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How do you go about increasing your prices when your client is a master negotiator?

Discussion in 'Marketing mastery' started by Redzebra, Jun 21, 2011.

  1. Redzebra

    Redzebra Member

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    Hi

    I'm looking for a little bit (or a lot) of advice on the best way to go about informing my clients that I am increasing the prices I charge for the services I provide. I realise this sounds simple but my clients are in Real Estate and are master negotiators. The market for the photography services I provide is very hotly contested in my area and I don't want to risk losing my client base but .... the time has come to bring my prices more inline with Australian averages. I also do not want to enter into a negotiation with them but want to present it professionally and in a positive light.

    Thanks so any comments
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  2. [Former] FS Concierge

    [Former] FS Concierge Renowned Member

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    Re: How do you go about increasing your prices when your client is a master negotiato

    Great question Redzebra!

    I'll be interested to read the responses you receive.

    And thanks for joining the forum too, by the way. It's lovely to have you on board.

    Jayne
    Redzebra likes this.
  3. JohnSheppard

    JohnSheppard Active Member

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    Re: How do you go about increasing your prices when your client is a master negotiato

    Throw dirt in their eye! Then. Yoink! Raise your price.

    No just joking...

    They have no power unless they can get your services of the same quality elsewhere for cheaper.

    If they can't: what's to negotiate? Just tell them how it is.
    If they can: why are you over charging?

    Take for example Petrol stations....they don't take no crap from real estate agents... :) The price is the price and it is so because thats what every other petrol station charges.

    As for telling them how it is, well I guess that's what you really want advice on...Myself, I would send a letter something like: "In order to continue providing the levels of service I have provided in the past it is necessary for me to bring my rates of pay in line with increases in cpi (or whateve) and industry averages. As such I am increasing my rates to xxx. As you can see I have not increased my prices since xxxx." etc etc

    Anyway, these are just my thoughts, I don't know much about that industry so maybe this won't work...good luck!
  4. bsengos

    bsengos Member

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    Re: How do you go about increasing your prices when your client is a master negotiato

    Perhaps add value to every increase. For example,

    We now offer xx product/service and as a result the fee of xxx service will now be $$$

    It's like adding free proof reading on all website projects, it takes us a little extra in time, however as we do this New service, we can ask for a larger price. The customer must find this service/product of value.

    We include proof reading because the end results are better, and the client will agree.

    As long as your covering the extra time to give the extra service/product in your increase, then your covered.

    I would tell a negotiating client this - taking away the extra service/product will not deduct the overall cost, it will only lessen the end result. Let them decide what they want.

    Hope that makes sence for everyone. Give value when increasing the fee.

    Hope this helps, it's all I could think of on the fly :)
  5. imaginecreative

    imaginecreative Member

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    Re: How do you go about increasing your prices when your client is a master negotiato

    In my experience, it’s not so much about negotiating an increase in rates - but rather about showing your client the value in what you do.

    I’ve dealt with Real Estate agents myself from a Marketing and Advertising perspective and whilst they may be tough negotiators - they also understand the value of paying for a service that gives them a distinct advantage over their competition.

    My advice to you? Don’t just inform them of your increase in rates. Put together a formal proposal. Show them what their competitors are doing from a photographic perspective. Show them the quality of images they could expect by choosing to go with an alternative supplier. Reinforce your existing relationship by re-committing to them as a client and ensuring that you will provide them with an incredible product and exceptional service.

    If you can prove to them that they mean more to you than dollars in your pocket, that you are committed to adding value to their business and helping them grow - there’ll be no need to negotiate anything.

    Good luck!

    M
    affirming and (deleted member) like this.
  6. Kathy Creaner

    Kathy Creaner Active Member

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    Re: How do you go about increasing your prices when your client is a master negotiato

    Hi Redzebra

    When you're setting your price you have to believe that it's the "right" price for you. One way to do that is to get an idea of the market price for your services. There are two market prices to consider - the price you and your competitors charge the real estate agents and the price that the real estate agents charge their customers. It would be worth your while to find out what both prices are.

