How to Respond When Clients Say Prices Are High

TL;DR

Respond to a price objection by examining the business problem, desired result, and potential value before defending your fee. If the client's budget cannot support a responsible engagement, decline the project or offer a performance-based arrangement that makes the tradeoff between a fixed fee and shared risk explicit.

Transcript

What's up Chris. Hey Mo I'm super glad you can take this call. I was hoping. That you could cut up one of those banger videos that you make that I see on your website. I'd love to do that for you. What's your budget? I have a thousand dollars. A thousand bucks. Is this video important to you? I think it will be. If you do it. No problem doesn't sol... Read More

Key Insights

• A price objection is an opportunity to examine the importance and value of the business problem. Instead of immediately reducing the fee, the vendor asks what outcome the client wants, how many additional customers are expected, and how much revenue those customers could generate.
• The client's desired result is two to three additional store visitors per day. With an average product sale of $100, the conversation uses a midpoint of $250 in additional daily revenue and calculates $7,500 in potential new revenue across 30 days.
• A $1,000 budget may be disproportionate to both the desired result and the work required. The vendor says responsible video development would involve a lengthy discussion about purpose, goals, effectiveness, and audience targeting before production could even begin.
• People tend to spend money on what they value, according to the negotiation argument. The vendor asks the client to compare the video budget with spending on refrigeration, air conditioning, polished floors, and a BMW, using those choices to test the project's actual priority.
• A vendor does not have to accept a project simply because a prospective client calls. The discussion emphasizes that the vendor was already making life work before the opportunity appeared, so the call should not create a desperate obligation to close the deal.
• Walking away can protect both parties when the budget cannot support meaningful work. The vendor says he is not the right person for a $1,000 engagement and even encourages the client not to spend that amount with anyone if the investment will not address the business problem.
• Performance-based pricing transfers risk from the client to the vendor. The alternative offer provides the video free in exchange for $50 per new customer, described later as 50 percent of new net revenue, because each additional customer is expected to spend $100.
• A fixed fee gives the client certainty and ownership of the upside. The final choice is a $4,000 minimum engagement, with the client keeping all future revenue, instead of sharing 50 percent of new net revenue for the first year under the performance arrangement.

Questions & Answers

Q: How should you respond when a client says your price is too high?

Ask questions about the business problem, the desired result, and the economic value of that result before discussing a discount. In the role play, the vendor asks how many additional customers the client wants, what each customer spends, and what that could produce over 30 days. This shifts the conversation from the video's isolated price to the relationship between investment, effort, and potential revenue.

Q: How can you reframe a creative project's price around value?

Translate the client's desired outcome into business terms using figures the client provides. The client wants two to three additional visitors each day, and the average product sells for $100. Using a midpoint of $250 in daily revenue across 30 days produces a potential $7,500 monthly increase. The vendor then asks whether a $1,000 investment is appropriate relative to that stated objective.

Q: What questions should you ask before agreeing to a video budget?

Ask whether the project is important, what problem it must solve, how much awareness the client wants, how many customers should respond, what each customer is worth, and who the target audience is. The vendor also says he needs to discuss the video's purpose, the client's goals, whether the concept may work, and whether it will reach the right people before producing it properly.

Q: When should you decline a low-budget creative project?

Decline when the available budget does not support the time, discovery, and execution needed to address the stated business problem. In the role play, the vendor concludes that he is not the right person for the client's $1,000 limit because his minimum engagement is $4,000. He also cautions against spending the money merely to create a video that keeps up with other businesses.

Q: Why compare a client's project budget with other expenses?

The comparison helps determine how highly the client actually values the problem. The vendor asks about spending on refrigeration, air conditioning, polished floors, and a BMW to show that people allocate money to things they consider important. If a potentially revenue-producing project receives a much smaller commitment than expenses with no stated material business impact, the proposed budget may not match the claimed priority.

Q: How does performance-based pricing handle a price objection?

Performance-based pricing removes or reduces the upfront cost while compensating the vendor from measured results. The vendor offers to make the video free and receive $50 for each new customer, based on the client's statement that each customer spends $100. The arrangement is later framed as 50 percent of new net revenue for the first year, with the vendor taking the risk and relying on the client's honesty.

Q: Why might a client choose a fixed fee over revenue sharing?

A fixed fee allows the client to keep all revenue generated after the project, while revenue sharing can become more expensive if the work performs well. The vendor presents a $4,000 fixed fee as one option and 50 percent of new net revenue for the first year as the other. After considering the possibility of attracting many customers, the client chooses the fixed fee and retains the upside.

Q: How can freelancers avoid feeling forced to accept every offer?

Remember that the prospective payment did not exist before the call and that life was already continuing without it. The discussion warns that believing every opportunity must be closed places the vendor in a disadvantageous position. Having enough financial runway makes saying no easier, while educated questions about value, goals, audience, effort, and results help determine whether the engagement deserves acceptance at the proposed budget.

Summary & Key Takeaways

• A client requests a promotional video with a $1,000 budget and hopes it will attract two to three additional customers per day. At an average purchase of $100, the midpoint estimate is $250 in added daily revenue, or $7,500 over 30 days, which reframes the discussion around value rather than production cost.

• The vendor questions whether the project is genuinely important, compares the proposed budget with other business and personal expenditures, and warns against commissioning a video merely to imitate competitors. He explains that proper discovery requires substantial time to clarify the purpose, goals, audience, and likelihood that the work will produce the desired outcome.

• When the client refuses to exceed $1,000, the vendor offers two alternatives: pay a fixed $4,000 fee and retain all resulting revenue, or receive the video free while sharing 50 percent of new net revenue for the first year. The client ultimately chooses the $4,000 fee and agrees to pay $2,000 upfront.