Dear Dakota Series | What Should I Do When Someone Negotiates My Fee?

Sep 9

DESIGNER SUBMITTED QUESTION

“What do you do when someone tries to negotiate your fees? Do you run away from the client? What’s the best way to explain the cost and your worth?”

Raise your hand if you’ve had to deal with this.

OF COURSE you are raising your hand! When you own a business, you’re also the chief negotiator. And it’s something you’ll need to get comfortable doing (at least in the beginning) because it will happen, especially in a service industry where much of the value is placed on the IP and creative genius of the business owner.

So first, let's back up.

01 | Negotiations typically happen at the contract/proposal phase.

Meaning, you’ve talked with the client, maybe done an in-person consultation, and now you’re sending them their proposal for services and contract. The scope, the fee, the timeline, all the good stuff are outlined in this proposal and contract.

PRO TIP: This should NOT be the first time your potential client is seeing your pricing.

You should have shared preliminary information on your website and/or in your investment guide.
You should have discussed this on the discovery call.
You should have discussed it again at the consultation and provided some specifics related to their project.
Your body of work in your portfolio and in your marketing should speak to the caliber of your services and talent.

02 | If the negotiations are happening during the discovery call, then we have a marketing problem.

This means what you’re sharing in your portfolio and your marketing isn’t matching up to the fee structure. This does NOT mean you should reduce your price; this means you need to reevaluate your marketing strategy to make sure you’re speaking to clients who can afford your services. And don’t put out DIY content if your ideal clients are not looking to DIY their design.

Oftentimes, our 1:1 clients don’t realize their unique selling proposition so it makes it easier for their potential clients to compare them to other designers based on price alone. This means potential clients may say “Well Susie Q Design charges $X,XXX for her services and yours are $XX,XXX”. And if you’re uncertain of how your company and your process is different, then it’s more likely you will be inclined to second guess your fee, give in to a lower price, and then suffer through an excruciatingly unprofitable project.

On the other hand, if your USP is clear, you are confident that your company is the only one that does x, y, and z, and you have a proven process, standing firm on your pricing will be a no-brainer.

PRO TIP: Know your unique selling proposition and then share that across your marketing. Here are some ideas:

Do your projects always come in under budget?
Do your projects always finish on time?
Do you incorporate their existing furniture and decor with glee?
Are you the queen of refinishing and reupholstering?
Do you love shopping for antiques?
Do you let them handle the project management? Or maybe you LOVE project management and do weekly site visits?
Do you only source retail so they can do the shopping?
Do you have a one-of-a-kind client experience?
Do they get access to your company beach home?
Do clients love your process?
Do you have tons of connections in the industry?
Are you a genius on construction sites?
Do you include professional organizing with your kitchen designs and bathroom designs?
Do clients get a dedicated project manager?
Do you never use the same piece twice?

The list goes on. What is your one thing? (If you work with us, we’ll tell you!!)

03 | You know your price because you know your process.

You know my viewpoint on processes and that I believe they are the foundation of everything we do in our businesses. The software we should use. The prices we charge. The type of help we need to hire.

When you know that Service A follows a 39-step process and takes a minimum of 42 hours to complete, there’s not a lot of wiggle room to lower your price because you know exactly how much time it will take your company to deliver.

SO, in my typical more-is-more response, here is my recommendation:

If you can reduce the scope and still deliver the same result, then you can certainly reduce the fee. But to reduce the fee, you need to reduce the scope or the term.

Let’s say the client wants three rooms designed and you propose $15,000 for your full-service experience. You detail what’s included in each room design, how long the project will take, and you set a minimum expenditure for furnishings.

You now have four things you can negotiate on:

Service fee
Scope
Term
Furniture investment

Client says, “Eeek, $15k for three rooms, we were thinking $7,000.”

To that, you could say, “While we can’t reduce the design fee for the scope of work as outlined, we can reduce the cost if we [remove a room | reduce the number of revisions included | remove the styling and accessorizing | shorten the contract term and let you handle the project management | reduce the number of site visits and bill those hourly as needed | etc.] How does that sound?”

If your services are clearly outlined on your website, if your process is clear, if you’ve been upfront about pricing and ranges, and they’re still struggling to understand the value or want you to change your process for them, then this is an indication that they won’t be a good fit for you and you won’t be a good fit for them. That’s when you run.

I also find that the prospects who want you to change your process (rather than your price) are often the ones who are more difficult as clients because they will struggle the entire time with boundaries.

If you’re struggling with this, be sure to check out our Client Experience templates for interior designers so you can impress potential clients with your professionalism, your clearly outlined process, and your transparency while also reducing questions, negotiations, and confusion from the minute they inquire. WOO HOO!