    Make a few phone calls. It's worth knowing that people will often answer your question when you ask it. Simply phone and ask them what they charge.

    If the market price has increased that makes it easier to increase your prices as you can use the market price as a justification. If the market price hasn't increased, that doesn't mean that you can't lift your prices. What it does mean is that you have to have a compelling case for valuing your work above the market rate.

    What are the benefits of using your services instead of your competitors? Have you got a proven track record? Do you know whether properties with your photos sell more quickly than similar properties without them? Maybe this is something you can research. Are you a more skilled photographer? Are your hours more flexible than your competitors? etc etc

    Do you have a client that you talk business with? Perhaps you could run the idea of increasing your prices by them. Find out what they value about your service compared to your competitors' services.

    One idea that I've seen work well is to increase prices for all new clients, but keep existing clients on old rates for a fixed period of time (loyalty bonus). Make sure that you send the existing clients the new prices and that they know the date from which those new prices will apply. You can always offer "bulk deals" at the old price, e.g. book 10 sessions at the old price (paid up front of course).

    Good luck. Looking forward to hearing how you go.

    Kathy
  7. bluepenguin

    bluepenguin Renowned Member

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    Re: How do you go about increasing your prices when your client is a master negotiato

    I don't think it's necessary to try and justify the cost or value-add. If you're worth what you're charging, you don't need to make excuses - you should almost have an arrogance about it.

    If you start making excuses, it may seem as if you don't belive you are worth what you're charging, and your clients will smell that and attack.

    I'd just politely tell them that due to the increasing costs of running a business, as of xx/xx/xx your new rate will be $xxx.xx.
    2 people like this.
  8. Mumnesia

    Mumnesia Member

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    Re: How do you go about increasing your prices when your client is a master negotiato

    Every so often I get a letter in the mail from a supplier to say from a certain date onwards the prices for this, that or what ever will be $XXXX. Thats it, not reason why sometimes if the increase is marginal.
    Ok for 3 minutes my shoulders slump in response, I file away the correspondence, update my records to reflect the price increase for that supplier and by the time I need to order from that supplier I could hardly remember the increase. Its not an issue unless you provide lousy, untrustworthy service with less than the promised delivery.
    I have found by experience that, if you have to justify your increase then you subsciously dont feel it is justified, then the objections will start.
    Sometimes the supplier might have excess stock of a certain line and bring this price down to take advantage before the increase takes effect, which is different for the service industry.
    Just a short professional looking note to state new schedule of fees for service and thats it. No appologies needed.
  9. Redzebra

    Redzebra Member

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    Re: How do you go about increasing your prices when your client is a master negotiato

    Wow, great advice everyone, and soooo quick. Thank you all very much!

    There seems to be a lot of interest in this subject as I've had quite a few private replies as well. All saying how difficult pricing is.

    I agree, I need to show value of money and know my market. There was a benchmarking survey done by one of the pro organisations and I have their pricing info to help me and I have collected some of my own prices as well. I am confident that my services are reasonably priced and I am in demand for my work so I guess I'm doing OK on that front.

    I agree though with the last comment about not trying to justify as it may show a sign of weakness and knowing real estate agents they will smell that a mile away. I mean that is their job to negotiate and read between the lines when it comes to $$.

    From todays helpful posts I think I'll construct a letter/package outlining what I do, including some of the more technical aspects and present it as having redesigned the packages I offer and outline what they are and what they cost. So that's tomorrows job sorted....

    Thanks again and please if their are anymore insights I love to hear them.
  10. The Infotainer

    The Infotainer Active Member

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    Re: How do you go about increasing your prices when your client is a master negotiato

    The art of negotiation flows both ways

    If all you are doing is quoting a fee and then they negotiate down then it is not a negotiation

    Do you get booked on a job by job basis, or do you have a contract that says you are used for the next 6 months.

