EP 36: It's not uncommon for clients to push back on your estimate and ask if there's any wiggle room in your rates. They may even ask you to explain your rates. And whether you are looking to get them closer to your number or meet them halfway, it's good to know how to adjust your rates that leave both sides happy. In today's episode, I answer an audience question on dealing with client push-back and how to find that middle ground during a negotiation.Cradoc Foto Software
Michael Der 0:02
You're listening to Artrepreneurs, a podcast that inspires photographers and visual artists to live their best creative lives. My name is Michael Der and I am a full time photographer with nearly 10 years of experience in the freelancing world. And I'm sitting down with an amazing community of visual artists to talk about process, business, and the lessons that have helped them grow. So let's get to it. Artrepreneurs starts right now.
Alright, folks, welcome back to Artrepreneurs. I am so thrilled to have you guys tuning into this show. Now we've come a long way in season one. And for today's episode, I am honored to answer our very first audience question left on the Artrepreneurs voicemail. Folks, this is such a cool feature to the Artrepreneurs website. And for those of you who don't know what that feature is, if you're ever looking to have a question answered about your business, please check out Artrepreneurspod.com, click on that microphone button on the bottom right part of the page and leave your voicemail. You can also go to speakpipe.com/artrepreneurs and do the exact same thing there. either myself or my esteemed guests will eventually address your question. And your voice just might end up on the next episode of Artrepreneurs. So how cool is that? For now I'm excited to bring you our very first message all the way from New York City. Let's tune in and see how we can help out.
Danny Suriel 1:14
Danny Suriel, New York City. love the podcast brother has been very informative, a huge help. And I actually need just a little more help. Just recently, I received some pushback from a client, a client that I really want to work for. We had originally came up with a price. But after finance looked over and a couple of other factors, they said that it was too much I need to find a middle ground where I believe that you know, I'm not overworking myself. And I'm also not taking too much from them. This is a client I want to work for just for a simple fact that it'll be a great opportunity, as well as I'd be breaking into a new plane of photography. And it might possibly be one of my biggest paydays. So I wanted to ask for your advice. And you know, what would you inform somebody or tell somebody to do in such a situation? I look forward to your response brother.
Michael Der 1:57
All right, brilliant. Danny, thank you so much for calling into the show and leaving that question, you are actually representing a lot of creatives out there. So I greatly appreciate you stepping forward and taking the initiative to bring up a topic that we all need a little bit more transparency in, which is how to negotiate with prospective clients, and everyone out there that is in the creative space. If you haven't done so already, you will eventually be asked for your rates only to be challenged by that lead to lower your price. And some days you're going to prefer to stand your ground, while other opportunities you're going to extend that Olive Branch. And there is no universal right or wrong decision here. There are simply informed decisions and uninformed decisions.
Now I am going to presume that we're not talking about a small editorial job like newspapers or magazines, or any type of b2c portrait shoot or anything like that, those rates tend to be significantly lower on the pricing spectrum. And they're not really worth an intense back and forth with a client. It's actually the bigger fish that I want you to focus on more. So presuming this falls under the commercial or corporate structure, I think we have enough information to go on to give you some food for thought.
First, let's look at the fact one, it's a first time lead to you want to work with them. Three, they asked for your estimate first to which you provided for they responded with we don't have that budget, and five, you're open to finding a middle ground. So those are the facts that we have right now. And it's actually a fair amount of information that I think we do have even though we don't know what the job really entails or what the terms are.
And what I want to do before diving into response tactics solely is actually just look at the leverage that you may have. Because oftentimes, when a creative gets pushback from a client, the immediate feeling is negative. There's an overwhelming sense of pessimism because you feel disrespected, you feel resentful, and then you might even respond defensively, which is an easy way to kill any negotiation. And so I'm hoping that you discover that what you tell yourself in a negotiation beforehand is just as important as what you tell your client. So I want to highlight some potential advantages that I see you having so that your mindset is actually primed for a healthy conversation with your lead.
Number one, the client sought you out for your services, this implies that they have interest and confidence in you to fill their needs. That is a positive
number two, there is likely an urgency for this client to come to a decision quickly. A lot of companies often don't prospect photography needs until they need them. This means instead of having a plethora of time to determine who the best photographer might be in the marketplace at the best price, all we have to do is nudge them just a little bit in our direction. While they're in urgency mode.
