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How to Price your Products and Services with Confidence {Part Three}

40 Days of Blogging - Day 11

Haggling. That’s the word I talked about at the end of the first post of this series about how to price your products and services with confidence. That word really got me thinking about its definition and some other similar words, such as bargaining and negotiating.

Before I continued on the topic of haggling, I shared some of my favorite pricing-related resources in the second post of the series.

Now, I’m ready to talk about it – and it’s a big topic that can be quite confusing.

First, let’s define the three terms. According to Merriam-Webster, to haggle is to “to talk or argue with someone especially in order to agree on a price.” To negotiate is to “to discuss something formally in order to make an agreement” or “to get over, through, or around (something) successfully.” And finally, to bargain is “to negotiate over the terms of a purchase, agreement, or contract” or “to come to terms.”

They’re all very similar and the act of any of them may be done with a variety of products or services. But, where do we draw the line and know when it’s appropriate or not appropriate to haggle, negotiate or bargain? That’s where it gets confusing and makes it difficult for entrepreneurs and small business owners to price their products and services…and stick to those prices.

Here are some examples of things that typically have “flexible” pricing.
Meaning, you can request a different price from the one that’s formally listed. The outcome may or may not be successful, but it’s common to at least make the request and probably go back-and-forth a bit.

  • Cars
  • Houses
  • Furniture/Home Decor (I recently bought a new rug and was surprised to learn the price was negotiable)
  • Salaries

Here are some things that don’t typically appear to be flexible:

  • Any item or service sold in a brick-and-mortar or online retail store/business (clothing, accessories, shoes, wine, liquor, classes, spa services, etc.)
  • Food/beverages in a restaurant or sold online
  • Products sold online that you buy without actually communicating with the seller (i.e. clicking a “buy now” button to buy an e-book)

If I had to find a correlation between the items in each list above, I’d conclude that we tend to want or try to haggle/negotiate/bargain when we [have to] communicate directly with a person (as in the first list), and we don’t even usually think about asking for a different price when we see the price (in print or online) and don’t have to communicate with the actual service provider or product creator (as in the second list).

Think about it – you walk into a store, see a shirt you like, see the price tag, and you either buy it or you don’t. You buy it if you really want it and if your budget allows for it. Simple as that.

But, when we walk into a car dealership, we see a car, see the sticker on the window, and immediately know that we’ll be negotiating (and the sales person expects the negotiation).

Maybe it’s just me, but I find it really interesting how certain prices are final and non-negotiable, and, clearly, certain prices aren’t.

In my own business, here’s what I’ve noticed/experienced:
When a potential client takes the time to read through my website to see the services I offer, the value I provide, and what I charge, the process runs very smoothly and has typically resulted in a contract and sale. They tend to “get it” from the get-go, and they don’t question my prices. They also all seem to understand the concept of needing to spend money to make money (a.k.a. invest in their own business); realize the value I will be providing; and that I will be doing something for them that they realize they do not have the skills, time or desire to do.

When potential clients come to me and (1) are on a very strict budget (or they have no budget in mind, they just know that they can’t or don’t want to spend “much”) and/or (2) want something that I don’t really provide as a standard service but they want me to do it for them because they like my work, the process is usually more challenging. They tend to want to wheel-and-deal, not show respect for my work or my business in general (which, honestly, translates to not showing respect for me, my skills, or the fact that this is my career and how I make my living), and sometimes decide to work with someone else after attempting negotiation and it not working in their favor.

Unless you have one of those inflexible-type businesses, then you are always going to have people question your prices and/or try to haggle/negotiate/bargain with you. And, the more flexible you are in your services, the more you open yourself up to those types of clients and situations.

Is this bad? Well, that depends. I read a ton of blogs and articles on pricing and how to lay out your services. No matter what they say, there are still going to be times where you might find yourself in a financial pickle. You may end up agreeing to a lower price if you are desperate for business (and money). But, the major downside to this is letting this become a habit and doing it for the next client…and the next…and the next.

Imagine if you walked into a restaurant and was able to get the $40 steak for $25 just because you asked for it…and even when met with hesitation and resistance from the restaurant, you persisted. Maybe you even said, “oh come on, it’s just a steak” (potential clients have actually said things like that to me, i.e. “oh come on, it’s not that hard”). Then, the next time you go in, you expect the same lower price. Maybe you even tell a friend about your cool new negotiating skills and how you wheeled-and-dealed at said restaurant. And now, they go in and try to do the same. Do you see the negative pattern that could happen in this situation? The restaurant starts losing money, gaining a bad reputation (well, a good reputation for those who got the good price…and a bad one for those who have been paying full price), and they’ve made it clear that it’s easy to walk all over them and disrespect their product(s).

Why would anyone want to do that to themselves?

I have always had the mindset of, “it never hurts to ask.” BUT, I’ve also always known when it feels appropriate to ask. As a business owner, I have become hypersensitive about respecting people’s work. I also understand that you must invest in your business in order to be successful.

I recently hired a CPA to handle my taxes, and I never once even thought of asking for any special price. I was so happy to have a professional – someone with the expertise that I certainly do not have – handle this important task for me. I saw the value in hiring this person and was eager and happy to pay him for his time, expertise and services. I also thanked him for the great work that he did and have already referred him to others.

It’s kind of like going to the doctor. You need him/her for his expertise, and you aren’t going to question the fee for his/her services. So again, why is it that some people do not see certain services in the same way?

A lack of boundaries invites a lack of respectI’m thinking it all comes down to how the information is presented and whether or not the service provider sticks to the fees and terms presented.

There’s no clear right or wrong situation in which it is 100% guaranteed to be appropriate. So, we have to use our best judgement and be very thoughtful and respectful when considering asking for a different price.

Here are some questions to ponder when thinking about asking for a discount:

  • Why am I asking for a discount?
  • Can I really not afford that product/service?
  • Am I just trying to negotiate because I feel like I can?
  • Do I really want that product/service or do I only want it if he/she will go down in price?
  • Am I being respectful of the service provider if I ask for a discount?
  • Even if I ask for a discount, do I really want to work with this person?
  • Would I appreciate it if it were the other way around and they were asking for a discount from me?
  • Why do I even want/need to hire this person or buy this product? Do I need it/him/her? Can I do/make this myself?

I could go on and on with those questions above, just like I could go on and on about this topic. But, I’ll end here with these thoughts:

  • Pricing is probably the hardest thing you will ever experience if you are a business owner or are selling anything.
  • Be careful about letting your guard down and letting people take advantage of you.
  • Value yourself – because if you don’t value yourself, others won’t either.
  • Be confident about your services/products and don’t allow someone to disrespect them.
  • Know that if you choose to not work with someone because they were disrespectful or didn’t value your work, then you are opening the door to other (probably much better) opportunities.

Your turn!

  • What types of haggling/negotiating/bargaining experiences have you had that didn’t result in a positive situation? Or maybe/hopefully you have some that did!
  • Do you stick to your prices no matter what or do you open the door for haggling/negotiating/bargaining?
  • What lessons have you learned in your own business about pricing and whether or not to offer discounts?

Thanks so much for reading this series on pricing. I really hope it provided some interesting thoughts to ponder on this ongoing, challenging, and important topic. I’d love to hear from you in the comments below.

Until tomorrow,

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