    If that is the case you can have your standard current fee if they want you for the next 6 months and work is assured

    If they want job by job, then it will be the higher fee- thus rewarding them for continued business.

    Real estate agents as master negotiators- I don't think so, sales men yes, over confident yes, negotiators - I don't see it not from my experience.

    In sales you must be willing to not take the job if the money is not to your liking, if they don't have enough money then they book someone else.

    You need to start looking at your business not just as a guy who takes photos and good ones (or a girl)

    it is the complete service

    Photography
    Availability
    on call easy to get in touch and get to last minute jobs
    Quality
    Knowing what sells, and how the real estate wants to sell

    all these things are what price is based on, not just the final picture.

    when negotiating you could say for example

    My fee is $xxx

    They say OK sure, then no problem
    or
    They say thats a bit steep,
    You say well if you would like the lower fee, then perhaps it would be best for a 6 month contract, then I have assured work and I an reduce the fee.
    or you could say thats includes whatever else you want to throw at them.

    The trick is to not play all your cards on the table, have something more to offer them in case they decline,

    but in any negotiation the rule of thumb is when you make your offer- the next one to speak loses, so if you make your offer and then look at them and say well I could lower it- without them saying anything you lose.

    When they say something negatively, don't take it as a no, take as tho they want more information to justify the higher price

    the art of negotiation takes practive- so practive this technique on lesser clients first to get the wording right and to get the confidence- Real estate agents are confident, but no less or more better at negotiation than you or I.

    whatever you do remember if you never ask- you will never receive



    I do alot of negotiation in my business when sending quotes to corporate clients
    2 people like this.
  11. The Infotainer

    The Infotainer Active Member

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    Re: How do you go about increasing your prices when your client is a master negotiato

    if it is real estate, perhaps you could get in with 1 real estate company and if they want a lower fee- get them to write a full on powerful referral to be used at other real estate companies and an introduction letter.

    Higher costs are a result of marketing expenses (and other things) but if they can reduce your marketing costs by actuvely promoting you- then you can have a lower fee
  12. Shaukat Adam (Khalid)

    Shaukat Adam (Khalid) Renowned Member

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    Re: How do you go about increasing your prices when your client is a master negotiato

    The first thing you have to do is ask yourself if you believe that the new price is justified. IF you don't believe it, it will come across as a weak money grab tactic.

    If you increase your price, you need to demonstrate how you are different from your competition and more importantly, how your difference will enhance the profile and revenue of the real estate agent.

    They need to feel that their listing will sell faster or they will get a higher price or the photos will increase their number of listings as well as increase the number of buyers on their database.

    Do you focus exclusively on the real estate niche? IF so, tell them that you are a specialist in their field. explain that when you take a photo, you are not just thinking about the quality but also how it can attract and close buyers faster.

    Before you increase your price.Invest in the following book: http://goo.gl/zSQHE

    and download the following file. https://www.box.net/shared/ujyg6ydupnio50fxi6dj

    Finally, have a strategy. dont be tactical. Price is not the reason why people buy but it is an element they compare when you have failed to differentiate yourself from the competition.

    There are some people who will refuse your service because you are too cheap. These people earn $250 - $500 per hour. Why would they take a risk with an "affordable" service when they are seeking premium?

    Would you compare a honda to a BMW? The natural response would be "ofcourse the bmw's price will be higher".

    why? bcos bmw has educated all of us of the prestige and status that comes along with owning one.

    are you a bmw or a honda or a hyundai? Here's a hint. check the type of car your real estate agents are driving.

    Strategic : have a blueprint before you build your house/business

    Tactic: start laying bricks where ever you feel like without planning. What's the outcome?
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  13. The Infotainer

    The Infotainer Active Member

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    Re: How do you go about increasing your prices when your client is a master negotiato

    thats a good post.

    Also understand that everyone is sold something they are not buying it- they have been sold it- so you really gotta understand exactly what you are selling and also what your customers needs are

    you have to sell to the need, so analyse what the real estate agent trully needs and sell to it.

    I remember an old quote my mentor gave me

    A Brick layer can choose to say 1 of two things:

    1: He builds toilets from Brick
    2: He builds chapels and churches that people go to worship .

    which one has more perceived value, they are both basically doing the same thing- laying bricks but it is the way you present it which makes a HUGE difference.

    Real estate agents have money, they buy expensive cars and suits to show off to their client- it is an ego thing, and ego is the worst thing to have when negotiating, it can so easily be used against them, and that is where your power lies. add quality to your product and add prestige,

    before anyone else pigeon holes you- create your own pigeon hole as the real estate photographer.

    when you do it enough you will start to enjoy the game of negotiation
    2 people like this.
  14. Kathy Creaner

    Kathy Creaner Active Member

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    Re: How do you go about increasing your prices when your client is a master negotiato

    Hi

    I was discussing this thread with my personal trainer this morning. I'm the client we'd all like to have, as I remind her (and my hairdresser) that it's time to put up their prices.

    I'll definitely get back to her with the advice in this post about "perceived fairness". I think it's really important, but I wouldn't have thought to say it so well. Thanks for your well-written post Pricing Matters.

    Kathy
  15. Inner West Counsellor

    Inner West Counsellor Member

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    Re: How do you go about increasing your prices when your client is a master negotiato

    Hi Redzebra

    re .... there are other ways to increase prices.
    One effective strategy I have applied is offering copies of the certified documents I produce for a small extra fee. The trick is to make the extra fee large enough for you to make a good profit for this added service (e.g. it only takes a minute to produce it), but the customer is happy to pay what they perceive as a small amount if it saves them their time and money, e.g. organising certified copies through a third party. Maybe in your case, this could be multiple/cropped/reformatted photos (?).

    I also endorse the idea of asking yourself why a price increase is necessary. I find in my business that advances in technology and 'template' materials I create mean that I actually earn more per hour for certain jobs than in the past, i.e. while keeping my prices constant in a very competitive sector that can also be sourced offshore. My philosophy is that your hourly profit margin is the key to everything - how long you need to work to allow yourself the time NOT to!

    ... and as always, never forget to tout your USPs!!!

    rgds Michael
  16. sansprix

    sansprix Member

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    Re: How do you go about increasing your prices when your client is a master negotiato

    Wow, you've got some great responses so far! One point of clarification though: customers don't give a rats about what your costs are, or how much your costs are increasing by. They only care about the benefits your deliver. Price = function (benefits, price).

    I did a project for a start-up a while back: we had to change her pricing methodology from only pay when customers used the service, to a two part model, part subscription, part usage based.

    Every single customer was going to be asked to pay more. So we emailed every single B2C customer and did face-to-face visits with every B2B customer and told them, inter alia:
    a) prices were going up
    b) this was to fund on-going investment in the business (technology, staff etc)
    c) we understood if they chose to take their business elsewhere.

    And you know what. We didn't lose one single customer!

    Hope that helps,

    Jon Manning
    www.pricingprophets.com
  17. Shaukat Adam (Khalid)

    Shaukat Adam (Khalid) Renowned Member

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    Re: How do you go about increasing your prices when your client is a master negotiato

    It's funny. my brother called just yesterday asking the same question. he wants to increase his price and doesn't know how to justify it.

    What's weird is that i did everything but point a gun to his head to increase his price by 300%. This was 5 years ago approx and he did it.

    He lost clients but he got high value clients who he enjoys talking business with.

    now he is revisiting the issue of raising prices again and still cant justify it.

    im letting him figure it out for himself for now and told him to buy dan kennedy's book on NO BS pricing strategy.

    maybe he should visit flyingsolo more often.

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