Never lower your price—do this instead

We’ve all been there: we’ve had a really good initial conversation with our client or prospect, where we’ve uncovered the main points of the matter, we’ve told the client or prospect that we can do the work, and we know they like us because they’ve laughed at all of our jokes.

We confidently go in with our price and get the standard response: “Ooh, that’s a bit steep, can you go lower?”

Now, there are two reasons why your client or prospect will be asking that question:

1. They’ve got a quote from another law firm; or
2. They’ve worked with you before and they know this is the dance they go through with you before you come down to a figure they are happy with.

If there’s another lawyer waiting in the wings, it can be tempting to drop your price to keep the client, especially as we know there are law firms out there that will do the work for ridiculous prices where it’s impossible to do the work with any level of service included.

Here’s the problem: drop your price once and your client will be asking for a discount forever, which then leaves you with only two options: one, at the next negotiation, start really high, in the hope that the client doesn’t run screaming without bothering to ask you to drop the price; or two, accept that this will be a client who will squeeze your margins from now on.

This is no basis for a relationship. You’re being dishonest with the client because it’s not the price you truly believe in; and the client knows this isn’t your real price—it’s just a dance you both have to go through. And both of you feel resentment towards the other for having to do this every time.

But here’s the most important factor: this client sees you as a commodity, so feels no loyalty towards you. They don’t value the work you do, so the moment another law firm comes along with a price you can’t beat, that client is gone.

There’s only one way to solve your commodity-discount problem.

Because there might actually be a third reason why they’ve asked you to drop the price that you haven’t considered before: they may not have seen the value in what you bring to the table.

Contrary to popular opinion, this is actually why most clients ask for a discount. It’s not because they’re price sensitive; and it’s not because they love to negotiate.

It’s because you haven’t shown them why working with you will get them the best service and outcome with your knowledge and experience they can only get from you.

The key is to move your conversations away from price and onto value. And it’s where you can make the biggest impact early on.

You can even take this a step further:

Most lawyers focus only on their area of law in supporting a client. Rainmakers—true trusted advisors—they offer something much more: they offer a complete service. That doesn’t mean you have to be a full-service law firm—it means that, where you or your colleagues can’t do the work, you use your network of contacts to find someone who can.

And most importantly, trusted advisors understand their clients and their needs so well that the advice they give them is personalised and the client sees their lawyer as an important part of their team, values the work they do for them and—here it comes—pays them what they tell them their advice is worth.

That means you have to know and be able to articulate your own value, particularly how it relates to each individual client and their circumstances. That takes patience, research and time with your clients.

But ask yourself this: if you aren’t taking the time to understand your client, why should they take the time to understand your fees?

Think about how you add value to matters—it is so much more than drafting the documents.  What you’ll realise is that explaining this to clients only takes a few minutes, but makes a big difference.

You also have to know the value of the matter to the client—not just what success looks like, but failure too. If they are cost-conscious, imagine the cost of not working with you? What will happen when they put price before value one too many times?

If you’ve done your job during your initial conversation with the client, you’ll have highlighted what makes you different, and they’ll understand the value you bring to them and their matter.

This is important: it’s not anyone else’s job to educate your client, to explain why what you do helps avoid some kind of pain, overcome a challenge or build towards a strategic gain—it’s yours.

Understanding and articulating your value—and becoming a trusted advisor—is the best way out of the price negotiation hole.

Will this work for every client? No, but it will work much better than being beaten down on price.