BROACHING THE
TOPIC OF MONEY

by Ilise Benun

A conversation with a new prospect usually begins very positively. They’re interested in your work and you are eager to learn about their project. You ask a lot of questions about the organization, the challenges of their marketplace—all important information. The more you talk, the stronger the bond you forge, the better your chances of a successful project. None of this can happen without the back and forth of conversation. Eventually money will come up. Will you bring it up or will they? Will you squirm and stutter? Will you put it off, thinking the time isn’t right? (Is it ever?) Will you avoid it completely? Or will you tolerate the discomfort? That’s the focus of this chapter.

Anxious about talking money? You’re not alone

Lots of people feel awkward talking about money—socially, professionally, personally. In some countries, talking about money is considered gauche or tacky; entire negotiations are handled without ever directly talking money. In the United States, a society rooted in capitalism and fixated on quantity, talking about money is strangely taboo.

For creative professionals, many of whom are ambivalent about money and business in general, the issues go beyond cultural taboos. The “starving artist” mentality pervades much of the creative fields. Fear also seems to run rampant. But fear of what exactly? Fear of being perceived as greedy if you deal with money well or make too much of it? Fear that clients will think your prices are too high and you’ll get no work at all? These beliefs and others are often used as obstacles to earning a good living—one that allows you to support yourself and your family with your creative enterprise.

Clients have issues, too

Have you ever stopped to wonder how your prospects and clients feel about dealing with money? Do you think it’s a breeze for them? Do you assume that those you perceive as high-powered corporate executives with big budgets are 100 percent at ease? They may not be. The corporate environment, unpredictable as it is, can produce free-floating anxiety. True, when a client is spending a corporate budget rather than his or her own personal money, it may smooth out some wrinkles of negotiation. But a project with a big price tag will expose your clients to what may feel like scrutiny from above. Their budgets are constantly changing (often shrinking) along with the state of the industry and perhaps the economy. Cuts come down, people are laid off, money that was already slotted disappears. Projects that were given the go-ahead—including your proposals—suddenly “aren’t happening.”

Even if the situation isn’t dire, your clients are probably under the gun to deliver more for less. In fact, their mandate to deliver a lot more for a lot less may come from a boss who is clueless about how creative work gets done. Or your client may simply have too much on their plate.

Maybe you’re dealing with a business owner anxious about taking a risk on a new resource. Or a junior professional new to the company and worried about selling you up the chain. Or a seasoned executive who is new to the industry and wants to ensure he or she isn’t taken advantage of. Your client may be uncomfortable because she doesn’t know enough about what she’s asking for or because she’s out of touch with how much things cost. These are all things you could listen for.

Do you need confidence to talk money?

Confidence, or lack thereof, is part of the problem. You may believe you need to have “confidence” before you can achieve x, y or z. Without it, you can’t negotiate that big contract with a formidable client, for example. But confidence is not an “object” one possesses.

In fact, things actually work the other way. Confidence is the byproduct of experience. Through trial and error—mostly error—confidence develops. The more you practice the action you’re not so confident about, the better you will get, and as with anything, the better you get, the more confident you will feel the next time, learning as you go. Confidence will not develop if you don’t try and don’t err. That is especially true when it comes to talking about money and pricing.

When to talk about money

Believe it or not, many creatives get deep into projects without settling on a price, sometimes without broaching the topic of money at all—that’s how distressing the topic can be. Have you ever avoided the topic altogether? You end a call or meeting where it could and should have been discussed but no one brought it up, including you. You were having such a nice time talking about the project that you didn’t want to screw it up by bringing up money. Afterwards, you rationalize, telling yourself that “the vibe” didn’t feel right to talk about money. Or you say to yourself, “Let’s just get a bit further into the project and then we’ll bring it up.” But when is the right time? And what exactly is the right vibe for money talk? Maybe there isn’t one. When you buy a car or a house, no one ever says, “Let’s not spoil the whole thing by talking price.” Right? Why is your business any different? If you have genuine reason to believe the air would suddenly get sucked out of the room because you mention money, that’s one big red flag.

Should you talk money right away?

Right away or wait? And, if so, how long?

Problem is, there is no rule. It’s different for every single situation and there are several points in a normal prospecting and sales process at which it could naturally come up. Here are general guidelines for how to talk about money at each stage:

1. Initial contact. In this preliminary phase with a new prospect, you’re deciding whether it’s worth your time (and theirs) to build a relationship. Should you start with a phone call or take the time to meet in person? Often it will depend on whether they can afford your services, which you need to know sooner rather than later. To find out, test the waters by floating some general price ranges as you’re talking. Do they blink? Stop breathing? Pause uncomfortably? Skip over it as if it’s a minor detail?

2. Proposal? You got past the initial contact and they seem fine with your general price range, but now there is a project on the table and it’s time to decide whether to do a proposal. Get more specific about pricing for the project at hand and run it by your prospect verbally (on the phone, not via e-mail) to see if it fits their budget. Get an okay on this before spending hours on a proposal.

