I have gotten so many anonymous requests from vendors trying to find out our prices. In fact, I even had a fake couple come into my office with a make-believe wedding just so we would give them our proposal (I found this out later).
As we talk about budgets this week, I think it is extremely essential to have a general idea of your competitors’ pricing. I keep reading over and over in your comments that others are bidding you out for a lower price in order to fit the client’s budget.
I have managed to find out what a few of my peers are charging by…
- A client giving me someone else’s price and asking me to match that price or do better. (Not in the least bit cool.)
- More than a few freelancers working in my company who offered this information. (Mostly unrequested. Word of advice for all of you with employees, have them sign a confidentiality agreement.)
- I am friendly with a few folks in the industry and we simply exchanged this information.
By the way, for all those who are interested in knowing what my prices are, it’s simple. We try to make a 50% margin on every job we do. The same margin I suggest you all try to make.
If you have an idea of what your competitors are charging, you’ll be better prepared to explain your value to your potential clients.
I just wish that most clients understood the old saying, “You get what you pay for.” They are either going to get less for less or a gift from a vendor, when the vendor does not make their profit.
How would you deal with a potential client who gives you a competitor’s proposal and asks you to match it or do better if you want the job? Do you think it is important to find out what your competitors are charging and how do you go about doing it?
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George Bernard Shaw once said: “You see things and say, ‘Why?’ But I dream things that never were and say, ‘Why not?’” That quote embodies how Preston Bailey approaches every event.
Brian
February 1, 2011
Preston, do you mean 50% profit before or after labor costs? Thanks!
alison
February 1, 2011
I just dealt with that very same issue; someone coming to me trying to get me to match my competitor’s extremely low offer. I refused to discount my services to that extent and turned down the job. I felt that if I matched their offer, I wasn’t just discounting the job, I was discounting myself. You really do get what you pay for, and sometimes the client has to realize that for themselves (i.e. via hiring the wrong person)…
Rosalba (Rose's Flowers & Gifts)
February 1, 2011
I had a bride, just last week, email me a quote from another floral designer and said that if I could beat it I could get the work. I told her that I customize my work to the couple and their choices I was unable to take the ideas and time of another person and make them my own. It was very upsetting.
Jeanne
February 1, 2011
In knowing what your competitor’s charge, you should also be able to differentiate the two products. I don’t use cake mix; I use butter, not vegetable shortening; I use three layers of cake and two layers of filling – when I go over my pricing I tell my customers this and go on to say every baker does things a little differently and I want them to be able to compare things on a level playing field. Some ingredients are cheaper (vegetable shortening is cheaper than butter, for example) so that enables a competitor to have a lower price.
I know what makes my product worth the price and I know I have to tell my customers this. For the clients who are shopping only on price, the quality of my ingredients and the time I spend on their design won’t matter because their needs are to stay within a budget that may not accommodate an elaborate design. If they can’t change their desire for an elaborate cake or adjust their budget, then it’s not a good fit for me or for them.
Nicky
February 1, 2011
I’ve had brides ask for a “good deal” from us or they want the highest end invitations we do at a very low cost. We’ve factored in our supply, design and assembly costs and are making a 50% profit on our orders (we are competitively priced). Sometimes we’ve have to cut our losses as it’s not worth working for free. I don’t think some people realize the amount of work that goes into creating custom pieces. SO true saying ‘you get what you pay for’
pippa
February 1, 2011
I too have been approached by clients seeking a “better deal”. Inevitably, this ends up being a total waste of my time as I refuse to undercut my services. I actually really feel for the original vendor, because their time, talent and ideas have been wasted too. One of my favourite quotes is “Quality is remembered long after the price is forgotten” and I try to keep that in mind when I’m pricing a job : )
Sam Scoutas
February 1, 2011
Preston i love this issue. I love when they bring me pages of your books and say we want something like this and we want to spend $100.00 per table setting.
Knowing competitors pricing is arming yourself with the knowledge and ammunition to be able to confidently sell YOUR products or services. I work or have worked alongside most of our competitors at one point or another being a decent person goes along way to getting information. Most clients understand “you get what you pay for” they just choose to ignore it.
