Don’t Chase A Lower Priced Competitor

I was speaking to an audience of commercial real estate professionals recently, and was asked an interesting question in the Q&A – “what should I do if I’ve quoted a potential client, and they come back to me to ask if I can match a lower-priced quote they have got elsewhere?”

There are a number of aspects to this which I will cover before I share my answer to that question.

First, never quote until you are totally clear about what the client wants, and they understand the value that you are going to deliver. In other words, make sure you have communicated that value! This might sound obvious, but too often I see companies fail to do this simple thing.

For example, I reviewed a pitch made by a commercial team of lawyers, one they had lost. The pitch followed the typical structure – some history about us, who is in the team, the wonderful and amazing clients they have done work for in the past, relevant examples of that work, how they’ll solve the client’s problem, and the fee.

That’s almost totally backwards. All the stuff at the beginning is exciting for the vendor, they are really proud of it all, but it’s boring for the client, who has already decided you are competent enough to include in the list of companies pitching. You don’t need to tell them up front what they already know.

Start with the client’s challenges, the outcomes they want to achieve, how you will deliver that, and then the fee. The rest of the history, background, team, previous clients and stuff can go into an appendix.

The simplest way to think about this is that you want to ‘sell the sizzle, not the sausage’.

Second, unless it’s important and relevant to do so, avoid breaking things down into individually priced chunks. You are inviting clients to say “well, Acme Co can do chunk one for half your price, why are you charging so much?”

Sure, give lots of detail where relevant, show the steps, demonstrate your competence – but try to avoid individual pricing.

Quick aside – where you should break down and price the steps is where there are large unknowns. For example, if phase 1 of a 3 phase project is clear but phase 2 depends on the outcomes of phase 1, and phase 3 depends on both, then it would be foolish to give one overall price or final prices for each phase. So you have to quote for phase 1, and probably indicate possible ranges of prices for phases 2 and 3.

And third, what’s the answer to the question I was asked?

My answer was this. If a potential client does that, then ask them this question: “if price is the only thing that matters to you then you can get that price from XYZ Co who quoted it; but there’s something about working with me that made you want to come back to me and ask me to match it. What are those things that made you want me to deliver for you?”

Then let the potential client explain what made you different. That’s important, don’t put words in their mouth for them, if they say out loud what makes you better that strongly embeds your value in their minds. At the end of which, your response is obvious – “well, the things that you’ve just outlined about why I am better are why I charge more, and why you get excellent value.”

As someone else from the same audience pointed out to me over coffee later… if your child is sick, you seldom shop around for the cheapest doctor!