Compete On Quality Not On Price

I work with consultants/freelancers/agencies on negotiating with their clients. The common fear they have is losing out on a deal because of price. Their competition is undercutting them so they lower their rates too. This is bad because you’re no longer competing on the quality of your work. You’re competing on who can do it with the least amount of money. Everyone is a loser here. You get paid less and feel like there’s no incentive to do an amazing job. Your client gets lower quality work.

Why Quality Matters

Nobody wants to deliver a finished product of low quality. People want to attach their names to beautiful products they create. The constraints of low price forces you to work faster and make decisions you otherwise normally wouldn’t make. You are sacrificing quality. Clients need to understand this. It is your job to communicate this to them to set the right expectations.

Why You Shouldn’t Lower Your Price

I understand in the short term you need to make some money. Maybe you’re even new to consulting and think you’ll do a couple projects for cheap so you have something to put on your portfolio. Try to think long term here. Your rate kind of self selects the type of clients you’ll get. Cheaper clients are more demanding. They already tried getting the lowest possible price out of you. Now they’ll try to maximize the amount of work out of you. They likely don’t understand the level of effort required to complete the project.

Higher end clients totally get how much work is involved. They understand that you get what you pay for. They prefer quality over price.

Know Your Value

One of our customers is a freelancer in San Francisco. He got into a bidding war with a Russian web development agency. The project was super interesting to him, he was able to use his favorite software stack and they were going after a huge market. He didn’t want to lose out on the job. When I intervened it was clear he shouldn’t have been trying to compete on price. I told him to take a different approach and just sell the hell out of himself. He’s a talented guy. He just wasn’t sure what his value proposition was. The agency differentiated themselves as the cheapest option. The freelancer now differentiated himself as the higher quality option. He won the bid.

Quality work is what defines you. Your branding, reputation and high quality leads are directly related to how well you execute. Don’t ever under price that.

If there are any topics you want to hear more about please me know. I can expand more in future posts.

Leave a Comment

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: