospects: "This is the price. I'm not really negotiable on the price. If you don't want to work with me, I totally understand, because for every customer, there's a vendor, and I probably am not the right person for you."
And I find that any prospect who immediately challenges being on the price and asks me to justify, I already know it's going to be a long day. And I've done enough business where I'm like, "You know, the last time I took on a client like that, I didn't enjoy the experience." And I want you to reflect back on your life. The last time I dated a person that asked me all these questions for me to justify myself, to make me prove myself to their parents, that relationship did not go well. And maybe it did work out for you, and if it did, by all means, keep doing it.
We have to understand that if it doesn't apply in most cases in our life, why would it apply in this one way? Because you know why? Because we're so used to answering questions, justifying ourselves, pleasing other people, because we're people pleasers, we're conflict-averse, and we think every question is a legitimate question. It is not. Not all questions are legitimate. Answering, "Why is it this much?" or "Justify your price" is not a legitimate question in my opinion.
I know that sometimes when I share short clips with you all, that you start to get really triggered with responses like, "How come this person can be such an arrogant a-hole?" and it's like, "The best way to lose all of your clients." That's why I wanted to spend this time and give you a little bit more context and expand the conversation. You can see it's from a point of view of support and love, and to make sure that you don't just throw yourself at a project and lose all semblance of self-respect and control, because actually, your clients will respect you more for it.
So if you have additional questions or comments, I'd love to hear them. Go ahead and drop them below, and I'll do my best to respond.