Three Big Reasons to Never Compete on Price

Article courtesy the Freelance Design Marketing Association.

One of the biggest mistakes I see freelance graphic designers and Web designers make is trying to compete on price.

If you think you’ll get more clients and earn more income by charging less than your competition, think again. Competing on price is a big mistake, and it’s one you can’t afford to make if you want your freelance design business to be successful long term.

I know, I know, competing on price can seem like the right thing to do; after all, many clients shop this way. But in reality, price competition can do more harm than good to your reputation and the types of clients you attract.

It really can be a vicious cycle that is impossible to get out of and seemingly more impossible to break as a business practice.

Here are three big reasons you should never compete on price:

1. You undermine your credibility by charging less.
Stop for a moment and think about the message you send your prospects by charging less than you’re worth. In your mind, you think clients are saying, “Oh, great! Now I can finally afford this service!”

But in reality, prospects are thinking, “Why is this designer charging less than everyone else? They must lack experience, or maybe they’re just not very good at what they do.”

Prospective clients expect those who are good at what they do to charge more than the competition, and they’ll gladly pay a higher price to get the service they desire. After all, your prospective clients believe in “you get what you pay for,” just like most people do.

If you needed plastic surgery, would you want to hire the bargain-basement discount doctor, or an expert who charged what his or her expertise was worth? What would the cheap doctor do for your face and image? What does the bargain-basement designer do for their client’s image?

Just something for you to ponder.

2. You attract those who know the price of everything and the value of nothing.
When you compete on price, you attract clients who value price more than anything — including the value of your work and how it can benefit their sales, marketing, and position in their industry.

It doesn’t matter whether you provide the very best services money can buy or you do a just a so-so job, you’ll never have a long-term relationship with these clients, unless you’re willing to compete on price forever… because price is all they really care about.

As soon as someone cheaper comes along and you’re not willing to drop your prices, those clients will be gone.

3. Most people who are cheap and looking for the cheapest price can be “royal pains” to work with.
Internet marketing coach Yanik Silver once told a story about the Mercedes dealership in his hometown. He said the customers with the lowest-priced, entry-level Mercedes complain the most and cause the most problems for the staff. But those who purchased the highest-priced models of Mercedes are the best clients to serve and work with.

The same is true for your freelance design business. Cheap clients almost always complain more, take up more of your time, and are rarely satisfied. That’s because they’re always looking to get more for their money — which usually means more work for you, more headaches for you, more fires to put out, etc.

Of course, all of this comes without more pay.

No matter how great of a freelance designer you are, you’ll never be as successful as you could, if you compete on price.

When you don’t charge what you’re worth, you undermine your credibility and are sure to attract the wrong kind of clients. However, when you refuse to compete on price and add a lot of value to your services, you make your work more enjoyable and profitable, which will make your clients happy to pay you what you’re worth!

Copyright © 2009-2010 by Jeanna Pool. Jeanna is the Founder & President of the Freelance Design Marketing Association. The FIRST and ONLY association of its kind, anywhere in the world dedicated to teaching freelance graphic designers and web designers how to market their services successfully, attract clients consistently and build the business and income of their dreams. Visit the Freelance Design Marketing Association Web site to test drive the association risk-free for 30-days.

 

Tags
Posted on: December 14, 2009

10 Comments on Three Big Reasons to Never Compete on Price

  1. It isn’t a good idea to do anything which will attract the wrong type of customer. You can bet they’ll send their friends, many of which will be cheaper than themselves.

  2. What’s your take on web sites like elance.com? They would seem to indicate the increasing globalization of service businesses like design, where you are not necessarily competing against lowballers, but against the prevailing rates in places like Romania, Slovakia, India, Zambia and so forth — places where levels of design skill can be pretty high and $15 is pretty good wage.

  3. Follow these tips and u wont get an order because ur price was too high.

  4. easy for you to say

  5. After 30 years in this business i have to say most clients are a pain to work with in some way or another. And now there is NO loyalty, a towelhead in India can take my work and get paid in corn and rice. I need to feed my family and i threw away my self respect when i entered advertising.

    But, I guess i would feel better about things if i said i charge $200 an hour and nobody is deserving of me unless they pay that. However, we are not doctors or plastic surgeons, we make items to sell other things. We are dispensable, and price does not create more effective, or more beautiful work. I am so worthy of more that i ought to charge you for writing this comment.

    signed- future walmart greeter

  6. Aren’t you just shilling for your “Association”? I don’t think you charge enough for membership ha!

    Seriously, go preach to the third world designers, get them to raise their prices.

  7. apply this concept to other aspects of your life and life becomes more enjoyable all around.

  8. This is a good article. Certainly, many freelance graphic designers and web designers charge their price overboard. Well, we can’t blame them for that since the tragic recession’s rage still lingers around us. If they wouldn’t do such thing then how will they pay their power bill, loans if any or rent? On the other hand, an overprice labor could also costs you less or rather no clients at all. This is a competitive market. More or less, just be fair to you and your clients then everything will fall into place.

  9. I don’t think this article is fair. There was a time when you could charge a premium price because you were the only person who could do the work. But now the technology has leveled the playing field and now anyone can create. Of course most of the stuff created by the unwashed masses is crap, but guess what? They don’t care! If you can find the clients that are willing to pay a premium when the guy down the street can do the same work for less, great. But I think those days are rapidly coming to an end.

  10. As President of the Freelance Design Marketing Association, your article suggesting everyone keep their prices high is shamefully self-serving, and dismally short sighted. Companies offering services must provide VALUE to their customers, regardless of the price. If web designers can’t offer their clients great VALUE for a necessary service at a price that the customer can’t find ANYWHERE else, then good riddance.

    My customers KNOW what I offer them, that it is an IRREPLACEABLE service to them, that they CAN”T do without it, and that I offer them the service at a FAIR price which they can’t match elsewhere for the service I provide.

    Be IMPORTANT to your clients. View your role as IMPROVING their business, not making pretty pictures.

    Designers are cheap and plentiful. Companies that help other companies better their market position are rare and invaluable.

    If you are serious about teaching designers how to market their services successfully, teach them to offer VALUE, not to charge a lot.

Leave a comment

Your email address will not be published.


*