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NOTABLE! Turning Away Customers who Can't Afford Your Prices

AustinS28

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I don't know if I'm looking for help or just seeing if anyone else deals with this...

When I first started my business I'd take on any work. I'd slash my prices, I needed money, I was desperate.

I never had this problem before but this past week I've already had two people wanting 25% less than my going rate and I had to say I couldn't do it.

There are several reasons why, but at the moment the two that stand out the most are - I'm already booked with appointments and the amount I'd make on those sales is not worth the headache and aggravation of selling my time.

Even the person I'm beginning to contract out as I take a small cut for the lead wouldn't make enough profit for me to pass on those customers even if I gave it away for free.

My dilemma is I've been poor before so I have trouble turning down money. That said I'm overworked as is.

I'm also trying to start another business and travel a lot so every dollar counts, but I think at a point my health and time take more value than certain business even if it means less money at a given time. It also may mean I'm saving those appointment slots for customers who fit my criteria.

I didn't realize what a challenge it is to set boundaries for yourself and put a value on your time and business. It's accepting you can't please everyone and being ok with that. I can't wait to get over the limiting fear that I need to be dependent on every sale that comes my way.
 

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Fox

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"Find the people who see the value in what you do and not the cost" (@Andy Black said this I think)

What you are running into is the wall of a time based business. It means you are successfully winning but with the wrong structure.

You need to free up that income so it can run without you.
 

Jon L

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Time to hire (or contract with) someone that can do what you do. If you hire overseas, you can keep 50-80 percent of your revenue. Finding good people is a pain, but its worth it. Its also then possible to lower your rates for some clients by a little bit, and still come out far ahead of where you were when you were doing all the work yourself.

NEVER do business with someone that doesn't value your service, though. Those types are usually awful to deal with...they're both demanding and cheap.
 

ApparentHorizon

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Tell them, you're actually thinking about raising your prices, because you're already being inundated with so many requests.

"What I can do for you, is make a note of our meeting today and if you would like, I can get you in at a later date, at today's price. When you have the funds to move forward."

They'll either go away or meet your price.
 
G

Guest3722A

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Maybe start taking names and when you have enough offer a group session. Or, maybe get the client's desired outcome and piece together a personalized video series for them and sell it at an even lower price than what they were asking. Include your phone number for questions.
 

amp0193

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I don't know if I'm looking for help or just seeing if anyone else deals with this...

When I first started my business I'd take on any work. I'd slash my prices, I needed money, I was desperate.

I never had this problem before but this past week I've already had two people wanting 25% less than my going rate and I had to say I couldn't do it.

There are several reasons why, but at the moment the two that stand out the most are - I'm already booked with appointments and the amount I'd make on those sales is not worth the headache and aggravation of selling my time.

Even the person I'm beginning to contract out as I take a small cut for the lead wouldn't make enough profit for me to pass on those customers even if I gave it away for free.

My dilemma is I've been poor before so I have trouble turning down money. That said I'm overworked as is.

I'm also trying to start another business and travel a lot so every dollar counts, but I think at a point my health and time take more value than certain business even if it means less money at a given time. It also may mean I'm saving those appointment slots for customers who fit my criteria.

I didn't realize what a challenge it is to set boundaries for yourself and put a value on your time and business. It's accepting you can't please everyone and being ok with that. I can't wait to get over the limiting fear that I need to be dependent on every sale that comes my way.

Turn them down, but take the opportunity to tell them why you can't lower your price. Convince them of how you are better/different than the others. Maybe they'll turn around and pay that price.

If they don't want to pay, let 'em walk. Like you said, you don't have time anyways and you can't even sub it out at that rate.
 

AgainstAllOdds

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"Sorry, I'm currently booked, and unfortunately don't have the time to offer my services at a discounted rate. However, let me refer you to one of my competitors. They do great work: [competitor name]."

Proceed to refer them to a competitor that is priced 2x or higher than you. Then wait for them to come back.
 

David Kotevski

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I don't know if I'm looking for help or just seeing if anyone else deals with this...

When I first started my business I'd take on any work. I'd slash my prices, I needed money, I was desperate.

I never had this problem before but this past week I've already had two people wanting 25% less than my going rate and I had to say I couldn't do it.

There are several reasons why, but at the moment the two that stand out the most are - I'm already booked with appointments and the amount I'd make on those sales is not worth the headache and aggravation of selling my time.

Even the person I'm beginning to contract out as I take a small cut for the lead wouldn't make enough profit for me to pass on those customers even if I gave it away for free.

My dilemma is I've been poor before so I have trouble turning down money. That said I'm overworked as is.

I'm also trying to start another business and travel a lot so every dollar counts, but I think at a point my health and time take more value than certain business even if it means less money at a given time. It also may mean I'm saving those appointment slots for customers who fit my criteria.

I didn't realize what a challenge it is to set boundaries for yourself and put a value on your time and business. It's accepting you can't please everyone and being ok with that. I can't wait to get over the limiting fear that I need to be dependent on every sale that comes my way.
Maybe start a middle class Personal training gym, that you could just manage with another personal Trainer whos new and less experienced, but with your guidance would still work out great if its a viable option to never turn down a client and potentially have 2 Brand Names going for you like muscletech and six star.
 
