How you respond to “What’s your rate?” will set the whole tone of the conversation and probably the relationship. Knowing the pricing strategies for your varied services is key, and so is being able to rationalize them to potential clients.
What seems like a simple question is in reality a minefield. It’s the opening move in a game of chess. Get it wrong and you are on the back foot from the start.
I have to say, I hate it when the first question I get is “What’s your rate?” My initial reaction is to think “darn, I’m dealing with someone really cheap here.” They are probably a tire kicker or just trying to knock somebody else’s rates down by using me as a comparison.
I have tried different responses which, in all honesty have had varying degrees of success. Here are the more successful ones.
Over time I have realised that most buyers do not actually know what professional services really cost. It doesn’t matter whether you are a graphic designer, web developer, dentist, lawyer, accountant or a consultant (like myself). These are not everyday services you go out and buy regularly. Our websites rarely publish our hourly rates as we are not selling commodities where price is the differentiator.
Commodities have to differentiate themselves by price, professional services, problem-solving and idea generation should not.
So when someone asks; “What’s your rate?” Do not jump in with the first number you think they will find acceptable. $40 an hour. That’s not a pricing strategy it’s more like rolling the dice and keeping your fingers crossed.
Has, what you’ve just said set the tone for the whole relationship. You’re cheap! You’re expensive! Now you are second-guessing yourself. I should have gone higher, I should’ve gone lower- Aaagh .
The more experienced you are at sales the more likely you are to have rehearsed a decent answer to that question. How do you steer the topic from dollars per hour to value for money, return on investment, speed of delivery or excellence.
Your ability to move away from being seen as a commodity to being seen as a trusted advisor, consultant and problem solver depends on your ability to sidestep the question-“What’s your rate?”
Before rushing in it’s important to find out a little bit about your lead. Rather than talk about you, your fantastic process, your wonderful results; instead ask them about themselves. What’s their business, how old is it, what do they sell, who are their customers? You’ll get a much better feel for the size and type of business you are dealing with. You are qualifying the lead as quickly as possible with your questions.
- What is the nature and scope of the project they are looking for a quote for?
- What is the desired outcome of this particular project or piece of work?
- What is the timeline or deadline for the project?
- Have they spoken to anyone else yet about this?
- Do they have a ballpark budget for the project? (This is one of the toughest ones to get a straight answer to, so don’t be surprised if your question is deflected, much like you have just deflected theirs.)
Hopefully you will find that your lead is well qualified and merits further investment of time. In which case suggests a short follow-up meeting within the next day or day after. The reason being you want to do as much research as possible before investing further time and energy.
Build A Sales Process
So the next time somebody asks you; “What’s your rate?” you will be prepared with an answer that starts a serious sales discussion, hopefully, leading to a profitable business relationship.