Price buyers vs. value buyers: the easiest way to screen potential clients
If you’re selling solely by price, there’s almost always somebody cheaper
In the last few months, I’ve stepped into unchartered territories in my freelancing journey.
My Book of Business has reached that point called “capacity” or “just past capacity”. But because I’ve been investing in inbound marketing for the past couple of years, I continue to pick up inbound leads.
Taken together, these two facts put me in a nice position from which I can coldly survey the market and judge the expectations and signals being sent out by those companies who land in my inbox.
I can decide whether to bother responding to a request for a Zoom call. I can ignore an email altogether if my intuition screams out that this is going to be a waste of time (always trust your intuition!). Or I can read the right (green) flags and decide that this is a lead worth pursuing.
And as I’ve done this, I’ve realized how far I’ve come in the 5 or so years since I started out on my freelancing journey.
How much easier it’s become to size up the potential client landscape and pinpoint with a reasonable degree of accuracy who I might like to work for and who …. would be the latest iteration of Model Bad Client.
And the simple way to make this determination: ask yourself if you are dealing with a price buyer or a value buyer?
If You’re Negotiating Three Figures With A Business … The Chances You’re Talking To A Price Buyer Are High
Most of us have been through straitened financial times.
The kind of times when the difference between a $3 and a $5 beer is enough to warrant making do with the more affordable option.
Sure it tastes worse, you might say to yourself. Sure, it might be filled with all sorts of dubious ingredients and give you a horrible hangover in the morning (that may cause you to skip your morning workout and be less productive during the subsequent day…). But it’s $2 cheaper and if you drink three beers in a night you’ll have saved up $5 through your purchasing decision. Who can argue with that logic?
Think back to college. Perhaps every dollar mattered. It was either that or foregoing consumption.
Eventually, many consumers go on to have slightly more disposable income to play around with. They get jobs. And then raises. And the disposable income left over after bills are paid becomes a little more padded.
And as that happens, most consumers — I wager — go through a slow process of evolution that feels a lot like slowly reaching maturity and being an adult. That crude means of selecting between different products and services can be slowly let go of. It takes more brainpower to look at whether A is better value than B. But ultimately most consumers find that it’s worth it.
Purchasing decisions are no longer made according to a simplistic means of comparing absolute price. We’ve become older and wise and we’ve probably had enough experiences that taught us that “you get what you pay for,” is more than just a common saying.
We realize now that that cheap beer has an opportunity cost in terms of lost productivity the next morning. We remember that time we discovered that that cheap toaster we bought didn’t come with a warranty and then ended up being wasted money after it broke down 3 months later. And we’re past the point of trying to save $2 by imbibing a product that we don’t actually enjoy.
Rather, we can afford for value to be a factor in our logic. And slowly, for many, value becomes the dominant factor when weighing up options.
Let’s now move from the consumer context and into the business one.
Small startups are often notoriously strapped for cash. They have to be price buyers in order to purchase the goods and services they need without going bankrupt. But as many organizations scale, grow their revenue, and become funded (dependent on the business model), many go through a similar process of evolution to that experienced by most consumers. It feels good, if nothing else.
It’s no longer strictly about which candidate is cheaper to hire. It’s about who can deliver the best return on investment (ROI). And working out the value that that resource can bring is an integral part of that equation.
“Can you do it for $50 less?”
The above is why whenever I’m dealing with a business who’s trying to shave $50 off a quote … I know that it’s unlikely to be a good fit for me. A lot of time can be saved by making this determination from the outset.
Truth be told, even a lead that wants me to re-scope a $500 quote into a $300 one is a business that I’m unlikely to want to work with.
Could I do it? Possibly. But do I want to? Not particularly.
Why, you may ask?
Having done this for 5 years, I build out quotes with fairly reliable mathematical precision.
I know how long it’s going to take me to deliver sufficient value and then multiply that by my hourly. There’s no seedy formulae being applied that you don’t know about. I’ve even shared most of how I bill quotes online. It’s not so much about what I want to charge. But what I have to charge if I want to do good work.
Moreover, when I have enough budget to work with, I can do my best work for my clients. And by doing my best work, I can accrue impressive portfolio samples that I can use to sell more.
It’s also more fun and satisfying to know that I’m being paid reasonably. Nobody likes the feeling of begrudgingly doing work for cheap. It boosts my morale and makes me happier which in turn makes me do a better job. I’m happier and my clients get better work.
On the other hand, trying to make small budgetary adjustments means that I’m either going to have to do a worse job or do a rushed job (usually the same thing). Either way, it’s going to be a frustrating process from my end. And who, given the option, would want to engage in that?
I once read a great quote in a sales book (sadly, the name evades me but it has stuck with me all these years).
If you sell yourself on value, then you’re going to loose your customers as soon as somebody can do something comparable to what you do for less money.
And here’s where that really falls down: in the global environment we’re all competing in, there’s almost always going to be someone who’ll do it for less.
The way out of this hapless situation?
Price according to value and find clients who buy according to value.
Your business — and you — will thank me.