Stephanie
February 2, 2011
Preston I have discovered for me it has very hard to do a job at my 100% creativity and get paid 50 or less percent of it’s value. So I tried very hard in the past to go ahead but it just became to draining so I just don’t. For me I just feel so limited and it frustrate me so bad till I just rather not make a dime so for me discounts are not on the table. I would rather do less work give them a smaller look for the money im presented. I recently had a lady who wanted 6 foot Manzinita trees complete with diamond strands and real hydrenga for 50 bucks a table. She was getting married in Brentwood Tn (one of the most affluent city in the US). We both know $50 would not even cover the cost of 3 hydrangea let alone a 6 ft tree. Needless to say when I told her my price She ended the meeting. I try not to think about my competitor pricing because I keep this one statement in my mind. ” I want people to come to me because I am good at what I do not because I’m cheapest at what I do.” I may do less jobs but I won’t have the stress my competition has doing more work for less money.
Kelli Taylor/Daniel Taylor Photography
February 2, 2011
Pricing is such a great topic to discuss! Thanks for the thoughts and advice.
Sheila Hylton DeToro Forlenza
February 2, 2011
You present a interesting situation, considering our luxury niche spa market. We definitely believe that clients get what they are willing to spend. If the clients requesting services as likely to be repeat customers or are presenting a large number of services they desire, we are likely to provide a 10% discount which does allow us to make a profit. However, when potential clients reveal they aren’t ideal clients by presenting a price that is indicative of run of the mill services, we do not hesitate with turning them away.
We too have competitors calling about pricing and unique scenarios in order to ascertain our pricing and flexibility. Comes with the territory.
Nishaka
February 3, 2011
This is excellent information. This year my goal was to focus on making a 40-50% profit per project. I have a better handle on now on my cost per project when working on the estimate. As it relates to the competition, I like to know the exact services that they are providing. Comparing if it’s apples to apples. Sometimes it’s not. I also evaluate if the competition is a part time planner versus a full time planner like myself. I’ve found that Planners who work their business part time have a full time job and tend to have lower prices than I do. Therefore, it makes me look higher. Per event now, I have a minimum of 2-3 people staff persons in the labor cost, plus other supplies, etc. needed to complete the project. This is helping me have a better and clear conversation with the potential client of the pricing for the event.
I have recognized and have been told that I am a mid-to-high end Event Planner. That is my market. Locally, clients and potential clients have are seeing the value, creativity, precise execution, and professionalism that me and my team bring to their event. We will continue to deliver the results and will continue to get to the right clients for our business.
Nishaka
GE MASANA
February 3, 2011
Preston, it sounds like you’ve been getting the wrong people in front of you lately.
And it’s causing you to think price is the issue. It’s not.
The question that should pop into your head in this particular scenario is: “if you like their price, why are you talking to me?” When someone asks you to match another’s price what it indicates is that they want *you* but not your fee. It’s a tactic, one could say, to get you to lower your fee.
They need to understand that for the other guy’s fee, you get the other guy – his abilities, his aesthetics, his service, his reputation, his experience. Yours costs more. You did Oprah’s birthday party for crying out loud. You are not the other guy.
If they want a lower price, then you CUT services and product to get there – but you can’t cut your profit margin. Cutting profit margins starts the descent to going out of business.
GinaShiShi
February 7, 2011
I am so happy to have read this post! I had this very same thing happen a few weeks ago where a bride asked me to match a competitor’s extremely low price, and I refused. It didn’t feel great to lose the client, but it felt good to know that we weren’t discounting ourselves, as Alison mentions below. Unfortunately there will always be those clients where cost is the only or overriding factor in their decision making, and over time, I’ve found those are the clients that just aren’t for us. I’m happy to make something work for a client in terms of customizing services, and charging appropriately, but to blatantly undercut a competitor simply in the interest of getting the client instead, is just bad business.
Occasions 2 Remember
February 8, 2011
Thank you for bringing these important issues to the fore-front! Although I do care what my Competitors are charging, I try to convince the client the value of the service that I am providing. If a Client attempted to present me with another Vendor’s proposal I would NOT accept it. Before I present a proposal to a Client, I find out in advance if 1) they are accepting proposals from other vendors; 2) I have a clause in my proposals that state “the design ideas are copyrighted and cannot be used without our written consent). This protects me in case the Client wants to shop around my concept as well.
Nate`
February 21, 2011
Mr. Bailey, I’m not to concern about my competitors, each Planner/Floral designer has their on style and mark to make in this world. Not too concern about the prices that my competitors are charging considering that we have a very unique service and our price is never the same because each bride has diffrent style and request for their wedding. PS Preston you ROCK.