Is It Possible To Keep Hyper-frugal Clients?

[mterrian]

I'd love to know if anyone else has been in my shoes.

I have a client whom I like, for whom I created a very good, well-received and effective web site.

Now I have been asked to build a second one for her. She has asked for a significant discount as a returning client, citing referrals made to me (none of which came through) and implying subtly that my project fees are too high.

I've explained that our bids are pure mathematics -- hours x rate = project -- thanked her for her business and referrals, and offered a service perk or two for being a returning client, but she still isn't happy. Also, there is the fact that she took nearly six weeks to pay us for the first site.....

My gut tells me that she really doesn't value OUR small business's needs, and since our business's needs are my #1 concern, I am leaning toward backing out of this second project rather than waste any more time bickering. Am I being hypersensitive? Should I cave in - IS the customer always right? What would all of YOU do?

Thanks,
Perplexed

[RebeccaZ]

I've always been told that as long as you know your rates are fair for your experience/skills and the type of work you are doing, then stick with them. Just respond very reasonably that you feel your rates are fair, that as a small business you have certain expenses (which you are sure she understands), explain the formula again, and state that you hope to continue working with her. She obviously was happy with your services the last time, or she would have just gone elsewhere.

The minute you start letting other people decide your rate, you lose your independence as a small business owner.

That's my opinion. Hope this helps!

Rebecca

[pete]

Instead of anything extra, why not offer her a cash discount for prepayment?

Or, simply tell her that your prior experience with her has taught you to ask for your money up front.

Don't beat around the bush on money. Tell it like it is.

I had a fair customer when I was sorking as a salesman for a national company. The kind where I often had to ask for a check. The guy always wrote one, like it was no big deal, but I had to ask to get it.

Several years after leaving that company, in fact that whole line of goods, I got back in a small way on my own. I knew the guy could be a good account, but I could not carry him for months. So, I put together a proposal which I knew was lower than what he was paying, simply because my prices were lower. No discounts, full price sheet, but I was buying from the manufacturer, not repackaging, like his then current supplier. I just had a better price.

So, I gave him my full price sheet price, but offered a 5% - 10 days discount.

I go into his two shops each week, deliver and put up what I ordered the week before and write a new order, all with none of his employees paying any attention. There is a check taped by where my products are as agreed. Been that way for years. Having a better price sure helped, but I believe the 5% was the deal clincher. My gross profit is about 53%, so I am still almost doubling my money and have virtually no A/R.

[Old Welsh Guy]

The client has cited many reasons why you should give a discount. so look at them.

1. Returning customer! Is it better to get burgled by the same burglar twice? not everything in life warrants a smile for a repeating aquaintance.

2. Referrals! A deal is a deal when the cheque clears (my motto when I ran a sales team in my business) up until then it is a loan. She referred LOSS OF TIME as none panned out into sales. have to ask yourself why, but chances are people refer like minded people and if the customer wants to pay peanuts then so will the referrals.

3. Infers your rates are too high! This is easy to deal with, ask here what she wants to cut out of the package to lower the rates.

Personally I would speak face to face with this client, and tell it like it is.

starting with your rates. Tell them your rates are set to allow you to deliver the high quality product you do, and that you would not want to deliver sub standard work to your clients so have to keep your rates where they are to ensure this. Ask them right out. " would you be happy with a substandard job?"

Next move on to the referrals, and be ABSOLUTELY blunt here, Tell her that you would be happy to offer a discount based on the volume of sales from their referrals. But the problem is that what actually happened was that you spent quite a lot of time dealing with the referrals, but none came to order, so a discount based on volume really isn't an option.

Returning customer thing. is easily dealt with. Tell them that as a returning customer you will of course give a discount and keep the quality as high as your normal rates. But say that as there was a delay to the point where the account was in default of your terms, you would have to insist that the terms of paypment are adhered to. or you will not be able to take the job on as it is simply not profitable.

[mterrian]

Thank you all.

Even after 9 years at this, sometimes, I still get tunnel vision and can't see my way 'round a problem.

I appreciate the fresh perspectives and great idea -- terrific!

All the best,
M