6 Reasons You Should Avoid Cheap Clients and Customers
Have you ever felt like you were selling yourself short? We’ve all probably done it at least once in our lives, be it in our careers, our relationships, or even the expectations we hold for ourselves. Sometimes we marginalize our self-worth because settling is easier than fighting for what we feel we truly deserve.
I’ve worked in online marketing for over 7 years now, and I still have a hard time pushing clients away. There have been many times where I’d negotiate down the cost of my services, or agree to a trial period at a lower rate. But in my experience, these scenarios are rarely worth the hassle, and apparently I’m not the only one who feels this way. To be clear, there’s a big difference between broke clients and cheap clients. I’m not talking about clients that simply can’t afford you. I’m talking about the clients that are more interested in getting the best deal over the best in service.
So why do some of us continue to shortchange ourselves, when we know that we’re worth more?
You have to start somewhere, right?
I don’t see anything wrong with lowering your costs until you’re generating enough revenue to keep the lights on. But at some point you need to figure out how to increase your perceived value if you ever want to turn a profit. When I first started consulting, I made it a goal to increase my average monthly retainer by $500 each year. The specific rate is arbitrary. What matters is that you’re getting closer to your revenue goals, without killing yourself juggling a million different projects. By scaling certain aspects of my business, I was able to boost annual revenue without increasing my workload. The key is figuring out what it will take to handle bigger clients in terms of staff wages and/or outsourcing costs, and how much monthly revenue you will need to generate from each client to cover your overhead, and consistently grow your annual revenue.
Your clients want a positive ROI, so why shouldn’t you?
Your time is valuable. Don’t give it away for free. Most clients want to know that their money is being spent wisely, and that they’re getting a decent return on their investment, and you should too. As a consultant, your time is money. If you average $100 per hour, and you spend 9 hours on a $500 per month client, you’re essentially losing $400 per month. It’s one thing if you work out a deal where the client signs a 6-month contract, and you reduce the monthly rate by ~10-20 percent, but undercutting yourself by more than 20 percent is just bad business. Remember that your time isn’t limited to the actual work, but also the time you spend reading/replying to emails, putting together client reports, and even phone conferences and consultations. Speaking of which, Clarity is a great tool for monetizing your talk time. I’d recommend checking it out if you haven’t already.
Cheap clients are bad clients.
I take on clients and projects of all shapes and sizes. Cheap isn’t about the total dollar value, but the amount of work you’re doing in relation to how much the client is willing to pay you to do it. Competitive rates tend to attract a lot of cheapskates, and these guys don’t typically stick around for long. When you consult, finding clients can be difficult, but keeping those clients is an even bigger challenge. I don’t necessarily believe that it always costs more to acquire new clients than it does to retain existing ones, but I can say from personal experience that longer customer life cycles are conducive to consistent growth. Also, cheap clients tend to be very demanding, so in most cases, they require the same amount of work as higher paying clients – sometimes more.
If you don’t believe that you’re worth it, neither will your clients.
As a consultant, your perceived value ultimately depends on how much you value yourself. The clients you get are the clients that you deserve. If you want high-end clients with deep pockets, then stop targeting small businesses that can’t afford you. The consultant/client hiring process should work both ways. Don’t feel obligated to take every client that walks through your door. Instead, only take on the clients that fit what you’re looking for. Once you build up a solid client roster, and you’re satisfied with your client retention rate, you can afford to be a little more selective when hiring clients. This means you’re more likely to get paid what you feel you deserve.
Charging more for your services could boost your credibility.
The cheapest option is rarely the best option. If you position yourself as the most affordable in the industry, you’re basically saying that you’re also the least skilled in the industry. Clients may still choose to work with you, but if a client is just looking for the best deal, you probably don’t want to be working with them in the first place. These are the cheap clients I was talking about before. They suck. You don’t want them. I’ve worked with quite a few clients over the years, and I’ve learned that clients that are willing to pay you what you feel you deserve are worth their weight in gold. Not only are they more receptive to your strategy and suggestions, but they are also more likely to send you referrals.
Never devalue your brand.
If you’re not ready to boost your rates just yet, that’s fine. Just make sure that once you do, you don’t ever look back. If your minimum monthly retainer is $1,000, then stand your ground, and don’t take anything less than $1,000 per month from that point forward. As I mentioned before, small discounts for bulk services or term-based contracts shouldn’t break the bank. But once you figure out how much revenue you need to generate from each client, it’s important that you stick to your guns. Typically clients that nickel and dime you on price will also scrutinize your work, and ask for minute-by-minute breakdowns of how you’re spending your time. As a consultant, you shouldn’t ever be micromanaged. We’re hired guns, we’re not employees. We have a job to do, and if we do it, we get paid, plain and simple. There will always be someone who can do the job for less. It doesn’t mean you need to lower your prices to compete. Instead, focus on building out your skill set, and improving the quality of your work. The rest will come naturally.