The value of being reassuringly expensive
You say cheap and cheerful, they think cheap and nasty
Does lowering your price make your service more attractive to a client?
There are plenty of reasons why recruiters lower their prices. Perhaps they’re up against a much more experienced negotiator. Maybe they’d rather lose a few ££s on the fee than miss out on the role. Or, they’re mindful that their bonus will be higher if they get something in now rather than spend a few days negotiating.
But what does a client think of our service when we agree to a discount?
Let’s have a look at some examples from other industries to help us understand how our clients might see our value…
First, let’s take a hypothetical recruiter with a fee of 25% in their terms of business, but who sometimes agrees to 15% with clients. At a glance a lot of people think they’ve taken 10% off their fee… but in cash terms that’s a 40% discount. In other words, they’ve just lost £4k off a £10k fee - ouch!
Now imagine walking into a fancy car showroom with some money to burn (it’s been a good year, right?). Your eye is drawn to a shiny red sports car, and you can already picture yourself driving it with the top down on a summer’s day.
The salesperson comes over, and you’ve got a list of questions - including “How soon can I take this for a test drive?” - but out of habit you ask about the price on the windscreen. The salesperson quickly apologises and says they can take 40% off the sticker price for you.
How are you feeling about the car right now? Of course the accountant living in your brain is delighted about the savings. But then a nagging doubt kicks in. What could be wrong with the car to get such a big discount, and so quickly? And you start thinking how much your friends would laugh if your flash car turned out to be a wreck: surely it was obvious at that price, they’d say.
Then, that night you take your partner out to a nice sushi bar. There’s raw fish zooming around you on the conveyor belt, you order some interesting Japanese beers... and then your server tells you all fish dishes are 40% off.
Does that make the food more or less appetising for you? Again, the accountant in your head is happy… but then you think that the discount might be because the fish isn’t quite so fresh as usual. And then you remember the last time you had food poisoning. And then you think about how you want to be feeling good for a big client meeting tomorrow (and definitely not running to the toilets every 5 minutes).
So what does a client think - and feel - when you take 40% off your price? If they have other recruiters at 15% they probably think you’re the same as the rest of them. They might also think you’re a bit of a chancer for trying for 25%.
And most importantly, any excitement they were feeling about getting to work with you - yes you! the expert in your field! the one who writes all the great posts on LinkedIn! the one who your old colleague recommended to them! - has faded, to be replaced by an uneasy feeling that there might be something not-quite-right with your service.
Like I said, there are plenty of reasons why you might agree to a discount. But there are pretty heavy consequences too, and not just that your £10k fee has shrunk to £6k in a few seconds.
This is why you need a pricing strategy that builds your value in the eyes of your clients, and helps you justify any discounts in a way that maintains that value.
So if you want to make sure clients are excited to work with you, whatever the price, simply reply to this email and we can arrange a one-off consultation to discuss where you are and where you could go.
Jon
PS. There are certainly people who get excited about discount sushi (I wonder if they also buy the cheapest indigestion tablets). But are they the people you want as your clients?
Even if you did attract that type of client, what happens when your competitor offers them a cheaper price? After all, the only thing better (in their mind) than 40% off sushi is 50% off sushi.
So if you want to make sure clients are excited to work with you, whatever the price, simply reply to this email and we can arrange a one-off consultation to discuss where you are and where you could go.