Number three, they did not provide you a price for their standard photography cost or their anticipated budget. That means you weren't pigeonholed In my opinion, the person that puts down the first number is usually in a position of strength, because you have said is what is called an anchor price to which all subsequent pricing options are referred back to. So relative to the anchor that you first set. Your next price point might look amazing to them. In comparison
number four, you actually heard back from them. And so I know that you weren't given an immediate greenlight to your rate. But the sheer fact that they continue the conversation and didn't ghost you after seeing your first estimate leads me to believe that there's hope I've done this enough to know that any answer is usually a good answer in my opinion, if the answer is flat out, no, at least they showed you the respect of not wasting your time. If it's a less than definitive No, then you're still in the game.
All of these things are really good signs.
Number five, you mentioned that this could be your biggest payday, which implies to me that your rate is high enough to make adjustments to while also still leaving plenty of room for profit. This is why low rates are harder to negotiate and feel good about. For instance, if you had a $500 job dropped down to $400, that is a 20% cut in your day rate, that probably leaves you a little bit resentful of that job, it's not worth it for you. Conversely, a day rate dropped from $15,000 to $12,000, which is still 20% off the top, that could be a little bit more digestible, because you still have plenty of profit margin.
And lastly, advantage number six, you want to work for them, you want to find the middle ground. Now I can try to convince you to stand firm on your budget and never budge. But in my opinion, having a mentality of seeking out Win Win scenarios puts you in a great position to build empathy with your lead and come up with a brand new client. So to me, these are some solid affirmations that you have working for you as you start drafting your response. These should give you confidence to either stand by your price, or make minor moves closer to theirs. And as you mentioned, any Your goal is to work with this client but not roll over completely.
So our first step is to articulate to our clients how we came to our number in the first place, which in my opinion works best if you itemize your rates. Think about any time you've gotten work done on your car, there's usually a breakdown of parts fluids and labor costs. And if you didn't see that breakdown, instead, you just got a bill for $500. Think about how you would feel about that purchase and ask yourself how would your client feel if they saw something similar.
So I like to list on my estimates the following fees, a creative fee, which is your cost of doing business rate, a license fee, which is determined by how the images are going to be used by the client, a retouching fee often determined by how many images need to be retouched and reimbursement fees, which are determined by how much travel production and assisted help you need to do the job. Not only is this an effective way to arrive at consistent pricing structures, but it's also a good negotiating tool as you can adjust terms and deliverables while keeping your creativity intact. And this leads me to my first negotiating option, which is to simply adjust the terms of your estimate.
Now let's run through an actual scenario here. Let's say your first estimate was for $10,000, for corporate headshots for a team of 50 people at two images per person. So your breakdown could look something a little bit like this creative fee $3,000 license fee $5,000 retouching fee $1,000 and reimbursement fee $1,000. Now the combination of these four fees comes out to $10,000. But with significantly more clarity to your client.
When presented in this fashion, it's actually easier for you and your client to adjust certain terms to meet their budget, while also honoring your creative fee and your licensing value. So here are a few ways that I would look to limit the terms
a, you can lower the amount of deliverables they receive. For instance, instead of providing them to edited images per person, you could provide them one per person. If they want more after the shoot, you can simply provide them an all a cart add on feature through your site
b, when you're licensing images, instead of selling your images, you can shorten the length of a license you provide them. So instead of a five year license for these images, you can make it a two year license or a one year license. If they want more time, they understand they have to come back up to your price.
c, you can adjust the benefits of that license. If your original rate gave them my full royalty free term, which are obviously very publisher friendly, you can then offer them specific rights management terms that meet their budget range, but limits their ability to use the images however they want. If they realize that they want full carte blanche for the images, then they realize that there may not be a way to get it without paying for it.
D You can provide them the option to remove retouching services which can help their costs and save you time. You can also ask them if they would be able to supply a person of their own to help you out so you don't have to hire anyone to assist you on your shoot.