3. Proposal presentation. By now, you’ve discussed the parameters of a project, written your proposal and are ready to present it. If you haven’t already, it’s time to get specific and commit to a price.

4. Handling objections. If price is one of the objections your prospect has, now is when the negotiation begins. Your fee is one element but certainly not the only one.

5. Closing the sale. Here is when you close the negotiation and either come to terms or not. You must know your bottom line in order to close the sale.

How to respond to “What’s the price for a [fill in the blank]?”

Here’s a typical situation: Cindy gets an e-mail message out of the blue from a small business owner who found her online and wants a price for a website. Cindy’s excited to get inquiries “from” her website. She doesn’t quite trust herself to say the right thing when she really wants the job and doesn’t want to jeopardize the opportunity. So she responds via e-mail, giving her prospect what she’s asking for: a price.

That is the easiest thing to do—and potentially the most dangerous from a business development point of view.

It’s easy because all Cindy has to do is reply with a number, but it’s dangerous because when you send prices to a stranger without having any conversation, without positioning or context or project details, you give over control and essentially say, “I’m not that interested.” This can cost you the job.

Prospects who ask first about price raise a red flag. What could it mean? That the prospect’s main criterion is price not value? That they’ve been burned? That they’re cheap? You won’t know until you talk to them.

If Cindy really wants the project, she will pick up the phone—a phone call in response to an e-mail inquiry speaks volumes about your level of interest—or respond with a message asking to schedule a call. This puts Cindy in the driver’s seat and is the first step toward her positioning.

How to respond to “What is your hourly rate?”

Creatives get this question all the time and often give the easy answer: a number, unadorned. $50 or $150 or $300—the number itself is irrelevant. What’s relevant is that it requires no conversation.

It can be tempting to answer this way, even a force of habit, especially if you don’t like talking money. But, when it comes to something as subjective as creative services, talking about hourly rates (or any other quantifiable unit of measure) diminishes the perceived value of your talents, cheapens the enterprise and turns it into a commodity that your prospect can get for less (often much less on the Internet).

If you respond to the question with your hourly rate, they may start immediately comparing you to other creative professionals, despite stark qualitative differences, essentially comparing apples to oranges. Or they may stop listening to the carefully constructed explanation of your creative process and start calculating what they think it should cost or, worse, how much you earn, perhaps compared to what they earn. Don’t let them go there.

Unless you’re talking about on-site freelancing, which is commonly paid hourly, it will serve you best to respond to this question by proposing a project fee as an alternative and framing it as “good news” for them, which it actually is. Here are a few variations to try:

• “I don’t charge per hour because it’s not good for my clients. What’s far more helpful to you is to know what this is going to cost. We’ll agree on a scope of work and a fee for it and you’ll know what you’ve got.”

• “We quote by the project, not by the hour, and I’m going to come up with my best estimate and I will give you a number, a fixed fee, so you don’t have to worry that once things get under way, I’ll throw up my hands and say, ‘Sorry, but now the meter is running.’”

• “I don’t bill my time that way. It’s far better, for me but especially for you, to give you a fixed fee. It’s all too easy for a simple project to turn into more hours because the meter always feels like it’s running. That way, you don’t go into a project wondering how many hours are going by. Instead, you know this job is going to cost $X with these stipulations. You have a clear line item in your budget, barring some unforeseen addition of work or scope creep.”

What do they really want to know?

Sometimes, when a prospect asks first for a price or your hourly rate, that’s not necessarily what they want or need to know at that moment. To find out what is, you must listen for the question underneath. Do they want to know how you bill? Are they asking about your process? The amateur clients especially may be unfamiliar with the way creative services work; others are trying to get a sense of where you fit in the world of creatives.

User experience design consultant Mona Patel believes, “It’s not smart to discuss actual prices too soon, because once you do, you’re both stuck with the numbers you’ve put on the table. The longer you wait, the more information you gather, the more accurate your price will be. By talking about the project and its scope without mentioning price, you are essentially buying yourself more freedom in the pricing. If you name your price too soon, it will be harder to negotiate down, even if you want to.”

If you take the lead, you can engage your prospect in a different conversation. In fact, be like a politician: don’t accept the premise of the question. Instead, direct the conversation where you think it needs to go before you talk about price—essentially positioning your price before you give it.

Mona recommends this response to buy you time:

• “I would be happy to provide a competitive price; however, I can only develop that once I understand your requirements better. May I ask you more questions?”

This way, you successfully drive the conversation to the more relevant topic of value: “What is this project worth to you?” This is more appropriate because it leads to more open communication, clarity and a stronger relationship, which is worth the potentially uncomfortable exchange it takes to get there.

Ilise Benun, founder of Marketing Mentor and co-producer of the Creative Freelancer Conference (www​.creativefreelancerconference​.com), works with creative freelancers who are serious about building healthy businesses. Sign up for her Quick Tips at www​.marketing-mentortips​.com.

Excerpted from The Creative Professional’s Guide to Money © 2011 by Ilise Benun. Used with the kind permission of HOW Books, an imprint of F+W Media Inc. Visit mydesignshop​.com or call (855)840-5126 to obtain a copy.