COVID-19 has disrupted the status quo. With the economic upheaval, some businesses were ordered to shut their doors. While, other businesses are busier than ever.
Because the client relationship matters, reach out to your clients. Pick up the phone to call them. And, don’t be surprised when some cry while sharing their story.
Do You Lower Your Rates?
As you listen to their concerns you wonder, “Do I need to lower my rates?” It’s a universal question for entrepreneurs across the globe.
Pricing, even under ideal circumstances, raises a variety of questions. So, do you lower your rates for COVID-19?
Unfortunately, there’s no single answer. A couple critical factors influence your decision. First, consider why you want to lower your rates. Does it stem from fear or generosity?
A Knee-Jerk Reaction
Many entrepreneurs I’ve spoken to are fearful. Lowering their prices is a knee jerk reaction to our current circumstances. They believe getting some new business in the door is better than none at all.
Is that true for you, too? If so, then leave your rates alone. Don’t allow scarcity and fear to run your business. Otherwise, those thoughts may run your business into the ground.
I know it seems counter-intuitive, especially now. People connect price with quality, regardless of the economy. Think about it, do you ever shop at Walmart for top of the line products?
Low prices equal low quality. Walmart’s brand leads with low prices. When shopping there, people expect low end products which don’t last.
Low Prices Hurt Your Business
A rate reduction relieves an immediate problem. However, lowered prices hurt your business in the long run.
Continue reading as I share alternatives which address today’s reality without reducing your rates. These solutions acknowledge your client’s concerns while maintaining your value.
Some entrepreneurs adjust their rates as a way of giving back to the community. This decision stems from charity. It’s not to produce income. Rather, you’re doing this to support others in need. If that’s true for you, then follow your heart.
Relationship over Revenue
As a trusted advisor, your business regularly places your client’s needs ahead of yours. You prioritize relationship over revenue. Your clients appreciate how you go the extra mile for them.
Rather than lower all your rates, be strategic. Talk with your clients, making this decision on a case-by-case basis.
Let’s set some protocols about how to approach this.
Rather than lower your rates apply these solutions when your clients fall on hard times.
Payment terms. Some clients will reach out to you requesting a temporary reduction. Rather than reducing your fees, talk with your client about a payment schedule. Extend the length of time for repayment.
Delete the extras. If your clients business is scaled back, then reduce the package to lower the pricing. Work with your client to identify the essentials for right now. Remember to remain open-minded as your client answers this question. Once her business recovers, you reinstate the original package.
Find the money. Review her expenses to reduce her operational costs. Remove any non-essential expenses, unused subscriptions or redundancies right now. Can some of these savings pay for your services?
Scholarship Slot. Our agency has weathered several recessions. We offered scholarships for financial hardship. Each of the 11 agents had one scholarship slot available. During staff meetings, we reviewed each request. This was our way of supporting our clients if they fell on hard times.
We developed specific guidelines for this policy.
Limitations. The scholarships didn’t last forever. They had a set time frame, typically between 30 to 90 days.
Existing client. Only existing clients in good standing would receive a scholarship.
Pricing. Once the scholarship expired, the original pricing was reinstated.
Avoid Following the Common Approach
Many entrepreneurs immediately lower their rates for all clients, new and existing. Don’t give into the urge since it’s not the ideal pricing strategy. Although you quickly resolve an immediate concern, there’s a downside later on.
As a trusted advisor, talk with your clients. Some clients must immediately reduce all their expenses. Develop solutions, like reducing services, to lower your rates. Clients who continue to work with you believe they have more to gain from your work together than the fee they pay for your services. As always, aim for the win-win solution.
Follow these recommendations for your business to be successful, and grow while keeping your passion alive. Are you tired of doing work for free because you don’t know how to charge for it? Discover how to get paid what you are worth and attract clients who understand your value. Right NOW claim your FREE RESOURCE to create value based pricing.