15 years on my own and after having this discussion with clients nearly every single time we begin a relationship, I have learned to embrace rather than fear the situation.
Often times this is a pattern, the person on the other end feels like they need to get a win in some form and the easiest and most obvious to them is always pricing.
Find out why they are asking this question, find out what they really want - 8 out of 10 times for me, it is just them asking because it would be dumb not to ask. Explain your rates, be open and honest about them. If they feel like your rates are too high for them then be willing to negotiate.
It is incredibly important that you negotiate, so many other people I talk to simply balk and let their rates come down some. This is insanity, it is surrender not negotiating. I always, always ask for something in return if I am giving up something and do my best to make sure what I get in return is more valuable than the money discount they are asking for. Often time I use this as a segue with a customer to discuss retainer billing models. Most people balk at it but if it is part of a give and take over the rate they will embrace it. Give me the choice of a project with pre-paid hours at 150/hr vs NET 30 at 165 and I am choosing the 150 all day long.
Another point, if you relax your rate - sunset the change. 'I am willing to do this project at $150/hr but only for this project - future work we do together will revert to the $165/hr rate'. Put it in writing.
If the price is too high, you can bring it down without gutting your rate. Just tell them what can be done in their budget. (So instead of "Fine, I'll come down to $75/hour," it's "Here's how much work each component is likely to be. Cutting any of these sets will bring it into your budget range. We can always revisit them later once the project starts earning back its cost.")
I agree with this approach... New clients really don't know how good Vendor A is over Vendor B. They may "Like" you but that doesn't mean they are going to marry you if they can't bring in their project within budget.
I'm flexible on rate based on a "fixed scope", any out of scope hours are billed at my "standard" rate. This puts the burden of "scope creep" on the side of the client.
I like to give me clients an incentive to work with me and to take the project seriously. If they get it cheap. They'll abuse you, if they feel like your rates are too high they will either move on or work with you and be very inflexible with any push back on other issues.
The rate negotiation is just the beginning of the relationship. If you're going to set the tone with inflexibility, that's what your going to get down the road, if you need some work from them.
Find out why they are asking this question, find out what they really want - 8 out of 10 times for me, it is just them asking because it would be dumb not to ask. Explain your rates, be open and honest about them. If they feel like your rates are too high for them then be willing to negotiate.
Yes! And just like anything else, be prepared for these kinds of questions and have a suggestion that can be accepted by both parties and count as a win. Like having your rates 10% inflated up front, but then giving 10% discount for paying early etc. They want to pay less, and you want to rely on the money coming. Also you can assuage their fears from the other side by proposing intermediate milestones.
Chacun a son gout... but I agree with OP. When I've been asked to discount, I recommend two or three other consultants. I sell hard for them, extolling their work, offering to make an introduction. Someday, a prospect will take me up, I'll lose some business, and win a favor with a colleague. But it hasn't happened yet.
Often times this is a pattern, the person on the other end feels like they need to get a win in some form and the easiest and most obvious to them is always pricing.
Find out why they are asking this question, find out what they really want - 8 out of 10 times for me, it is just them asking because it would be dumb not to ask. Explain your rates, be open and honest about them. If they feel like your rates are too high for them then be willing to negotiate.
It is incredibly important that you negotiate, so many other people I talk to simply balk and let their rates come down some. This is insanity, it is surrender not negotiating. I always, always ask for something in return if I am giving up something and do my best to make sure what I get in return is more valuable than the money discount they are asking for. Often time I use this as a segue with a customer to discuss retainer billing models. Most people balk at it but if it is part of a give and take over the rate they will embrace it. Give me the choice of a project with pre-paid hours at 150/hr vs NET 30 at 165 and I am choosing the 150 all day long.
Another point, if you relax your rate - sunset the change. 'I am willing to do this project at $150/hr but only for this project - future work we do together will revert to the $165/hr rate'. Put it in writing.