One of the things designers should be cautious of is “baiting” from clients. “Baiting” is when you’re parenthetically promised more work down the road in a play by the client to get cheaper pricing.
Often the “we’ll also have some additional projects for you later” line comes directly after an inquiry for a quote, and most, if not all, the time is designed to give the designer a sense that perhaps they should under-value their services in hopes that it will lead to additional work in the future.
When you’re first getting started in this industry, or if your business is in a lull, this can be an easy temptation to succumb to. Here are a few reasons why both designers/developers and their clients should consider it a bad idea:
- An hour of service is an hour of service: Though we live in a Costco world where “buy bulk = discount” in a lot of people’s minds, creative work doesn’t necessarily fall into this category. Creative work is a tactile experience, and unlike selling products, selling more for less only means you’ll lose money in the end.
Whereas products get cheaper the more you manufacture, and that savings can be passed on to the wholesaler or consumer, an hour of creative work is an hour of creative work, the hours don’t get shorter as they increase. By underselling your services, you’re not just narrowing your profit margin, but could quickly start costing yourself money.
- More Work ≠ More Money: Should you decide to offer cut-rates once for your client, they will assume you will always give them the discounted price. So, it may be that they’ll give you a boat load of business in the future, but all that work will now need to be done at the discounted price. If your prices are set to cover your operating costs while also providing a revenue stream to build your business on, this discounted business then becomes a burden on your resources.
- Assumptions are not guarantees: You’ve no contract or solid agreement that your client is going to return to you for business in the future. They may take the cheaper price, and then never use your services again. The best way to assure that a client will keep coming back to you is not by under-selling your services, but by doing a good job at a fair price.
- Discounting your prices, discounts your reputation: By putting a cheap price tag on your services, you in turn call into question whether your services are worth even the discounted rate. Everyone wants a deal, no one wants to pay full price for things. However, in my experience, businesses are much more willing to pay a fair price over a discounted one if it means you’re offering top-quality work and the end-project isn’t “discounted” in looks and functionality.
Further, the chances of your heart and mind truly being in a project that you’re not pulling a profit from is unlikely. This in turn may lead to a poorly done project, and a poor relationship with the company in the future, which overall can create a bad reputation for you and your company. The client gets what they paid for, and you are left holding the bad rep.
Now, all this isn’t to say that you should be a hard-ass and not have some flexibility with your pricing. Of course there will always be extenuating circumstances that need to be taken into account on a case by case basis. However, underselling your services for the hope that it may bring additional work in the future is a slippery slope best avoided.
Set your pricing fairly, and be able to back up your quotes with solid reasoning and top-notch customer service and you’ll be cherry picking your clients in no time, not needing to worry about lining up future jobs at such a steep cost.