While working as a freelancer or independent professional, one of the biggest challenges is simply getting clients to pay you what your services are worth. Potential clients often have an unrealistic expectation of what professional services should cost, and an important part of your job is overcoming that obstacle to obtaining appropriate payment for your work. The source of unrealistic expectations in many clients stems from them using an inappropriate past buying experience as a reference point for deciding what your services are worth. something known as a “price anchor.”
Understanding Price Anchors
Although “price anchor” may sound like a technical term, the concept is a simple one. However, if you’re going to successfully negotiate compensation for your professional services, it is important that you clearly understand the concept of price anchors so you know how to deal with them. When evaluating the price of a product or service as “expensive” or “cheap,” people tend to automatically compare the price to prices paid for similar goods or services in the past. That is a price anchor. A problem arises for you as a professional when the past comparable a client has in mind is not really comparable. For example, a consumer seeking the services of a financial adviser may have a price anchor based on what he or she paid for accounting services, or the closest comparable purchase experience. This creates a problem because the services you provide as an investment professional aren’t genuinely comparable to accounting services such as preparing a tax return.
Overcoming Price Anchors
To get clients to let go of their restrictive price anchors, get them to view your services in a different light, one that shifts their price expectations to a higher level. One way to reset the price anchors of clients is to define your work by the value they will receive from it, rather than just by the specific skill you possess. For example, if a client wants to contract with you to design a marketing and advertising campaign for a new product, point out the benefit he or she stands to gain from your services in terms of revenues generated, rather than just having the client evaluate your service based on your job title of “marketing copywriter.”Another helpful tactic is to go beyond just presenting what you do in terms of specific tasks accomplished, and move to the realm of getting clients to think about valuable intangible benefits of hiring you. For instance, instead of having clients see your job as simply helping to select investments, try to get them to appreciate the intangible value of being able to rest knowing they’ve made solid plans for their retirement. Differentiate yourself from providers of less-expensive services by your appearance and the look and feel of your business. Upscale restaurants are able to charge higher prices in part because they don’t look like a fast food restaurant. Tailor your own look and the look of your office in a way that says your services are inherently more valuable.