W

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I don't know if I'm looking for help or just seeing if anyone else deals with this...

When I first started my business I'd take on any work. I'd slash my prices, I needed money, I was desperate.

I never had this problem before but this past week I've already had two people wanting 25% less than my going rate and I had to say I couldn't do it.

There are several reasons why, but at the moment the two that stand out the most are - I'm already booked with appointments and the amount I'd make on those sales is not worth the headache and aggravation of selling my time.

Even the person I'm beginning to contract out as I take a small cut for the lead wouldn't make enough profit for me to pass on those customers even if I gave it away for free.

My dilemma is I've been poor before so I have trouble turning down money. That said I'm overworked as is.

I'm also trying to start another business and travel a lot so every dollar counts, but I think at a point my health and time take more value than certain business even if it means less money at a given time. It also may mean I'm saving those appointment slots for customers who fit my criteria.

I didn't realize what a challenge it is to set boundaries for yourself and put a value on your time and business. It's accepting you can't please everyone and being ok with that. I can't wait to get over the limiting fear that I need to be dependent on every sale that comes my way.
I think the easiest way for you to get over the draining feeling of turning money down is to get a better appreciation of the value of your time. Take 3 days off from your business or job and use those days to do whatever you want. With working 5+ days a week and having obligations every weekend you start to forget what it's like to have the ability to own your decisions without the consideration of anyone else. To be able to do whatever you want at that moment in time and almost feel guilty about it. Then remember that feeling of freedom the next time someone tries to low ball you, and ask yourself if what they are offering enough to keep you from that feeling.
 

The-J

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I gave a dude a 75% discount not too long ago.

How did I do it?

I came up with another solution that would take 25% as many man-hours.
 

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ZCP

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Raise your rates. Give all clients the opportunity to book the next 6 months at current rates by paying in advance. Then raise your rates across the board. If you want, hold a 1/2 day here and there open for last minute bookings at double the price. (If no one books, take that time off or to work on your business). When that time is booked out, raise your rates again.

Supply and demand, brother. If you have the last beer on the island, it will cost more. Do yourself the favor of respecting your time, and the value you provide, as much as your clients do. Then give them the best service possible.

One piece of the puzzle, the one you are having trouble with, is saying 'NO'. You have to say no. Look at it this way, if you burn out, you will not be able to help people. You help people. It is what you do. If you burn out or start to feel like it is not worth your time, you will not do the outstanding work that people need.

We tell clients 'we are expensive. we solve the problem and make it go away'. We charge more so we can do a better job for them. We are more focused and more prepared because we don't fill every second of the day with work. It gives us a chance to help our clients more.

The final piece, and what you work on in those 1/2 days that are not booked, is figure out how to do video and group sessions and sell books / videos while you sleep.

Good luck!
 

IGP

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If you have trouble saying no, flip the scenario around.

Imagine you walk into a nice steak house and order a $60 steak, then ask if you get it for $40 bucks.

See how ridiculous that sounds?

This is business, not charity work.
 

JAJT

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Take emotion out of it - sit down and decide firmly what your lowest acceptable price is and under what situations you would grant that discount (possible future work, slow season, etc...). Write it down somewhere and remind yourself that this is the business's lowest acceptable price.

Then when talking to people make it entirely dispassionate - "sorry, this is the absolute lowest price we can offer right now, without exception, I'd love your business but if price is the deciding factor I'm afraid you'll have to find someone else". Then don't feel bad about losing the sale - they weren't a potential customer at the price they wanted.

If someone talks about how they know "for a fact!:" that you've gone lower in the past, simply say "you are absolutely right - we were very loose with pricing in the past and made a lot of concessions without much thought and it caused a lot of problems. Great for customers but it wasn't sustainable for the business. We've since put into place a very reasonable (but firm) pricing structure now that takes both customer needs and business requirements into account so that everyone feels they are being treated fairly. I can guarantee you nobody is getting lower than this going forward."
 

Lex DeVille

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I like to start with,

I understand if our prices aren't within your budget...

or

I understand if you can't afford our prices. Not everyone can...

or

I understand if you can't currently afford these rates. If you'd like I can refer you to a low-cost [insert title here]

It's really just a trick. Basically I say you're too poor for my service.

At that point those who really can't afford it disappear.

Those who can and have a big ego will pay.

Also those who are resourceful and really want your service will find a way to come up with the cash.
 
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AustinS28

AustinS28

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Great posts from everybody. Can't expect anything less from the crowd here.

It's weird how the Universe works sometimes, but I lost a good customer this morning because she was moving. It was completely out of the blue, and I was able to negotiate with the other person (one I was referencing yesterday) at a higher rate and at a location I have less overhead at. It’s like I didn't lose anyone. I just need to close the sale Friday.

However, I think these problems are illustrating a few things most of you mentioned here.

1. My current business model is reaching it's limits. It needs to be changed (outsourcing work), hands off materials or just get out of this business (the ideal scenario) once it serves its purpose (funding a fastlane business.)

2. My time is valuable. I want more time to compete in weightlifting before I am too old. I want more time with my parents as they get older. I want more time to travel. I want more time with my girlfriend and friends etc. So this makes selling my time for prices it's not worth unacceptable.

3. Negotiation strategies like Lex outlined and other avenues like topherea suggested to capture audiences that fit a lower price point will need to be put into place.

4. I need to separate my emotions from my business in certain situations.

Thanks again everyone. I hope to be rid of most of these problems sooner than later. I'm working hard on another business and the flame is burning hot because I don't like my quality of life right now even if I am making more profits than I have the entire time I've operated. Like fox illustrated, my current model - if my business grows, my time also goes with it, sucks. It’s not fastlane yet. I've learned so many skills though so I think this period of my life, I'll look back and be thankful for all the lessons learned.
 

Andy Black

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It's weird how the Universe works sometimes, but I lost a good customer this morning because she was moving. It was completely out of the blue, and I was able to negotiate with the other person (one I was referencing yesterday) at a higher rate and at a location I have less overhead at. It’s like I didn't lose anyone. I just need to close the sale Friday.
Someone once told me that when you give away books you're finished with, then better books somehow come into your life to fill in the space you've just made available on your book-shelf.

Have faith that when you turn these clients away (and give yourself more head-space) that you've made space for amazing things to come into your life/business.

(What @ZCP said, but more foo-foo. :))



"Find people who see the value in what you do, not the costs."

^^^ This line has served me so well. The slightest hint that they don't see the value, and I'm gone. There's someone else up the road who'll bite my hand off down to my ankle, who'll pay more, and who'll be less of a PITA.

Abundance vs Scarcity mindset.



EDIT: This is a great thread!

Thank you @AustinS28 for being willing to be vunerable. Thank you for everyone who's contributed such great advice so far.

NOT setting prices too low is very hard to do. It's something all entrepreneurs need to overcome (I'm looking in the mirror here).

This thread will help many more people who'll follow along afterwards, so I think it's worth a [HASHTAG]#goldwatch[/HASHTAG] ...

Thanks everyone.
 

Andy Black

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marked notable
--facepalm-- I forgot about "Notable". Thanks @Vigilante



There's some great advice in this podcast, including a little bit about pricing:

One of the tips on pricing is to "get it wrong". i.e. Just start and don't get precious about it.



Another of the lessons is when the guest explains how he realised he didn't want to do any more setups/installations which he'd priced at $4k.

Instead of not offering them though, he uses that anchor price to make a different option more attractive (3 months at $1k/mth).

He prefers the 3 month package as it evens out the workload for his team, and gives him 90 days instead of a few weeks to build a relationship with the client and hopefully extend that 3 month period to an ongoing arrangement.


For those of us providing a service, it's a great podcast to listen to.



So is this one:
 

Green Destiny

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I can relate to this. I used to run my own catering business back in the day and I would always get chancers trying to get a discount or ask you to lower your prices. The few times I did, I always ended up regretting it. Now I told myself that maybe I'll lower my rates just this time and then they'll see the amazing value I offer and will be more than happy to pay this next time and will recommend me to their friends and colleagues.

They way it actually worked out was these people are just bottom feeders, have no interest in what value your product has and only care about the price. They tend to be the most annoying and demanding customers, will take up so much of your time dealing with their mounting BS requests and will resent having to pay you for your final product which when you work out all the time and hassle you went through to fulfil their needs ended up costing you more than what you made.

Oh and the people they recommend will be bottom feeders just like themselves.

After a while when faced with these type of requests in the future I just told them why our product cost a little more than some but if they wanted a cheaper option then i'd give a recommendation of another caterer and just tell them that they make nothing from scratch and use the cheapest ingredients possible and that's why they are cheaper. Haha.

Also whenever we had a nightmare client I always added their name to a list that sat next to our phone, so that whenever they phoned up again or their name was mentioned by the potential client on the phone, all employees were told to make an excuse as to why, most unfortunately, we couldn't cater for their event.

I was happier, the staff were happier and we attracted better, more profitable clients as a result.
 

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AustinS28

AustinS28

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Little recap on these two customers I referenced in the original post.

Customer 1 - we came to an agreed upon hourly rate for my services where we are both happy. He is the first customer I've had in my pipeline to replace an existing customer imideately after losing them. He also found me through Google which makes me even happier since the time I spent creating my website actually got me business. To top things off he mentioned he was planning on budgeting 12k for my services this year.

Customer 2 - I sent an email and used wording similar to what Lex posted. I haven't heard back and don't mind if that person walks if they can't afford it.

If I can come to an agreed upon price, I'll be putting down my first payment on another business I'm starting to get me out of this paid by the hour thing and more into fastlane work. That'll go down at 10 am est, but I'll save those details for another thread and once the finalizations of the deal fall into place.

Thanks again everyone :)
 

John Robert

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Thats good you turned down the work. Always be very firm about the price you set on your own head.
 

handog

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If you break the price for one customer then there's a chance others will find out. Remember higher cost = higher perceived value. I would stick to your prices unless you find out that nobody bites.
 
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