These are all easy ways to show your client transparency in your pricing. And that while your creative fee is what it is your deliverables, your usage rates and your production costs can also be fluid. So when a client understands your process, you're more likely to convince them that your rates are more than fair, and that they just need to determine how important this project is to them and whether they can make their budget work. When you limit the beliefs that client will receive. They will reassess what they're willing to spend to get the best service and hopefully meet you at your numbers more often. At the very least if they still don't have the budget after you've presented this, they will have a greater understanding of your pricing methodology and should respect it more.
The second option I would suggest is to standardize an introductory rate for first time clients. And for me, I would stick to a percentage instead of saying I'll knock off $1,000 I might say here's a 10% off intro rate for new clients. This way if a client says we can pay you $2,000 instead of your $10,000 I articulate that an 80% discount is not something I can offer at this time when they see how big of a cut that is. I think it registers with clients a little bit more empathetically and they are more likely to see the absurdity of such a big drop. It doesn't mean they're gonna match your first offer but they will understand where you're coming from a little bit better, which is a huge step in negotiation. Now the kicker in this though, is that you should pitch them different packages that will save them money upfront.
While promising you future work. Now, this could include a stipulation that after the job is done, if they are happy with your services, that they connect you with another client, it might be a leap of faith that they're going to abide by this honor system and sing your praises to anyone else. But generally speaking, if you deliver on your services, they will likely follow the law of reciprocity and share your info. You can also offer discounting in bulk by securing more projects with this client right now, something like here's 25% off this job. If we sign up for a follow up next year, or on your next campaign, there's nothing wrong with taking less upfront so that you can benefit dev Alon, that's actually smart business.
So while the first option I talked about is D, incentivizing a lower rate package by limiting client benefits, the second option is more incentivizing them on goodwill and future projects. Now, regardless of which option you choose, if you are lowering your rates to meet client satisfaction, I strongly suggest improving the terms of payment on your end. So for instance, instead of net 30 terms on the original estimate, in your newly revised estimate, give them payment terms of net 15, or same day pay or a larger deposit, and it's going in automatically, don't even ask them if that's okay, simply provide a new estimate that lists these new terms. If you're getting a discount, you should be getting paid faster.
Now, in the end, finding common ground is less about what your tactics are and more about your attitude during the communication process. We've all heard the saying it's not what you say it's how you say it. So don't take things personally, it's just business. We've all been pitched, terrible rate before. And it's not the last time it's going to happen. But it's also not worth getting defensive over. After all, this is not a boxing match. It's not you versus them. It's not divorcecourt. If you're approaching your negotiations as a zero sum game as a fight, I think you're in the wrong headspace. This is a dance. You have a partner in this that you want to build chemistry with. You should want them to come away feeling like they got a great experience that was worth every single penny. You don't want to leave a client with buyer's remorse just so you can see you got to your number. Likewise, you want to let your partner know if they're stepping on your feet during the foxtrot. Remember, advantage number six, you want to work with this client. Those are your words, this is a positive. Just make sure your client knows that. So don't be combative during your negotiations. Be collaborative, listen to their needs and articulate how you might be able to meet their budget. If you approach this with a win win attitude, you will have a potentially new client that can create a lot more opportunities for you down the road.
And so that is going to wrap up today's episode first. What a great question for our first entrepreneurs voicemail, huge shout out to Danny, surreal out of New York City for leaving this message on the Artrepreneurs site. I hope this helps you out in some small way. I have a lot of confidence in the leverage that you already have to negotiate with your client and land this job. But I am wishing you good luck all the same. For the rest of you out there. kudos for tuning in. You all rock. Have a great rest of the day, folks. And see you guys next week.
Hey everybody, this is Michael Der thank you so much for making it all the way to the end of the episode. I hope you'll follow tag and engage with us on our Instagram account at Artrepreneurspod. We've also launched our website Artrepreneurspod.com. It is the central hub where you can sign up for our newsletter, read our blog posts, send us voicemails, and even access discounts from our amazing affiliates. It's also the perfect spot to shout out Artrepreneurs with what would be an immensely appreciated five star rating and review. And if you're feeling extra generous, you can even make a small donation that's really going to help accelerate the growth of this podcast. But no matter what you do, folks, I just want to say thank you so much for supporting this program. There are a lot of great photography podcasts out there and I am just grateful to have gained your trust even for a moment. Take care everyone. See you next week.
Transcribed by https://otter.ai