Whether you’re a small-business owner or the CEO of Apple, conversations around budget are unavoidable, but they’re nothing to be feared. The best way to get comfortable with the conversation is to be equipped for it. To start, you’ve got to know where you stand on the matter. Our take on it all?
To navigate the conversation, preparation is key. So, how can small-business owners ensure they’re ready?
Know the value of your expertise
When the price of your service is in question, it’s important to be prepared and know your response. It can be tempting to drop your price in order to secure the job, but this is not wise in the long run. Your choices in these moments will inform a range of factors; how the client views you, how your staff feel about their role and how future or potential clients will feel about you.
The problem with discounting is that it communicates an underlying message that you may not be aware of.
- It implies the first quote was inflated: Not only does this discredit the honesty of your pricing for future discussions, it opens up the floodgates for future discounting requests. Grant one favour and you’ll be expected to grant them all.
- It diminishes the value of your staff and their time: This one is problematic because most business owners won’t have even considered it. Nevertheless, it’s important to remember that your staff pride themselves on their work and their expertise should be respected.
In my experience, conversations around budget are a lot less intimidating when you fully understand and can convey your reasoning for declining the request to discount.
How can business owners manage conversations around budget with their clients?
In my experience, there are two ways to manage conversations around budget when you have a client requesting a discount.
- Know how else you can add value to their business
- Look at the possibility of breaking down the project into phases and separating payments based on certain deliverables.
The important thing here is that negotiation doesn’t always have to be a conversation around dollars. For example, you could offer to deliver the project on a faster timeline. Often, time and convenience are valued above a dollar amount so it’s just a matter of proving it’s worth it.
On the flip side of that, if time isn’t an issue, then offer to deliver a large project in a phased approach and bill the client per each phase. It’s a good way to show the client that you understand the constraints they’re working within while simultaneously valuing your own business and the time spent to deliver the project.
How does this contribute to your long-term business success?
This allows business owners to build relationships with clients that are meaningful beyond simple transactions. Yes, budget is important but it’s not the only factor your client will consider. If you provide value by way of truly understanding their business and their needs then the conversation will naturally move away from price. The question no longer becomes about what it costs to have you but what it costs their business if they lose you. Clients who value your services for reasons beyond price are the ones who will fuel your business. They’ll be the ones providing recommendations to others in the industry and coming to you with exciting opportunities.
Knowing your business, your goals and who the right clients are to help you succeed is an underrated yet essential skill in leadership. Considering this early and using it to execute your business goals will only see your business grow.